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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| | | | | |
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2022
OR
| | | | | |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______________ to ______________
Commission File Number: 001-39964
Home Point Capital Inc.
(Exact name of registrant as specified in its charter)
| | | | | | | | | | | | | | |
| Delaware | | | 90-1116426 | |
(State or other jurisdiction of
incorporation or organization) | | | (I.R.S. Employer Identification No.) | |
| | | | |
2211 Old Earhart Road, Suite 250 Ann Arbor, Michigan | | | 48105 | |
| (Address of Principal Executive Offices) | | | (Zip Code) | |
(888) 616-6866
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
| Title of each class | | Trading Symbol | | Name of each exchange on which
registered |
Common Stock, par value $0.0000000072 per share | | HMPT | | The Nasdaq Stock Market LLC (The Nasdaq Global Select Market) |
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | |
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of August 5, 2022, the registrant had 138,381,757 shares of common stock, par value $0.0000000072 per share, outstanding.
TABLE OF CONTENTS
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PART I—FINANCIAL INFORMATION | |
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PART II—OTHER INFORMATION | |
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Cautionary Note on Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Report”) contains certain “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements include, but are not limited to, statements relating to our future financial performance, our business prospects and strategy, anticipated financial position, liquidity and capital needs, the industry in which we operate and other similar matters. Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “could,” “would,” “will,” “may,” “can,” “continue,” “potential,” “should” and the negative of these terms or other comparable terminology often identify forward-looking statements. Forward-looking statements are not guarantees of future performance, are based upon assumptions, and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements, including the risks discussed in Part I, Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which was filed on March 17, 2022 (our “2021 Annual Report”). Factors, risks, and uncertainties that could cause actual outcomes and results to be materially different from those contemplated include, among others:
•our reliance on our financing arrangements to fund mortgage loans and otherwise operate our business;
•the dependence of our loan origination and servicing revenues on macroeconomic and U.S. residential real estate market conditions;
•the requirement to repurchase mortgage loans or indemnify investors if we breach representations and warranties;
•counterparty risk;
•the requirement to make servicing advances that can be subject to delays in recovery or may not be recoverable in certain circumstances;
•risks related to any subservicer;
•competition for mortgage assets that may limit the availability of desirable originations, acquisitions and result in reduced risk-adjusted returns;
•our ability to continue to grow our loan origination business or effectively manage significant increases in our loan production volume;
•difficult conditions or disruptions in the mortgage-backed securities (“MBS”), mortgage, real estate and financial markets;
•competition in the industry in which we operate;
•our ability to acquire loans and sell the resulting MBS in the secondary markets on favorable terms in our production activities;
•our ability to adapt to and implement technological changes;
•the effectiveness of our risk management efforts;
•our ability to detect misconduct and fraud;
•any failure to attract and retain a highly skilled workforce, including our senior executives;
•our ability to obtain, maintain, protect and enforce our intellectual property;
•any cybersecurity risks, cyber incidents and technology failures;
•material changes to the laws, regulations or practices applicable to reverse mortgage programs operated by the Federal Housing Administration (“FHA”) and the U.S. Department of Housing and Urban Development;
•our vendor relationships;
•our failure to deal appropriately with various issues that may give rise to reputational risk, including legal and regulatory requirements;
•any employment litigation and related unfavorable publicity;
•exposure to new risks and increased costs as a result of initiating new business activities or strategies or significantly expanding existing business activities or strategies;
•the impact of changes in political or economic stability or by government policies on our material vendors with operations in India;
•our ability to fully utilize our net operating loss (“NOL”) and other tax carryforwards;
•any challenge by the Internal Revenue Service of the amount, timing and/or use of our NOL carryforwards;
•possible changes in legislation and the effect on our ability to use the tax benefits associated with our NOL carryforwards;
•the impact of other changes in tax laws;
•the impact of interest rate fluctuations;
•risks associated with hedging against interest rate exposure;
•the impact of any prolonged economic slowdown, recession or declining real estate values;
•risks associated with financing our assets with borrowings;
•risks associated with a decrease in value of our collateral;
•the dependence of our operations on access to our financing arrangements, which are mostly uncommitted;
•risks associated with the financial and restrictive covenants included in our financing agreements;
•risks associated with changes in the London Inter-Bank Offered Rate reporting practices and the use of alternative reference rates;
•our ability to raise the debt or equity capital required to finance our assets and maintain and grow our business;
•risks associated with derivative financial instruments;
•our ability to comply with continually changing federal, state and local laws and regulations;
•the impact of revised rules and regulations and enforcement of existing rules and regulations by the Consumer Financial Protection Bureau;
•the impact of revised rules and regulations and enforcement of existing rules and regulations by state regulatory agencies;
•our ability to comply with the Government-Sponsored Enterprises (“GSE”), FHA, U.S. Department of Veterans Affairs (“VA”) and U.S. Department of Agriculture (“USDA”) guidelines and changes in these guidelines or GSE and Government National Mortgage Association (“Ginnie Mae”) guarantees;
•changes in regulations or the occurrence of other events that impact the business, operations or prospects of government agencies such as Ginnie Mae, the FHA or the VA, the USDA, or GSEs such as the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, or such changes that increase the cost of doing business with such entities;
•our ability to obtain and/or maintain licenses and other approvals in those jurisdictions where required to conduct our business;
•our ability to comply with the regulations applicable to our investment management subsidiary;
•the impact of private legal proceedings;
•risks associated with our acquisition of mortgage servicing rights;
•the impact of our counterparties terminating our servicing rights under which we conduct servicing activities;
•risks associated with higher risk loans that we service;
•our ability to foreclose on our mortgage assets in a timely manner or at all; and
•the effects of the COVID-19 pandemic on our business.
Many of the important factors that will determine these results are beyond our ability to control or predict. You are cautioned not to put undue reliance on any forward-looking statements, which speak only as of the date of this Report. Except as otherwise required by law, we do not assume any obligation to publicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Report or to reflect the occurrence of unanticipated events. You should refer to the risks and uncertainties listed under the heading “Risk Factors” in our 2021 Annual Report, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange Commission (“SEC”), for a discussion of other important factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements.
Unless the context otherwise indicates, any reference in this Report to “Home Point,” “our Company,” “the Company,” “us,” “we” and “our” refers to Home Point Capital Inc. and its subsidiaries.
Website and Social Media Disclosure
We use our website (www.investors.homepoint.com) and our corporate Facebook, LinkedIn, and Twitter accounts as channels of distribution of Company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. The contents of our website and social media channels are not, however, a part of this Report.
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
HOME POINT CAPITAL INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share and per share amounts)
| | | | | | | | | | | |
| (Unaudited) | | |
| June 30, 2022 | | December 31, 2021 |
| Assets: | | | |
| Cash and cash equivalents | $ | 135,843 | | | $ | 170,987 | |
| Restricted cash | 27,065 | | | 36,803 | |
| Cash and cash equivalents and Restricted cash | 162,908 | | | 207,790 | |
| Mortgage loans held for sale (at fair value) | 2,018,640 | | | 5,107,161 | |
| Mortgage servicing rights (at fair value) | 1,419,105 | | | 1,525,103 | |
| Property and equipment, net | 18,039 | | | 21,892 | |
| Accounts receivable, net | 176,995 | | | 129,092 | |
| Derivative assets | 59,280 | | | 84,385 | |
| Goodwill | 10,789 | | | 10,789 | |
| Government National Mortgage Association loans eligible for repurchase | 117,092 | | | 65,237 | |
| Assets held for sale | 50,748 | | | 63,664 | |
| Other assets | 40,824 | | | 43,228 | |
| Total assets | $ | 4,074,420 | | | $ | 7,258,341 | |
| Liabilities and Shareholders’ Equity: | | | |
| Liabilities: | | | |
| Warehouse lines of credit | $ | 1,910,395 | | | $ | 4,718,658 | |
| Term debt and other borrowings, net | 845,531 | | | 1,226,524 | |
| Accounts payable and accrued expenses | 106,005 | | | 138,193 | |
| Government National Mortgage Association loans eligible for repurchase | 117,092 | | | 65,237 | |
| Deferred tax liabilities | 214,871 | | | 229,752 | |
| Derivative liabilities | 60,309 | | | 26,736 | |
| Other liabilities | 87,815 | | | 76,588 | |
| Total liabilities | 3,342,018 | | | 6,481,688 | |
Note 9 – Commitments and Contingencies | | | |
| | | |
| Shareholders’ Equity: | | | |
Preferred stock (250,000,000 authorized shares, none issued and outstanding, $0.0000000072 par value per share) | — | | | — | |
Common stock (1,000,000,000 authorized shares, 138,380,272 and 139,326,953 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively, $0.0000000072 par value per share) | — | | | — | |
| Additional paid-in capital | 511,675 | | | 523,811 | |
| Retained earnings | 220,727 | | | 252,842 | |
| Total shareholders’ equity | 732,402 | | | 776,653 | |
| Total liabilities and shareholders’ equity | $ | 4,074,420 | | | $ | 7,258,341 | |
See accompanying notes to the unaudited condensed consolidated financial statements.
1
HOME POINT CAPITAL INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited – dollars in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| Revenue: | | | | | | | |
| Gain on loans, net | $ | 13,234 | | | $ | 75,029 | | | $ | 58,638 | | | $ | 376,257 | |
| Loan fee income | 15,255 | | | 39,500 | | | 35,159 | | | 83,615 | |
| | | | | | | |
| Interest income | 27,533 | | | 34,648 | | | 54,610 | | | 60,225 | |
| Interest expense | (28,920) | | | (44,136) | | | (62,015) | | | (77,071) | |
| Interest expense, net | (1,387) | | | (9,488) | | | (7,405) | | | (16,846) | |
| Loan servicing fees | 62,872 | | | 85,584 | | | 143,936 | | | 155,922 | |
| Change in fair value of mortgage servicing rights | (29,887) | | | (106,905) | | | (12,704) | | | (94,057) | |
| Other income | 9,921 | | | 652 | | | 10,555 | | | 1,453 | |
| Total revenue, net | 70,008 | | | 84,372 | | | 228,179 | | | 506,344 | |
| Expenses: | | | | | | | |
| Compensation and benefits | 75,601 | | | 127,296 | | | 165,033 | | | 280,938 | |
| Loan expense | 6,969 | | | 17,483 | | | 15,984 | | | 35,178 | |
| Loan servicing expense | 7,121 | | | 7,507 | | | 12,867 | | | 15,600 | |
| Production technology | 4,343 | | | 8,170 | | | 9,208 | | | 17,455 | |
| General and administrative | 16,969 | | | 26,549 | | | 36,640 | | | 52,786 | |
| Depreciation and amortization | 2,627 | | | 2,350 | | | 5,314 | | | 5,111 | |
| Other expenses | 5,772 | | | 8,637 | | | 11,068 | | | 17,973 | |
| Total expenses | 119,402 | | | 197,992 | | | 256,114 | | | 425,041 | |
| (Loss) income before income tax | (49,394) | | | (113,620) | | | (27,935) | | | 81,303 | |
| Income tax benefit (expense) | 14,121 | | | 27,209 | | | 9,798 | | | (22,908) | |
| (Loss) income from equity method investment | (9,144) | | | 13,198 | | | (14,416) | | | 17,361 | |
| Net (loss) income | $ | (44,417) | | | $ | (73,213) | | | $ | (32,553) | | | $ | 75,756 | |
| | | | | | | |
| (Loss) earnings per share: | | | | | | | |
| Basic | $ | (0.32) | | | $ | (0.53) | | | $ | (0.23) | | | $ | 0.54 | |
| Diluted | $ | (0.32) | | | $ | (0.53) | | | $ | (0.23) | | | $ | 0.54 | |
See accompanying notes to the unaudited condensed consolidated financial statements.
2
HOME POINT CAPITAL INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(unaudited – dollars in thousands, except share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| Common Stock | | Additional
Paid in Capital | | Treasury
Stock | | Retained
Earnings | | Total
Shareholders’
Equity |
| Shares | | Amount | | | | |
| Beginning balance, January 1, 2022 | 139,326,953 | | | $ | — | | | $ | 523,811 | | | $ | — | | | $ | 252,842 | | | $ | 776,653 | |
| Stock repurchase | (461,690) | | | — | | | — | | | (1,513) | | | — | | | (1,513) | |
| Distributions to shareholders | — | | | — | | | — | | | — | | | (5,575) | | | (5,575) | |
| Employee stock purchases (option exercise) | 97,223 | | | — | | | 122 | | | — | | | — | | | 122 | |
| Equity-based compensation | — | | | — | | | 1,706 | | | — | | | — | | | 1,706 | |
| Net income | — | | | — | | | — | | | — | | | 11,864 | | | 11,864 | |
| Balance at March 31, 2022 | 138,962,486 | | | $ | — | | | $ | 525,639 | | | $ | (1,513) | | | $ | 259,131 | | | $ | 783,257 | |
| Stock repurchase | (718,106) | | | — | | | — | | | (2,261) | | | — | | | (2,261) | |
| Retirement of treasury stock | — | | | — | | | (15,338) | | | 3,774 | | | 11,564 | | | — | |
| Distributions to shareholders | — | | | — | | | — | | | — | | | (5,551) | | | (5,551) | |
| Employee stock purchases (option exercise) | 11,114 | | | — | | | (33) | | | — | | | — | | | (33) | |
| Equity-based compensation (restricted stock units vesting) | 124,778 | | | — | | | 1,407 | | | — | | | — | | | 1,407 | |
| Net loss | — | | | — | | | — | | | — | | | (44,417) | | | (44,417) | |
| Ending balance, June 30, 2022 | 138,380,272 | | | $ | — | | | $ | 511,675 | | | $ | — | | | $ | 220,727 | | | $ | 732,402 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Stock | | Additional
Paid in Capital | | Retained
Earnings | | Total
Shareholders’
Equity |
| Shares | | Amount | | | |
| Beginning balance, January 1, 2021 | 138,860,103 | | | $ | — | | | $ | 519,510 | | | $ | 407,964 | | | $ | 927,474 | |
| Contributed capital | — | | | — | | | — | | | 192 | | | 192 | |
| Distributions to parent | — | | | — | | | — | | | (295,089) | | | (295,089) | |
| Employee stock purchases (option exercise) | 185,073 | | | — | | | (1,028) | | | — | | | (1,028) | |
| Equity-based compensation | — | | | — | | | 1,779 | | | — | | | 1,779 | |
| Net income | — | | | — | | | — | | | 148,969 | | | 148,969 | |
| Balance at March 31, 2021 | 139,045,176 | | | $ | — | | | $ | 520,261 | | | $ | 262,036 | | | $ | 782,297 | |
| Employee stock purchases (option exercise) | 441,921 | | | — | | | (1,503) | | | — | | | (1,503) | |
| Equity-based compensation | — | | | — | | | 1,747 | | | — | | | 1,747 | |
| Net loss | — | | | — | | | — | | | (73,213) | | | (73,213) | |
| Ending balance, June 30, 2021 | 139,487,097 | | | $ | — | | | $ | 520,505 | | | $ | 188,823 | | | $ | 709,328 | |
See accompanying notes to the unaudited condensed consolidated financial statements.
3
HOME POINT CAPITAL INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited – dollars in thousands)
| | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 |
| Operating activities: | | | |
| Net (loss) income | $ | (32,553) | | | $ | 75,756 | |
| Adjustments to reconcile net (loss) income to cash used in operating activities: | | | |
| Depreciation | 5,314 | | | 5,111 | |
| Amortization of debt issuance costs | 1,660 | | | 1,620 | |
| Gain on loans, net | (58,638) | | | (376,257) | |
| Provision for representation and warranty reserve | 13,724 | | | 9,821 | |
| Equity-based compensation expense | 3,113 | | | 3,526 | |
| Deferred income tax (benefit) expense | (14,881) | | | 22,789 | |
| Loss (income) from equity method investment | 14,416 | | | (17,361) | |
| Distributions for mortgage loans held for sale | (22,568,858) | | | (57,917,479) | |
| Proceeds from sale and payments of mortgage loans held for sale | 25,032,673 | | | 55,578,192 | |
| Decrease in fair value of mortgage servicing rights | 12,704 | | | 94,057 | |
| Decrease in fair value of mortgage loans held for sale | 113,594 | | | 10,633 | |
| Decrease in fair value of derivative assets | 25,105 | | | 209,106 | |
| Changes in operating assets and liabilities: | | | |
| Decrease (increase) in accounts receivable, net | 10,620 | | | (24,515) | |
| Decrease (increase) in other assets | 2,404 | | | (7,157) | |
| Decrease in accounts payable and accrued expenses | (40,455) | | | (21,394) | |
| Increase (decrease) in other liabilities | 31,075 | | | (30,659) | |
| Net cash provided by (used for) operating activities | 2,551,017 | | | (2,384,211) | |
| Investing activities: | | | |
| Purchases of property and equipment, net of disposals | (1,461) | | | (6,751) | |
| Purchase of mortgage servicing rights | (17,833) | | | (18,701) | |
| Proceeds from sale of mortgage servicing rights | 630,622 | | | — | |
| Equity method investment | (1,500) | | | — | |
| Net cash provided by (used for) investing activities | 609,828 | | | (25,452) | |
| Financing activities: | | | |
| Proceeds from warehouse borrowings | 24,046,240 | | | 57,710,590 | |
| Payments on warehouse borrowings | (26,854,503) | | | (55,658,415) | |
| Proceeds from term debt borrowings | 400,000 | | | 1,140,000 | |
| Payments on term debt borrowings | (780,000) | | | (375,000) | |
| Proceeds from other borrowings | 70,000 | | | 65,000 | |
| Payments on other borrowings | (73,250) | | | (105,000) | |
| Write off (payments of debt issuance costs),net | 597 | | | (14,103) | |
| Employee stock purchases (option expense) | 89 | | | (2,531) | |
| Common stock repurchases | (3,774) | | | — | |
| Contributed capital from parent | — | | | 192 | |
| Dividends paid to shareholders | (11,126) | | | — | |
Distributions to parent 1 | — | | | (295,089) | |
| Net cash (used for) provided by financing activities | (3,205,727) | | | 2,465,644 | |
| Net (decrease) increase in cash, cash equivalents and restricted cash | (44,882) | | | 55,981 | |
| Cash, cash equivalents and restricted cash at beginning of period | 207,790 | | | 196,893 | |
| Cash, cash equivalents and restricted cash at end of period | $ | 162,908 | | | $ | 252,874 | |
| Supplemental disclosure: | | | |
| Cash paid for interest | $ | 65,502 | | | $ | 53,267 | |
| Cash received from tax refunds, net | $ | (1,951) | | | $ | (268) | |
See accompanying notes to the unaudited condensed consolidated financial statements.
4
HOME POINT CAPITAL INC. & SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands, Except Shares and Per Share Amounts)
(unaudited)
Note 1 – Organization and Operations
Nature of Business
Home Point Capital Inc., a Delaware corporation (“HPC”, or the “Company”), through its subsidiaries, is a residential mortgage originator and servicer with a business model focused on growing originations by leveraging a network of partner relationships and its servicing operation. The Company’s business operations are organized into the following two segments: (1) Origination and (2) Servicing. Home Point Financial Corporation (“HPF”), a New Jersey corporation and a wholly owned subsidiary of the Company, originates, sells, and services residential real estate mortgage loans throughout the United States of America (“U.S.”). Home Point Asset Management LLC (“HPAM”), a Delaware limited liability company, is a wholly owned subsidiary of the Company and manages certain servicing assets. HPAM’s wholly owned subsidiary, Home Point Mortgage Acceptance Corporation (“HPMAC”), an Alabama Corporation, services residential real estate mortgage loans. Home Point Corporation Insurance Agency LLC (“HPCIA”), a Michigan limited liability company, is a wholly owned subsidiary of the Company that brokers home owner insurance policies.
Both HPF and HPMAC are approved sellers and servicers of one-to-four family first mortgages by the Federal National Mortgage Association (“FNMA” or “Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“FHLMC” or “Freddie Mac”) and are approved issuers by the Government National Mortgage Association (“GNMA” or “Ginnie Mae”) (collectively, the “Agencies”), and as such, HPF and HPMAC must meet certain Agency eligibility requirements.
Note 2 – Basis of Presentation and New Accounting Pronouncements
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. The condensed consolidated financial statements include the financial statements of HPC and its wholly owned subsidiaries. The accompanying condensed consolidated financial statements have been prepared in conformity with Article 10 of Regulation S-X promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The consolidated balance sheet as of December 31, 2021 and related notes were derived from the audited consolidated financial statements but do not include all disclosures required by U.S. GAAP for complete financial statements. Certain information and footnote disclosures normally included in complete financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These condensed consolidated financial statements reflect, in the opinion of management, all material adjustments (which include normal recurring adjustments) necessary to fairly state, in all material respects, the Company’s financial position as of June 30, 2022, its results of operations for the three and six months ended June 30, 2022 and 2021, and its cash flows for the six months ended June 30, 2022 and 2021. The condensed consolidated financial information should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2021.
All intercompany balances and transactions have been eliminated in consolidation.
Reclassifications
The Company reclassified gains and losses on MSR sales from Other income to the Change in fair value of mortgage servicing rights on the consolidated statement of operations. Prior periods have been reclassified to conform to current period presentation.
Use of Estimates
The preparation of the Company’s condensed consolidated financial statements in conformity with U.S. GAAP requires HPC to make estimates and assumptions about future events that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable.
Examples of reported amounts that rely on significant estimates include mortgage loans held for sale, mortgage servicing rights (“MSRs”), servicing advances reserve, derivative assets, derivative liabilities, reserves for mortgage repurchases and indemnifications, and deferred tax valuation allowance considerations. Significant estimates are also used in determining the recoverability and fair value of property and equipment and goodwill.
Recently Adopted Accounting Pronouncements
ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes, eliminates particular exceptions related to the method for intra period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. This amendment is effective for annual periods beginning after December 15, 2021. The Company adopted ASU 2019-12 as of January 1, 2022. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
Accounting Pronouncements Issued but Not Yet Adopted
Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting, subject to meeting certain criteria, provides optional expedients and exceptions related to applying U.S. GAAP to certain contract modifications and hedging relationships that reference the London Interbank Offered Rate ("LIBOR") or another rate that is expected to be discontinued. This guidance was effective upon issuance and allows application to contract changes as early as January 1, 2020. Subsequently, in 2021, the FASB issued ASU 2021-01, Reference Rate Reform, to further clarify and expand certain aspects of Topic 848. The Company is in the process of reviewing its derivative and hedging instruments that utilize LIBOR as the reference rate. The Company plans to adopt ASU 2020-04 and ASU 2021-01 when LIBOR is discontinued for the Company and does not expect it to have a material impact on its consolidated financial statements.
Note 3 – Mortgage Loans Held for Sale
The Company sells its originated mortgage loans into the secondary market. The Company may retain the right to service some of these loans upon sale through ownership of servicing rights. The following presents mortgage loans held for sale (“MLHS”) at fair value, by type:
| | | | | | | | | | | | | | | | | |
| June 30, 2022 |
| Unpaid
Principal | | Fair Value
Adjustment | | Total
Fair Value |
| (dollars in thousands) |
Conventional(1) | $ | 1,351,092 | | | $ | (15,935) | | | $ | 1,335,157 | |
Government(2) | 679,660 | | | 3,631 | | | 683,291 | |
Reverse(3) | 275 | | | (83) | | | 192 | |
| Total | $ | 2,031,027 | | | $ | (12,387) | | | $ | 2,018,640 | |
| | | | | | | | | | | | | | | | | |
| December 31, 2021 |
| Unpaid
Principal | | Fair Value
Adjustment | | Total
Fair Value |
| (dollars in thousands) |
Conventional(1) | $ | 4,206,099 | | | $ | 79,389 | | | $ | 4,285,488 | |
Government(2) | 799,579 | | | 21,902 | | | 821,481 | |
Reverse(3) | 275 | | | (83) | | | 192 | |
| Total | $ | 5,005,953 | | | $ | 101,208 | | | $ | 5,107,161 | |
(1)Conventional includes mortgage loans meeting the eligibility requirements to be sold to FNMA or FHLMC.
(2)Government includes mortgage loans meeting the eligibility requirements to be sold to GNMA (including Federal Housing Administration, Department of Veterans Affairs and United States Department of Agricultural mortgage loans).
(3)Reverse loan presented in MLHS on the condensed consolidated balance sheets as a result of a repurchase.
MLHS on nonaccrual status had $24.0 million and $26.1 million of unpaid principal balances and $19.4 million and $21.6 million estimated fair value, as of June 30, 2022 and December 31, 2021, respectively.
The Company had $2.0 billion in unpaid principal balance pledged to secure its mortgage warehouse line of credit as of June 30, 2022.
The following presents a reconciliation of the changes in MLHS to the amounts presented on the condensed consolidated statements of cash flows:
| | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 |
| |
| Fair value at beginning of period | $ | 5,107,161 | | | $ | 3,301,694 | |
| Mortgage loans originated and purchased | 22,568,858 | | | 57,917,479 | |
| Proceeds on sales and payments received | (25,032,673) | | | (55,578,192) | |
| Change in fair value | (113,594) | | | (10,633) | |
Loss on loans(1) | (511,112) | | | (217,896) | |
| Fair value at end of period | $ | 2,018,640 | | | $ | 5,412,452 | |
(1)This line as presented on the condensed consolidated statements of cash flows excludes originated mortgage servicing rights and mortgage servicing rights hedging.
Note 4 – Mortgage Servicing Rights
The Company sells residential mortgage loans in the secondary market and typically retains the right to service the loans sold.
Mortgage Servicing Rights (“MSRs”) give the Company the contractual right to receive service fees and other remuneration in exchange for performing loan servicing functions on behalf of investors in mortgage loans and securities. Upon sale of a mortgage loan for which the Company retains the underlying servicing, an MSR asset is capitalized, which represents the current fair value of the future net cash flows that are expected to be realized for performing servicing activities.
The following presents an analysis of the changes in capitalized MSRs:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (dollars in thousands) |
| Balance at beginning of period | $ | 1,490,224 | | | $ | 1,156,357 | | | $ | 1,525,103 | | | $ | 748,457 | |
| MSRs originated | 155,942 | | 269,449 | | 364,683 | | 563,806 |
| MSRs purchased | 9,245 | | 13,884 | | 17,833 | | 18,701 |
| MSRs sold | (275,312) | | — | | (755,556) | | — |
| Changes in valuation model inputs | 72,395 | | (94,713) | | 349,381 | | 103,183 |
| Change due to cash payoffs and principal amortization | (33,389) | | (77,724) | | (82,339) | | (166,894) |
| Balance at end of period | $ | 1,419,105 | | | $ | 1,267,253 | | | $ | 1,419,105 | | | $ | 1,267,253 | |
The following presents the Company’s total capitalized mortgage servicing portfolio (based on the unpaid principal balance (“UPB”) of the underlying mortgage loans):
| | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
| (dollars in thousands) |
| Ginnie Mae | $ | 8,391,398 | | $ | 5,602,582 |
| Fannie Mae | 45,950,073 | | 70,174,987 |
| Freddie Mac | 36,143,003 | | 52,547,588 |
| Other | 31,947 | | 34,417 |
| Total | $ | 90,516,421 | | $ | 128,359,574 |
| | | |
| MSR balance | $ | 1,419,105 | | | $ | 1,525,103 | |
The following presents the key weighted average assumptions used in determining the fair value of the Company’s MSRs: | | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
| Discount rate | 7.93 | % | | 8.68 | % |
| Weighted average prepayment speeds | 6.37 | % | | 8.30 | % |
The key assumptions used to estimate the fair value of the MSRs are discount rate and the Conditional Prepayment Rate (“CPR” or “prepayment speeds”). An increase in prepayment speeds generally has an adverse effect on the value of MSRs as the underlying loans prepay faster. In a declining interest rate environment, the fair value of MSRs generally decreases as prepayments increase. A decrease in prepayment speeds generally has a positive effect on the value of the MSRs as the underlying loans prepay less frequently. In a rising interest rate environment, the fair value of MSRs generally increases as prepayments decrease. Increases in the discount rate result in a lower MSR value and decreases in the discount rate result in a higher MSR value. MSR uncertainties are hypothetical and do not always have a direct correlation with each assumption. Changes in one assumption may result in changes to another assumption, which might magnify or counteract the uncertainties.
The following presents the impact on the fair value of the Company’s MSR portfolio when applying the following hypothetical data points:
| | | | | | | | | | | | | | | | | | | | | | | |
| Discount Rate | | Prepayment Speeds |
| 100 BPS Adverse Change | | 200 BPS Adverse Change | | 10% Adverse Change | | 20% Adverse Change |
| (dollars in thousands) |
| June 30, 2022 | $ | (69,128) | | | $ | (131,943) | | | $ | (45,752) | | | $ | (88,681) | |
| December 31, 2021 | $ | (66,885) | | | $ | (128,172) | | | $ | (56,278) | | | $ | (108,621) | |
The following presents information related to loans serviced:
| | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
| (dollars in thousands) |
| Total unpaid principal balance | $ | 92,158,562 | | | $ | 133,889,085 | |
| Loans 30-89 days delinquent | 898,742 | | | 656,012 | |
| Loans delinquent 90 or more days or in foreclosure | 753,270 | | | 777,650 | |
The following presents components of Loan servicing fees as reported in the Company’s condensed consolidated statements of operations:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (dollars in thousands) |
| Contractual servicing fees | $ | 62,618 | | | $ | 77,615 | | | $ | 143,381 | | | $ | 145,098 | |
| Late fees | 891 | | | 1,323 | | | 2,016 | | | 2,465 | |
| Other | (637) | | | 6,646 | | | (1,461) | | | 8,359 | |
| Total | $ | 62,872 | | | $ | 85,584 | | | $ | 143,936 | | | $ | 155,922 | |
The Company held for its customers $16.5 million and $19.9 million of escrow funds recorded in Other liabilities in the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021, respectively. The Company reported $21.2 million and $74.7 million loss on MSR sales in the Change in fair value of mortgage servicing rights in the condensed consolidated statement of operations for the three and six months ended June 30, 2022, respectively.
Note 5 – Derivative Financial Instruments
The following presents the outstanding notional amounts and fair values of derivative instruments not designated as hedging instruments:
| | | | | | | | | | | | | | | | | |
| June 30, 2022 |
| Notional
Value | | Derivative
Asset | | Derivative
Liability |
| (dollars in thousands) |
| Forward sale contracts | $ | 3,730,800 | | | $ | 13,718 | | | $ | 14,434 | |
| Interest rate lock commitments | 3,306,824 | | | 22,622 | | | 6,375 | |
| Forward purchase contracts | 305,000 | | | 77 | | | 3,741 | |
| Treasury futures purchase contracts | 510,000 | | | 2,121 | | | 698 | |
| Margin | | | 20,742 | | | 35,061 | |
| Total | | | $ | 59,280 | | | $ | 60,309 | |
| | | | | | | | | | | | | | | | | |
| December 31, 2021 |
| Notional
Value | | Derivative
Asset | | Derivative
Liability |
| (dollars in thousands) |
| Forward sale contracts | $ | 7,819,802 | | | $ | 6,969 | | | $ | 8,242 | |
| Interest rate lock commitments | 6,068,763 | | | 29,887 | | | 2,843 | |
| Forward purchase contracts | 1,521,000 | | | 3,031 | | | 281 | |
| Interest rate swap futures contracts | 1,540,000 | | | 25,313 | | | 5,662 | |
| Treasury futures purchase contracts | 4,720,000 | | | 111 | | | — | |
| Margin | | | 19,074 | | | 9,708 | |
| Total | | | $ | 84,385 | | | $ | 26,736 | |
The following presents the recorded gain (loss) on derivative financial instruments:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (dollars in thousands) |
| Forward sale contracts | $ | (91,472) | | | $ | 283,156 | | | $ | (2,804) | | | $ | 43,568 | |
| Interest rate lock commitments | 50,983 | | | (386,845) | | | (9,770) | | | (206,291) | |
| Forward purchase contracts | 819 | | | 17,509 | | | (3,053) | | | (3,878) | |
| Interest rate swap and Treasury futures purchase contracts | $ | (43,601) | | | $ | 52,606 | | | $ | (161,953) | | | $ | (18,049) | |
Counterparty agreements for forward commitments contain master netting agreements. The master netting agreements contain a legal right to offset amounts due to and from the same counterparty. The Company incurred no credit losses due to nonperformance of any of its counterparties for the three and six months ended June 30, 2022 and 2021.
The following presents a summary of derivative assets and liabilities and related netting amounts:
| | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2022 |
| | | Gross Amounts Not Offset in the Statement of Financial Position(1) | | |
| Gross Amount of Assets (Liabilities) Recognized | | Financial Instruments | | Cash Collateral | | Net Amount |
| (dollars in thousands) |
| Derivatives subject to master netting agreements: | | | | | | | |
| Assets: | | | | | | | |
| Forward sale contracts | $ | 13,718 | | | $ | (9,944) | | | $ | (3,413) | | | $ | 361 | |
| Forward purchase contracts | 77 | | | (77) | | | — | | | — | |
| Interest rate swap and Treasury futures purchase contracts | 2,121 | | | (2,121) | | | — | | | — | |
| Liabilities: | | | | | | | |
| Forward sale contracts | (14,434) | | | 9,944 | | | — | | | (4,490) | |
| Forward purchase contracts | (3,741) | | | 77 | | | 3,362 | | | (302) | |
| Interest rate swap and Treasury futures purchase contracts | (698) | | | 2,121 | | | (1,423) | | | — | |
| Derivatives not subject to master netting agreements: | | | | | | | |
| Assets: | | | | | | | |
| Interest rate lock commitments | 22,622 | | | — | | | — | | | 22,622 | |
| Liabilities: | | | | | | | |
| Interest rate lock commitments | (6,375) | | | — | | | — | | | (6,375) | |
| Total derivatives | | | | | | | |
| Assets | $ | 38,538 | | | $ | (12,142) | | | $ | (3,413) | | | $ | 22,983 | |
| Liabilities | $ | (25,248) | | | $ | 12,142 | | | $ | 1,939 | | | $ | (11,167) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2021 |
| | | Gross Amounts Not Offset in the Statement of Financial Position(1) | | |
| Gross Amount of Assets (Liabilities) Recognized | | Financial Instruments | | Cash Collateral | | Net Amount |
| (dollars in thousands) |
| Derivatives subject to master netting agreements: | | | | | | | |
| Assets: | | | | | | | |
| Forward sale contracts | $ | 6,969 | | | $ | (4,886) | | | $ | (1,272) | | | $ | 811 | |
| Forward purchase contracts | 3,031 | | | (258) | | | (2,627) | | | 146 | |
| Interest rate swap and Treasury futures purchase contracts | 25,424 | | | (5,662) | | | — | | | 19,762 | |
| Liabilities: | | | | | | | |
| Forward sale contracts | (8,242) | | | 4,886 | | | 1,252 | | | (2,104) | |
| Forward purchase contracts | (281) | | | 258 | | | — | | | (23) | |
| Interest rate swap and Treasury futures purchase contracts | (5,662) | | | 5,662 | | | — | | | — | |
| Derivatives not subject to master netting agreements: | | | | | | | |
| Assets: | | | | | | | |
| Interest rate lock commitments | 29,887 | | | — | | | — | | | 29,887 | |
| Liabilities: | | | | | | | |
| Interest rate lock commitments | (2,843) | | | — | | | — | | | (2,843) | |
| Total derivatives | | | | | | | |
| Assets | $ | 65,311 | | | $ | (10,806) | | | $ | (3,899) | | | $ | 50,606 | |
| Liabilities | $ | (17,028) | | | $ | 10,806 | | | $ | 1,252 | | | $ | (4,970) | |
(1) Amounts disclosed for collateral received from or posted to the same counterparty includes cash up to and not exceeding the net amount of the derivative asset or liability presented in the balance sheet. The fair value of the total collateral received from or posted to the same counterparty may exceed the amounts presented. The amounts of collateral received from or posted to counterparty are presented as margin and included as a component of either Derivative assets or Other liabilities in the Balance Sheet.
For information on the determination of fair value, refer to Note 12 – Fair Value Measurements.
Note 6 – Accounts Receivable, net
The following presents principal categories of Accounts receivable, net:
| | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
| (dollars in thousands) |
| Pair off receivable | $ | 34,813 | | | $ | 3,738 | |
| Servicing sale receivable | 72,850 | | | 14,364 | |
Servicing advance receivable | 34,342 | | | 71,884 | |
Servicing advance reserve | (1,769) | | | (4,207) | |
| Agency receivable | 12,346 | | | 20,184 | |
Income tax receivable | 7,855 | | | 11,181 | |
Servicing receivable-general | 10,231 | | | 359 | |
| Warehouse receivable | 1,957 | | | 1,934 | |
Interest on servicing deposits | 262 | | | 464 | |
Other | 4,108 | | | 9,191 | |
Total | $ | 176,995 | | | $ | 129,092 | |
As part of managing the Company’s servicing advances, servicing advance reserve is recognized with management’s estimate of current expected losses and maintained at a level that management considers adequate based upon continuing assessments of collectability, historical loss experience, current trends, and reasonable and supportable forecasts.
The following presents changes to the servicing advance reserve:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (dollars in thousands) |
| Servicing advance reserve at beginning of period | $ | (2,875) | | | $ | (8,749) | | | $ | (4,207) | | | $ | (8,380) | |
| Additions | (8,705) | | | (881) | | | (16,222) | | | (2,224) | |
| Charge-offs | 9,811 | | | 532 | | | 18,660 | | | 1,506 | |
| Servicing advance reserve at end of period | $ | (1,769) | | | $ | (9,098) | | | $ | (1,769) | | | $ | (9,098) | |
Note 7 – Warehouse Lines of Credit
The Company maintains mortgage warehouse lines of credit arrangements with various financial institutions, primarily to fund the origination of mortgage loans. The Company held mortgage funding arrangements with 11 separate financial institutions with a total maximum borrowing capacity of $6.0 billion and $7.5 billion as of June 30, 2022 and December 31, 2021, respectively, which is primarily uncommitted. The Company had $4.1 billion and $2.8 billion of unused capacity under its warehouse lines of credit as of June 30, 2022 and December 31, 2021, respectively.
The following presents the amounts outstanding and maturity dates under the Company’s various mortgage funding arrangements:
| | | | | | | | | | | |
| Maturity Date | | June 30, 2022 |
| | (dollars in thousands) |
$350 million Warehouse Facility1 | August 2022 | | $ | 32,401 | |
$450 million Warehouse Facility | September 2022 | | 163,940 | |
$500 million Warehouse Facility | September 2022 | | 42,866 | |
$500 million Warehouse Facility | September 2022 | | 58,208 | |
$1,200 million Warehouse Facility | February 2023 | | 685,953 | |
$325 million Warehouse Facility | March 2023 | | 231,877 | |
$400 million Warehouse Facility | March 2023 | | 33,780 | |
$250 million Warehouse Facility2 | March 2023 | | 32,608 | |
$1,200 million Warehouse Facility | May 2023 | | 170,149 | |
$89 million Warehouse Facility | Evergreen | | 10,103 | |
$550 million Warehouse Facility | Evergreen | | 280,103 | |
| Gestation Warehouse Facility | Evergreen | | 168,407 | |
Early Funding4 | | | — | |
| Total | | | $ | 1,910,395 | |
(1)The capacity of this Warehouse Facility has been reduced from $700 million as of March 31, 2022 to $350 million as of June 30, 2022.
(2)The capacity of this Warehouse Facility has been reduced from $500 million as of March 31, 2022 to $250 million as of June 30, 2022.
| | | | | | | | | | | |
| Maturity Date5 | | December 31, 2021 |
| | (dollars in thousands) |
$1,200 million Warehouse Facility4 | February 2022 | | $ | 604,421 | |
$500 million Warehouse Facility4 | March 2022 | | 335,509 | |
$500 million Warehouse Facility4 | March 2022 | | 381,087 | |
$1,000 million Warehouse Facility | August 2022 | | 716,802 | |
$450 million Warehouse Facility | September 2022 | | 277,060 | |
$500 million Warehouse Facility | September 2022 | | 339,521 | |
$500 million Warehouse Facility | September 2022 | | 375,381 | |
$500 million Warehouse Facility | March 2023 | | 309,898 | |
$1,500 million Warehouse Facility | May 2023 | | 731,132 | |
$88.5 million Warehouse Facility | Evergreen | | 11,409 | |
$550 million Warehouse Facility | Evergreen | | 363,959 | |
| Gestation Warehouse Facility | Evergreen | | 179,360 | |
Early Funding3 | | | 93,119 | |
| Total | | | $ | 4,718,658 | |
(3)In addition to warehouse facilities, the Company is an approved lender for early funding facilities with Fannie Mae through its As Soon As Pooled (“ASAP”) program and Freddie Mac through its Early Funding (“EF”) program. From time to time, the Company enters into agreements to deliver certified pools of mortgage loans and receive funding in exchange for such pools. All mortgage loans delivered under these programs must adhere to a set of eligibility criteria. Early funding programs with Fannie Mae and Freddie Mac do not have stated expiration dates or maximum capacities.
(4)Maturity Dates in this table are as of December 31, 2021. These Warehouse Facilities have been renewed as reflected in the table above.
The Company’s warehouse facilities’ variable interest rates are calculated using an index rate generally tied to either (a) 1-month LIBOR or (b) a Secured Overnight Financing Rate (“SOFR”); plus applicable interest rate margins, with varying index interest and interest rate margin floors. The weighted average interest rate for the Company’s warehouse facilities was 2.44% and 2.36% as of June 30, 2022 and December 31, 2021, respectively. The Company’s borrowings are 100% secured by MLHS at fair value.
The Company’s warehouse facilities require the maintenance of certain financial covenants relating to net worth, profitability, liquidity, and ratio of indebtedness to net worth among others. The Company’s warehouse lines that contain profitability covenants were amended to allow for a net loss for the three months ended June 30, 2022. The Company was in compliance with all warehouse facility covenants as of June 30, 2022.
The Company continually evaluates its warehouse capacity in relation to expected financing needs.
Note 8 – Term Debt and Other Borrowings, net
The following presents the Company’s term debt and other borrowings, net:
| | | | | | | | | | | | | | | | | | | | | | | |
| Maturity Date | | Collateral | | June 30, 2022 | | December 31, 2021 |
| | | | | (dollars in thousands) |
$1.0 billion MSR Facility | May 2025 | | MSRs | | $ | 355,000 | | | $ | 685,000 | |
$550 million Senior Notes1 | February 2026 | | Unsecured | | 500,000 | | | 550,000 | |
$85 million Servicing Advance Facility2 | May 2023 | | Servicing Advances | | — | | | 3,250 | |
$35 million Operating Line of Credit | May 2023 | | Mortgage loans | | 1,000 | | | 1,000 | |
| Gross | | | | | 856,000 | | | 1,239,250 | |
| Debt issuance costs | | | | | (10,469) | | | (12,726) | |
| Total | | | | | $ | 845,531 | | | $ | 1,226,524 | |
(1)The Company repurchased and retired $50 million Senior Notes during the six months ended June 30, 2022.
(2)Effective June 9, 2022, the capacity of the Servicing Advance Facility has been reduced from $90 million to $85 million.
The Company maintains a $1.0 billion MSR financing facility (the “MSR Facility”). On April 29, 2022, the Company entered into an amendment to the MSR facility that, among other things, reduced the committed capacity from $650.0 million to $500.0 million. The amendment also replaced the LIBOR based interest rate with SOFR, plus the applicable interest rate margin, with advance rates generally ranging from 62.5% to 72.5% of the value of the underlying MSRs. The MSR Facility is collateralized by the Company’s FNMA, FHLMC, and GNMA MSRs. The MSR Facility has a three-year revolving period ending on May 4, 2024 followed by a one-year period during which the balance drawn must be repaid and no further amounts may be drawn down, which ends on May 20, 2025. The MSR Facility requires the maintenance of certain financial covenants relating to net worth, liquidity, and indebtedness of the Company. As of June 30, 2022, the Company was in compliance with all covenants under the MSR Facility.
In January 2021, the Company issued $550.0 million aggregate principal amount of its 5.0% Senior Notes due 2026 (the “Senior Notes”) in a private placement transaction. The Senior Notes are guaranteed on a senior unsecured basis by each of the Company’s wholly owned subsidiaries existing on the date of issuance, other than HPAM and HPMAC. The Senior Notes bear interest at a rate of 5.0% per annum, payable semi-annually in arrears. The Senior Notes will mature on February 1, 2026. The Company repurchased and retired $50 million Senior Notes during the three and six months ended June 30, 2022.
The Indenture governing the Senior Notes contains covenants and restrictions that, among other things and subject to certain exceptions, limit the ability of the Company and its restricted subsidiaries to (i) incur additional debt or issue certain preferred shares; (ii) incur liens; (iii) make certain distributions, investments, and other restricted payments; (iv) engage in certain transactions with affiliates; and (v) merge or consolidate or sell, transfer, lease, or otherwise dispose of all or substantially all of their assets.
The Company has a $85.0 million servicing advance facility which is collateralized by all of the Company’s servicing advances. The facility carries an interest rate of 1-month LIBOR plus a margin and an advance rate ranging from 85.0-95.0%. The servicing advance facility requires the maintenance of certain financial covenants relating to net worth, liquidity, and indebtedness of the Company. As of June 30, 2022, the Company was in compliance with all covenants under the servicing advance facility.
The Company also has a $35.0 million operating line, with an interest rate based on the Prime Rate.
The Company had total available capacity of $468.1 million and $28.8 million for its MSR Facility and servicing advance facility, respectively as of June 30, 2022. The Company has no available capacity for its operating line of credit as of June 30, 2022.
Note 9 – Commitments and Contingencies
Commitments to Extend Credit
The Company’s Interest rate lock commitments (“IRLCs”) expose the Company to market risk if interest rates change and the loan is not economically hedged or committed to an investor. The Company is also exposed to credit loss if the loan is originated and not sold to an investor and the customer does not perform. The collateral upon extension of credit typically consists of a first deed of trust in the mortgagor’s residential property. Commitments to originate loans do not necessarily reflect future cash requirements as some commitments are expected to expire without being drawn upon. Total commitments to originate loans were $3.3 billion and $6.1 billion as of June 30, 2022 and December 31, 2021, respectively.
Litigation
The Company is subject to various legal proceedings arising out of the ordinary course of business. There were no current or pending claims against the Company which are expected to have a material impact on the Company's condensed consolidated balance sheets, statements of operations, or cash flows.
Regulatory Contingencies
The Company is subject to periodic audits and examinations, both formal and informal in nature, from various federal and state agencies, including those conducted as part of regulatory oversight of our mortgage origination, servicing, and financing activities. Such audits and examinations could result in additional actions, penalties, or fines by state or federal governmental bodies, regulators, or the courts with respect to our mortgage origination, servicing, and financing activities, which may be applicable generally to the mortgage industry or to the Company in particular. The Company did not pay any material penalties or fines during the six months ended June 30, 2022 and 2021 and is not currently required to pay any such penalties or fines.
Note 10 – Regulatory Net Worth Requirements
The Company is subject to various regulatory capital requirements administered by the Department of Housing and Urban Development (“HUD”), which govern non-supervised, direct endorsement mortgagees. The Company is also subject to regulatory capital requirements administered by Ginnie Mae, Fannie Mae, and Freddie Mac, which govern issuers of Ginnie Mae, Fannie Mae, and Freddie Mac securities. Additionally, the Company is required to maintain minimum net worth requirements; these range from $0 to $1.0 million depending on the state.
Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary remedial actions by regulators that, if undertaken, could (i) remove the Company’s ability to sell and service loans to, or on behalf of, the Agencies and (ii) have a direct material effect on the Company’s condensed consolidated financial statements. In accordance with the regulatory capital guidelines, the Company must meet specific quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Changes in regulatory and accounting standards, as well as the impact of future events on the Company’s results, may significantly affect the Company’s net worth adequacy.
The Company is subject to the following minimum net worth, minimum capital ratio, and minimum liquidity requirements established by the Federal Housing Finance Agency for Fannie Mae and Freddie Mac Seller/Servicers, and Ginnie Mae for single family issuers:
Minimum Net Worth
The minimum net worth requirement for Fannie Mae and Freddie Mac is defined as follows:
•Base Adjusted/Tangible Net Worth (as defined by HUD) of $2.5 million plus 25 basis points of outstanding UPB for total loans serviced.
•Adjusted/Tangible Net Worth, as defined by HUD, is comprised of total equity less goodwill, intangible assets, affiliate receivables, deferred tax assets, prepaid expenses, and certain pledged assets.
The minimum net worth requirement for Ginnie Mae is defined as follows:
•Base Adjusted/Tangible Net Worth (as defined by HUD) of $2.5 million plus 35 basis points of the issuer’s total single-family effective outstanding obligations.
•Adjusted/Tangible Net Worth, as defined by HUD, is comprised of total equity less goodwill, intangible assets, affiliate receivables, deferred tax assets, prepaid expenses, and certain pledged assets.
Minimum Capital Ratio
For Fannie Mae, Freddie Mac, and Ginnie Mae, the Company is also required to hold a ratio of Adjusted/Tangible Net Worth to Total Assets greater than 6.0%.
Minimum Liquidity
The minimum liquidity requirement for Fannie Mae and Freddie Mac is defined as follows:
•3.5 basis points of total Agency servicing.
•Incremental 200 basis points of total nonperforming Agency servicing, measured as 90 plus day delinquencies, in excess of 6.0% of the total Agency servicing UPB.
•Allowable assets for liquidity may include: cash and cash equivalents (unrestricted); available for sale or held for trading investment grade securities (e.g., Agency MBS, Obligations of GSEs, US Treasury Obligations); and unused/available portion of committed servicing advance lines.
The minimum liquidity requirement for Ginnie Mae is defined as follows:
•Maintain liquid assets equal to the greater of $1.0 million or 10 basis points of the Company’s outstanding single-family MBS.
The most restrictive of the minimum net worth and capital requirements require the Company to maintain a minimum adjusted net worth balance of $218.5 million and $326.3 million as of June 30, 2022 and December 31, 2021, respectively.
The Company is in compliance with all minimum requirements to which it was subject as of June 30, 2022.
Note 11 – Representation and Warranty Reserve
Certain of the Company’s loan sale contracts include provisions requiring the Company to repurchase a loan if a borrower fails to make certain initial loan payments due to the acquirer or if the accompanying mortgage loan fails to meet customary representations and warranties. The Company has included considerations that it may receive relief of certain representations and warranty obligations on loans sold to FNMA or FHLMC on or after January 1, 2013 if FNMA or FHLMC satisfactorily concludes a quality control loan file review or if the borrower meets certain acceptable payment history requirements within 12 or 36 months after the loan is sold to FNMA or FHLMC, respectively. The current UPB of loans sold by the Company represents the maximum potential exposure to repurchases related to representations and warranties. Reserve levels are a function of expected losses based on historical experience and loan volume. While the amount of repurchases is uncertain, the Company considers the liability to be appropriate.
The following presents the activity of the outstanding repurchase reserve:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (dollars in thousands) |
Repurchase reserve at beginning of period | $ | 24,918 | | | $ | 23,810 | | | $ | 24,577 | | | $ | 18,080 | |
Additions | 38,467 | | | 4,411 | | | 42,418 | | | 11,004 | |
Charge-offs | (25,084) | | | (320) | | | (28,694) | | | (1,183) | |
Repurchase reserve at end of period | $ | 38,301 | | | $ | 27,901 | | | $ | 38,301 | | | $ | 27,901 | |
Note 12 – Fair Value Measurements
The Company uses fair value measurements to record certain assets and liabilities at fair value on a recurring basis, such as MSRs, derivatives, MLHS and Early buyout loans (“EBOs”). The Company has elected fair value accounting for loans held for sale and MSRs to more closely align the Company’s accounting with its interest rate risk strategies without having to apply the operational complexities of hedge accounting.
The Company uses a three-level fair value hierarchy that categorizes assets and liabilities measured at fair value based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:
| | | | | | | | |
| Level Input: | | Input Definition: |
| | |
| Level 1 | | Unadjusted, quoted prices in active markets for identical assets or liabilities. |
| | |
| Level 2 | | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing an asset or liability and are developed based on market data obtained from sources independent of the Company. These may include quoted prices for similar assets and liabilities, interest rates, prepayment speeds, credit risk and others. |
| | |
| Level 3 | | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity), unobservable inputs may be used. Unobservable inputs reflect the Company's own assumptions about the factors that market participants would use in pricing the asset or liability and are based on the best information available in the circumstances. |
An asset or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
While the Company believes its valuation methods are appropriate and consistent with those used by other market participants, the use of different methods or assumptions to estimate the fair value of certain financial statement items could result in a different estimate of fair value at the reporting date. Those estimated values may differ significantly from the values that would have been used had a readily available market for such items existed, or had such items been liquidated, and those differences could be material to the financial statements.
Fair Value of Certain Assets and Liabilities
The following describes the methods used in estimating the fair values of certain assets and liabilities:
Mortgage loans held for sale. The majority of the Company's MLHS at fair value are saleable into the secondary mortgage markets and their fair values are estimated using observable quoted market or contracted prices or market price equivalents, which would be used by other market participants. These saleable loans are considered Level 2. A smaller portion of the Company's MLHS consist of loans repurchased from the Government-Sponsored Enterprises (“GSEs”) that have subsequently been deemed to be non-saleable to GSEs and Ginnie Mae when certain representations and warranties are breached. These loans, however, are saleable to other entities and are classified on the consolidated balance sheets as Mortgage loans held for sale. These repurchased loans are considered Level 3 and are valued based on recent sales prices of similar loans.
Interest rate lock commitments. The Company estimates the fair value of IRLCs based on the value of the underlying mortgage loan, quoted MBS prices and estimates of the fair value of the MSRs and the probability that the mortgage loan will fund within the terms of the interest rate lock commitment. The average pull-through rate for IRLCs was 81.0% and 86.1% as of June 30, 2022 and December 31, 2021, respectively. Given the significant and unobservable nature of the pull-through factor, IRLCs are classified as Level 3.
Forward sales and purchase commitments. The Company treats forward mortgage-backed securities purchase and sale commitments that have not settled as derivatives and recognizes them at fair value. These forward commitments will be fulfilled with loans not yet sold or securitized and new originations and purchases. The forward commitments allow the Company to reduce the risk related to market price volatility. The Company estimates the fair value of forward commitments based on quoted MBS prices. These derivatives are classified as Level 2.
Interest rate swap futures contracts. The Company uses options on swap contracts to offset changes in the fair value of MSRs. The Company estimates the fair value of these MSR-related derivatives using quoted prices for similar instruments. These derivatives are classified as Level 2.
Treasury futures purchase contracts. The Company uses Treasury futures contracts to offset changes in the fair value of MSRs. The Company estimates fair value of these MSR-related derivatives using quoted market prices. These derivatives are classified as Level 1.
Mortgage Servicing Rights: The Company uses a discounted cash flow approach to estimate the fair value of MSRs. This approach consists of projecting servicing cash flows discounted at a rate that management believes market participants would use in their determinations of value. The Company obtains valuations from an independent third party on a quarterly basis to support the reasonableness of the fair value estimate. Key assumptions used in measuring the fair value of MSRs include, but are not limited to, discount rates and prepayment speeds. Other assumptions such as delinquencies, and cost to service are also considered resulting in a Level 3 classification.
The following presents the major categories of assets and liabilities measured at fair value on a recurring basis:
| | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2022 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| (dollars in thousands) |
Assets: | | | | | | | |
Mortgage loans held for sale | $ | — | | | $ | 2,004,714 | | | $ | 13,926 | | | $ | 2,018,640 | |
| Interest rate lock commitments | — | | | — | | | 22,622 | | | 22,622 | |
| Forward sale contracts | — | | | 13,718 | | | — | | | 13,718 | |
| Forward purchase contracts | — | | | 77 | | | — | | | 77 | |
| Treasury futures purchase contracts | 2,121 | | | — | | | — | | | 2,121 | |
Mortgage servicing rights | — | | | — | | | 1,419,105 | | | 1,419,105 | |
Total | $ | 2,121 | | | $ | 2,018,509 | | | $ | 1,455,653 | | | $ | 3,476,283 | |
| Liabilities: | | | | | | | |
| Interest rate lock commitments | $ | — | | | $ | — | | | $ | 6,375 | | | $ | 6,375 | |
| Forward sale contracts | — | | | 14,434 | | | — | | | 14,434 | |
| Forward purchase contracts | — | | | 3,741 | | | — | | | 3,741 | |
| Treasury futures purchase contracts | 698 | | | — | | | — | | | 698 | |
| Total | $ | 698 | | | $ | 18,175 | | | $ | 6,375 | | | $ | 25,248 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2021 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| (dollars in thousands) |
Assets: | | | | | | | |
Mortgage loans held for sale | $ | — | | | $ | 5,086,943 | | | $ | 20,218 | | | $ | 5,107,161 | |
| Interest rate lock commitments | — | | | — | | | 29,887 | | | 29,887 | |
| Forward sale contracts | — | | | 6,969 | | | — | | | 6,969 | |
| Forward purchase contracts | — | | | 3,031 | | | — | | | 3,031 | |
| Interest rate swap futures contracts | — | | | 111 | | | — | | | 111 | |
| Treasury futures purchase contracts | 25,313 | | | — | | | — | | | 25,313 | |
Mortgage servicing rights | — | | | — | | | 1,525,103 | | | 1,525,103 | |
Total | $ | 25,313 | | | $ | 5,097,054 | | | $ | 1,575,208 | | | $ | 6,697,575 | |
| Liabilities: | | | | | | | |
| Interest rate lock commitments | $ | — | | | $ | — | | | $ | 2,843 | | | $ | 2,843 | |
| Forward sale contracts | — | | | 8,242 | | | — | | | 8,242 | |
| Forward purchase contracts | — | | | 281 | | | — | | | 281 | |
| Interest rate swap futures contracts | — | | | 5,662 | | | — | | | 5,662 | |
| Total | $ | — | | | $ | 14,185 | | | $ | 2,843 | | | $ | 17,028 | |
The following presents a reconciliation of Level 3 assets measured at fair value on a recurring basis:
| | | | | | | | | | | | | | | | | |
| MSRs | | IRLC | | MLHS |
| (dollars in thousands) |
Balance at January 1, 2022 | $ | 1,525,103 | | | $ | 29,887 | | | $ | 20,218 | |
Purchases, sales, issuances, contributions, and settlements | (262,915) | | | — | | | (1,564) | |
Change in fair value | 228,036 | | | (17,746) | | | (52) | |
Transfers out(1) | — | | | — | | | (826) | |
Balance at March 31, 2022 | $ | 1,490,224 | | | $ | 12,141 | | | $ | 17,776 | |
Purchases, sales, issuances, contributions, and settlements | (110,125) | | | — | | | (1,147) | |
Change in fair value | 39,006 | | | 10,481 | | | (1,261) | |
Transfers out(1) | — | | | — | | | (1,442) | |
Balance at June 30, 2022 | $ | 1,419,105 | | | $ | 22,622 | | | $ | 13,926 | |
| | | | | | | | | | | | | | | | | |
| MSRs | | IRLC | | MLHS |
| (dollars in thousands) |
Balance at January 1, 2021 | $ | 748,457 | | | $ | 257,785 | | | $ | 44,374 | |
Purchases, sales, issuances, contributions, and settlements | 299,174 | | | — | | | 41 | |
Change in fair value | 108,726 | | | (237,592) | | | (247) | |
Transfers out(1) | — | | | — | | | 1,410 | |
Balance at March 31, 2021 | $ | 1,156,357 | | | $ | 20,193 | | | $ | 45,578 | |
Purchases, sales, issuances, contributions, and settlements | 283,333 | | | — | | | 415 | |
Change in fair value | (172,437) | | | 36,271 | | | (517) | |
Transfers out(1) | — | | | — | | | — | |
Balance at June 30, 2021 | $ | 1,267,253 | | | $ | 56,464 | | | $ | 45,476 | |
(1)Transfers in (out) represents transfers between Levels 2 and 3, and reclassifications to Real estate owned (“REO”), foreclosure or claims.
The following presents the fair value and UPB of MLHS that have contractual principal amounts and for which the Company has elected the fair value option. The fair value option was elected for mortgage loans held for sale as the Company believes fair value best reflects its expected future economic performance:
| | | | | | | | | | | | | | | | | |
| Fair Value | | Principal
Amount Due
Upon Maturity | | Difference(1) |
| (dollars in thousands) |
| June 30, 2022 | $ | 2,018,640 | | | $ | 2,031,027 | | | $ | (12,387) | |
| December 31, 2021 | $ | 5,107,161 | | | $ | 5,005,069 | | | $ | 102,092 | |
(1)Represents the amount of (losses) gains related to changes in fair value of items accounted for using the fair value option included in Gain on loans, net within the condensed consolidated statements of operations.
The Company had no significant assets or liabilities measured at fair value on a nonrecurring basis as of June 30, 2022 and December 31, 2021, respectively.
The following is a summary of the key unobservable inputs used in the valuation of the Level 3 assets:
| | | | | | | | | | | | | | | | | |
| June 30, 2022 |
Assets: | Key Input | | Range | | Weighted
Average |
Mortgage servicing rights | Discount rate | | 7.7% - 12.2% | | 7.9% |
| Prepayment speeds | | 5.2% - 7.9% | | 6.4% |
| Interest rate lock commitments | Pull-through rate | | 44% - 100% | | 81.0% |
Mortgage loans held for sale | Investor pricing | | 70.0% - 101.1% | | 83.2% |
| | | | | | | | | | | | | | | | | |
| December 31, 2021 |
Assets: | Key Input | | Range | | Weighted
Average |
Mortgage servicing rights | Discount rate | | 8.6% - 12.2% | | 8.7% |
| Prepayment speeds | | 6.9% - 11.6% | | 8.3% |
| Interest rate lock commitments | Pull-through rate | | 49.8% - 100.0% | | 86.1% |
Mortgage loans held for sale | Investor pricing | | 70.0% - 104.1% | | 91.3% |
Fair Value of Other Financial Instruments: All financial instruments were either recorded at fair value or the carrying value approximated fair value as of June 30, 2022 and December 31, 2021. For financial instruments that were not recorded at fair value, such as cash and cash equivalents, restricted cash, servicing advances, warehouse and operating lines of credit, accounts payable, and accrued expenses, their carrying values approximated fair value due to the short-term nature of such instruments. The Senior Notes had a carrying value of $500.0 million and $550.0 million and an estimated fair value of $345.4 million and $506.4 million as of June 30, 2022 and December 31, 2021, respectively. For the Company’s other long-term secured borrowings not recorded at fair value, the carrying value approximated fair value due to the variable interest rate on the borrowings and the re-repricing of collateral.
Note 13 – Equity-based Compensation
On January 21, 2021, the Company’s board of directors (the “Board”) approved the adoption of the Company’s 2021 Incentive Plan (“2021 Plan”) and designated 6.9 million shares of the Company’s authorized common stock available for equity-based awards thereunder. The 2021 Plan allows for the assumption and substitution of outstanding options to purchase common units of HPLP granted under the Home Point Capital LP (“HPLP”) 2015 Option Plan (the “2015 Option Plan”), which was in place prior to the Company’s IPO. The expiration date of the 2021 Plan is the tenth (10th) anniversary of the effective date of the 2021 Plan, which is January 21, 2031. The 2021 Plan contains both time-vesting service criteria and performance based vesting terms, which are based on the achievement of specified performance criteria outlined in the underlying award agreement.
Prior to the consummation of the merger in connection with the IPO, the 2015 Option Plan governed awards of stock options to key persons conducting business for HPLP and its direct and indirect subsidiaries, including the Company. The 2015 Option Plan allowed awards in the form of options that are exercisable into common units of HPLP. In connection with the IPO, all outstanding options under the 2015 Option Plan were canceled and “substitute options” were granted under the 2021 Plan. The exercise price and number of shares of common stock of the substitute options result in the same (subject to rounding) intrinsic value as the outstanding options granted under the 2015 Option Plan.
Restricted Stock Units
Restricted stock units (“RSUs”) are awards that represent the potential to receive shares of the Company’s common stock at the end of the applicable vesting period, subject to the terms and conditions of the 2021 Plan and the applicable award documents. RSUs awarded under the 2021 Plan are fair valued based upon the fair market value of the Company’s common stock on the grant date. Any person who holds RSUs has no ownership interest in the shares of the Company’s common stock to which such RSUs relate until and unless shares of common stock are delivered to the holder. The RSUs will be credited with dividend equivalent payments, as provided in Section 13(c)(iii) of the 2021 Plan.
The following presents the summary of the Company’s RSU activity:
| | | | | | | | | | | |
| Six Months Ended June 30, 2022 |
| Units | | Weighted
Average
Grant Date Fair Value |
| Outstanding at beginning of period | 367,991 | | | $ | 10.18 | |
| Granted | 233,550 | | | 3.85 | |
| Vested | (209,093) | | | 10.75 | |
| Outstanding at end of period | 392,448 | | | $ | 6.12 | |
The RSUs granted to the Company’s management team will vest in equal annual installments over a three-year period subject to the participants’ continued employment with the Company. The RSUs granted to the non-management members of the Company’s Board who are not affiliated with Stone Point Capital LLC vest at the next annual meeting of stockholders following the grant date. The Company recognized $0.6 million and $1.1 million of compensation expense related to RSUs within Compensation and benefits expense on the consolidated statement of operations for the three and six months ended June 30, 2022, respectively. The Company recognized $0.4 million and $0.6 million of compensation expense related to RSUs for the three and six months ended June 30, 2021, respectively.
Performance Stock Units
Performance stock units (“PSUs”) are fair valued on the date of grant and expensed over the service period using a straight-line method as the awards cliff vest at the end of a three-year performance period. The Company also estimates the number of shares expected to vest, which is based on management’s determination of the probable outcome of the Performance Condition (as defined below), which requires considerable judgment. The Company records a cumulative adjustment in periods in which the Company’s estimate of the number of shares expected to vest changes. Additionally, the Company ultimately adjusts the expense recognized to reflect the actual vested shares following the resolution of the Performance Condition. The PSUs will become earned based on the level of achievement of the Company’s average return on equity over a three-year performance period (the “Performance Condition”). The number of earned PSUs can range from 0% to 150% of the number of PSUs granted, depending on continued service with the Company and the extent to which the Performance Condition has been achieved at the end of the performance period. The PSUs will be credited with dividend equivalent payments, as provided in Section 13(c)(iii) of the 2021 Plan.
The following table presents the summary of the Company’s PSU activity:
| | | | | | | | | | | |
| Six Months Ended June 30, 2022 |
| Units | | Weighted-Average Grant Date Fair Value |
| Outstanding at beginning of period | 238,347 | | | $ | 9.44 | |
| Granted | 131,924 | | | 3.79 | |
| Outstanding at end of period | 370,271 | | | $ | 7.43 | |
The Company did not recognize any compensation expense related to PSUs for the three and six months ended June 30, 2022 and 2021.
Stock Option Awards
The Company recognizes compensation expense associated with the stock option grants using the straight-line method over the requisite service period. The Company recognized $0.8 million and $2.1 million of compensation expense related to stock options within Compensation and benefits expense on the condensed consolidated statements of operations for the three and six months ended June 30, 2022, respectively, and $1.3 million and $2.9 million for the three and six months ended June 30, 2021, respectively. The unrecognized compensation expense related to outstanding and unvested stock options was $65.3 million as of June 30, 2022, which is expected to vest and get recognized over a weighted-average period of 5.96 years. The number of options vested and exercisable was 2,265,344 and the weighted-average exercise price of the options exercisable was $3.85 as of June 30, 2022.
The following presents the summary of the Company’s stock option activity under the 2021 Plan:
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2022 |
| Number of
Shares | | Weighted
Average
Exercise
Price | | Weighted
Average
Contractual
Life (Years) | | Weighted
Average
Grant Date
Fair Value |
| Outstanding at beginning of period | 11,751,031 | | | $ | 4.45 | | | 6.87 | | $ | 8.38 | |
| Granted | 337,043 | | | 1.81 | | | 4.09 | | 9.79 | |
| Exercised | (188,914) | | | 1.86 | | | 3.26 | | 9.81 | |
| Forfeited | (255,340) | | | 1.86 | | | 1.17 | | 9.72 | |
| Expired | (45,028) | | | 1.74 | | | — | | | 9.45 | |
| Outstanding at end of period | 11,598,792 | | | $ | 4.48 | | | 6.18 | | $ | 8.35 | |
The following presents the summary of the Company’s non-vested activity under the 2021 Plan:
| | | | | | | | | | | |
| Six Months Ended June 30, 2022 |
| Number of Shares | | Weighted Average Grant Date Fair Value |
| Non-vested at beginning of period | 9,627,033 | | | $ | 8.19 | |
| Granted | 337,043 | | | 9.79 | |
Vested | (141,346) | | | 8.77 | |
| Exercised | (188,914) | | | 9.81 | |
| Forfeited | (255,340) | | | 9.72 | |
| Expired | (45,028) | | | 9.45 | |
| Non-vested at end of period | 9,333,448 | | | $ | 8.25 | |
The following presents assumptions used in the Black-Scholes option valuation model to determine the weighted-average fair value per stock option granted:
| | | | | |
| | June 30, 2022 |
| Expected life (in years) | 8.25 |
| Risk-free interest rate | 0 - 3.0% |
| Expected volatility | 24.9% |
| Dividend yield | 8.4% |
The expected life of each stock option is estimated based on its vesting and contractual terms. The risk-free interest rate reflected the yield on zero-coupon Treasury securities with a term approximating the expected life of the stock options. The expected volatility was based on an analysis of the historical volatilities of peer companies, adjusted for certain characteristics specific to the Company. The Company applied an estimated forfeiture rate of 0%-10.4% as of June 30, 2022 and December 31, 2021.
Note 14 – Earnings Per Share
(Loss) earnings per share (“EPS”) is calculated and presented in the consolidated financial statements for both basic and diluted earnings per share. Basic EPS excludes all dilutive common stock equivalents and is calculated by dividing the net income available to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted EPS, as calculated using the treasury stock method, reflects the potential dilution that would occur if the Company’s dilutive outstanding stock options and stock awards were issued and exercised.
The following presents the calculation of the basic and diluted (loss) earnings per share:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (dollars in thousands, except share and per share amounts ) |
| Net (loss) income | $ | (44,417) | | | $ | (73,213) | | | $ | (32,553) | | | $ | 75,756 | |
| | | | | | | |
| Numerator: | | | | | | | |
| Net (loss) income attributable to common shareholders | $ | (44,417) | | | $ | (73,213) | | | $ | (32,553) | | | $ | 75,756 | |
| Net (loss) income attributable to Home Point - diluted | $ | (44,417) | | | $ | (73,213) | | | $ | (32,553) | | | $ | 75,756 | |
| | | | | | | |
| Denominator (in thousands): | | | | | | | |
| Weighted average shares of common stock outstanding - basic | 138,459 | | | 138,953 | | | 138,885 | | | 139,019 | |
| Dilutive effect of common stock equivalents | — | | | — | | | — | | | 1,221 | |
| Weighted average shares of common stock outstanding - diluted | 138,459 | | | 138,953 | | | 138,885 | | | 140,240 | |
| | | | | | | |
| (Loss) earnings per share of common stock outstanding - basic | $ | (0.32) | | | $ | (0.53) | | | $ | (0.23) | | | $ | 0.54 | |
| (Loss) earnings per share of common stock outstanding - diluted | $ | (0.32) | | | $ | (0.53) | | | $ | (0.23) | | | $ | 0.54 | |
| | | | | | | |
As a result of the net loss from continuing operations for the three and six months ended June 30, 2022 and three months ended June 30, 2021, the effect of certain dilutive securities was excluded from the computation of weighted average diluted shares outstanding, as inclusion would have resulted in antidilution. Inclusion of these securities would not impact the disclosed EPS amounts.
Note 15 – Shareholders’ Equity and Equity Method Investment
Common Stock Repurchases
On February 24, 2022, the Company’s Board approved the repurchase of shares of the Company’s common stock, par value $0.0000000072 per share (the “Common Stock”), in an aggregate amount not to exceed $8.0 million, from time to time through and including December 31, 2022 (the “Stock Repurchase Program”). Repurchases under the Stock Repurchase Program may be made from time to time pursuant to one or more plans adopted under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The Company repurchased 718,106 and 1,179,796 shares of Common Stock at an aggregate price of $2.3 million and $3.8 million, including commissions and fees, through market purchase transactions under the Stock Repurchase Program during the three and six months ended June 30, 2022, respectively. Shares repurchased under the program have been subsequently retired.
Equity Method Investment
The Company holds an equity method investment in Longbridge Financial, LLC (“Longbridge”) through a 49.6% voting ownership interest, which is the only equity method investment held by the Company. The investment was initially recognized at cost and is adjusted for HPC’s share of Longbridge’s earnings or losses, contributions or distributions. HPC had a net investment of $50.7 million and $63.7 million in Longbridge as of June 30, 2022 and December 31, 2021, respectively. The Company entered into a definitive agreement in February of 2022 to sell its investment in Longbridge, subject to customary closing adjustments (the “Longbridge Transaction”). The Longbridge Transaction is subject to the satisfaction of closing conditions, including regulatory approvals and notices, which have not yet been satisfied. The Company’s investment in Longbridge is classified as Assets Held for Sale as of June 30, 2022 and December 31, 2021.
The following presents condensed financial information of Longbridge:
| | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
| (dollars in thousands) |
| Total assets | $ | 7,547,293 | | | $ | 6,727,807 | |
| Total liabilities | 7,455,460 | | | 6,604,351 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (dollars in thousands) |
| Revenue | $ | (73,766) | | | $ | 61,700 | | | $ | (131,507) | | | $ | 100,236 | |
| Net (loss) income | (24,014) | | | 19,186 | | | (34,665) | | | 31,712 | |
| Net (loss) income attributable to the Company | (9,144) | | | 13,198 | | | (14,416) | | | 17,361 | |
Note 16 – Income Taxes
The Company’s effective income tax rate was 28.6% and 35.1% for the three and six months ended June 30, 2022, respectively and 23.9% and 28.2% for the three and six months ended June 30, 2021, respectively, compared to the statutory rate of 21.0%. The Company calculated the provision for income taxes by applying the estimated annual effective tax rate to year-to-date pre-tax income and adjusted for discrete items that occurred during the period. Several factors influence the effective tax rate, including the impact of equity investment, state taxes, and permanent disallowed deductions for tax such as officer's compensation limitations applicable to a public entity, equity-based compensation, and non-deductible transaction costs.
Note 17 – Segments
Management has organized the Company into two reportable segments based primarily on its services as follows: (1) Origination and (2) Servicing. Each reportable segment has discrete financial information evaluated regularly by the chief operating decision maker (“CODM”) in monitoring performance, allocating capital and making strategic and operational decisions that align with the Company and its internal operations. The Origination segment consists of a combination of retail and third-party loan production options. The Servicing segment performs loan servicing for both newly originated loans the Company is holding for sale and loans the Company services for others.
Origination
In the Origination segment, the Company originates residential real estate mortgage loans in the U.S. through the consumer direct third party originations, and prior to its sale, which was completed on June 1, 2022, the correspondent channel. The Company’s origination channels offer a variety of loan programs that support the financial needs of the borrowers. In each of the channels, the Company’s primary source of revenue is the difference between the cost of originating or purchasing the loan and the price at which the loan is sold to investors as well as the fair value of originated MSRs and hedging gains and losses. Loan origination fees and interest income earned on loans held for sale or securitization are also included in the revenue for this segment.
Servicing
In the Servicing segment, the Company generates revenue through contractual fees earned by performing daily administrative and management activities for mortgage loans. These activities include collecting loan payments, remitting payments to investors, sending monthly statements, managing escrow accounts, servicing delinquent loan work-outs, and managing and disposing of foreclosed properties. Servicing of the Company’s customers was primarily conducted in-house as of June 30, 2022. In February 2022, the Company entered into an agreement with ServiceMac, LLC (“ServiceMac”), a wholly owned subsidiary of First American Financial Corporation, pursuant to which ServiceMac will subservice all mortgage loans underlying the Company’s MSRs. ServiceMac began subservicing loans for the Company in the second quarter of 2022.
Other Information About the Company’s Segments
The Company's CODM evaluates performance, makes operating decisions, and allocates resources based on the Company's contribution margin. Contribution margin is the Company’s measure of profitability for its two reportable segments. Contribution margin is defined as revenue from Gain on loans, net, Loan fee income, Loan servicing fees, Change in fair value of MSRs, Interest income, and Other income (which includes Income from equity method investment) adjusted for the change in fair value attributable to valuation assumptions of MSRs and less directly attributable expenses. Directly attributable expenses include salaries, commissions and associate benefits, general and administrative expenses, and other expenses, such as servicing and origination costs. Direct operating expenses driven by the activities of the segments are included in the respective segments.
The Company does not allocate assets to its reportable segments as they are not included in the review performed by the CODM for purposes of assessing segment performance and allocating resources. The balance sheet is managed on a consolidated basis and is not used in the context of segment reporting. Additionally, the Company does not enter into transactions between its reportable segments.
The Company also reports an “All Other” category that includes unallocated corporate expenses, such as IT, finance, and human resources. These operations are neither significant individually or in aggregate and therefore do not constitute a reportable segment.
The following presents the key operating data for our business segments:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2022 |
| Origination | | Servicing | | Segments
Total | | All Other | | Total | | Reconciling Item(1) | | Total
Consolidated |
| (dollars in thousands) |
| Revenue: | | | | | | | | | | | | | |
| Gain on loans, net | $ | 13,234 | | | $ | — | | | $ | 13,234 | | | $ | — | | | $ | 13,234 | | | $ | — | | | $ | 13,234 | |
| Loan fee income | 15,255 | | | — | | | 15,255 | | | — | | | 15,255 | | | — | | | 15,255 | |
| Loan servicing fees | — | | | 62,872 | | | 62,872 | | | — | | | 62,872 | | | — | | | 62,872 | |
| Change in fair value of mortgage servicing rights | — | | | (29,887) | | | (29,887) | | | — | | | (29,887) | | | — | | | (29,887) | |
| Interest income (expense), net | 8,641 | | | 1,429 | | | 10,070 | | | (11,457) | | | (1,387) | | | — | | | (1,387) | |
| Other income | 55 | | | — | | | 55 | | | 722 | | | 777 | | | 9,144 | | | 9,921 | |
| Total | $ | 37,185 | | | $ | 34,414 | | | $ | 71,599 | | | $ | (10,735) | | | $ | 60,864 | | | $ | 9,144 | | | $ | 70,008 | |
| Contribution margin | $ | (29,857) | | | $ | 20,023 | | | $ | (9,834) | | | $ | (48,704) | | | $ | (58,538) | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2022 |
| Origination | | Servicing | | Segments
Total | | All Other | | Total | | Reconciling Item(1) | | Total
Consolidated |
| (dollars in thousands) |
| Revenue: | | | | | | | | | | | | | |
| Gain on loans, net | $ | 58,638 | | | $ | — | | | $ | 58,638 | | | | | $ | 58,638 | | | | | $ | 58,638 | |
| Loan fee income | 35,159 | | | — | | | 35,159 | | | | | 35,159 | | | | | 35,159 | |
| Loan servicing fees | — | | | 143,936 | | | 143,936 | | | | | 143,936 | | | | | 143,936 | |
| Change in fair value of mortgage servicing rights | — | | | (12,704) | | | (12,704) | | | | | (12,704) | | | | | (12,704) | |
| Interest income (expense), net | 16,097 | | | 2,135 | | | 18,232 | | | (25,637) | | | (7,405) | | | | | (7,405) | |
| Other income (expense) | 55 | | | — | | | 55 | | | (3,916) | | | (3,861) | | | 14,416 | | | 10,555 | |
| Total | $ | 109,949 | | | $ | 133,367 | | | $ | 243,316 | | | $ | (29,553) | | | $ | 213,763 | | | $ | 14,416 | | | $ | 228,179 | |
| Contribution margin | $ | (38,247) | | | $ | 103,257 | | | $ | 65,010 | | | $ | (107,361) | | | $ | (42,351) | | | | | |
(1)The Company includes the (income) loss from its equity method investment in the All Other segment. Therefore, it must be removed to reconcile to Total revenue, net on the condensed consolidated statements of operations.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2021 |
| Origination | | Servicing | | Segments
Total | | All Other | | Total | | Reconciling Item(1) | | Total
Consolidated |
| (dollars in thousands) |
| Revenue: | | | | | | | | | | | | | |
| Gain on loans, net | $ | 75,011 | | | $ | 18 | | | $ | 75,029 | | | $ | — | | | $ | 75,029 | | | $ | — | | | $ | 75,029 | |
| Loan fee income | 39,500 | | | — | | | 39,500 | | | — | | | 39,500 | | | — | | | 39,500 | |
| Loan servicing fees | — | | | 85,584 | | | 85,584 | | | — | | | 85,584 | | | — | | | 85,584 | |
| Change in fair value of mortgage servicing rights | — | | | (106,905) | | | (106,905) | | | — | | | (106,905) | | | — | | | (106,905) | |
| Interest income (expense), net | 2,698 | | | 416 | | | 3,114 | | | (12,602) | | | (9,488) | | | — | | | (9,488) | |
| Other income | — | | | 48 | | | 48 | | | 13,802 | | | 13,850 | | | (13,198) | | | 652 | |
| Total | $ | 117,209 | | | $ | (20,839) | | | $ | 96,370 | | | $ | 1,200 | | | $ | 97,570 | | | $ | (13,198) | | | $ | 84,372 | |
| Contribution margin | $ | (20,850) | | | $ | (39,596) | | | $ | (60,446) | | | $ | (39,975) | | | $ | (100,421) | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2021 |
| Origination | | Servicing | | Segments
Total | | All Other | | Total | | Reconciling Item(1) | | Total
Consolidated |
| (dollars in thousands) |
| Revenue: | | | | | | | | | | | | | |
| Gain on loans, net | $ | 376,239 | | | $ | 18 | | | $ | 376,257 | | | $ | — | | | $ | 376,257 | | | $ | — | | | $ | 376,257 | |
| Loan fee income | 83,615 | | | — | | | 83,615 | | | — | | | 83,615 | | | — | | | 83,615 | |
| Loan servicing fees | — | | | 155,922 | | | 155,922 | | | — | | | 155,922 | | | — | | | 155,922 | |
| Change in fair value of mortgage servicing rights | — | | | (94,057) | | | (94,057) | | | — | | | (94,057) | | | — | | | (94,057) | |
| Interest income (expense), net | 3,986 | | | 668 | | | 4,654 | | | (21,500) | | | (16,846) | | | — | | | (16,846) | |
| Other income | — | | | 176 | | | 176 | | | 18,638 | | | 18,814 | | | (17,361) | | | 1,453 | |
| Total | $ | 463,840 | | | $ | 62,727 | | | $ | 526,567 | | | $ | (2,862) | | | $ | 523,705 | | | $ | (17,361) | | | $ | 506,344 | |
| Contribution margin | $ | 166,412 | | | $ | 25,248 | | | $ | 191,660 | | | $ | (92,996) | | | $ | 98,664 | | | | | |
(1)The Company includes the (income) loss from its equity method investments in the All Other segment. In order to reconcile to Total revenue, net on the condensed consolidated statements of operations, it must be removed as is presented above.
The following presents a reconciliation of contribution margin to consolidated U.S. GAAP Loss (income) before income tax:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (dollars in thousands) |
| (Loss) income before income tax | $ | (49,394) | | | $ | (113,620) | | | $ | (27,935) | | | $ | 81,303 | |
| (Loss) income from equity method investment | (9,144) | | | 13,198 | | | (14,416) | | | 17,361 | |
| Contribution margin | $ | (58,538) | | | $ | (100,422) | | | $ | (42,351) | | | $ | 98,664 | |
Note 18 – Related Parties
The Company entered into transactions and agreements to purchase various services and products from certain affiliates of our sponsor, Stone Point Capital LLC. The services include valuation of MSRs, insurance brokerage services, loan review and tax payment services for certain loan originations. The Company recorded $4.7 million and $20.8 million for the three and six months ended June 30, 2022, respectively, and $3.8 million and $10.1 million for the three and six months ended June 30, 2021, respectively, for products, services, and other transactions in Loan expense, Loan servicing expense, Production technology, General and administrative and Other expenses in the condensed consolidated statements of operations.
Note 19 – Sale of The Correspondent Channel
On June 1, 2022 (the “Closing Date”), HPF completed the previously announced sale of certain assets of HPF’s delegated Correspondent channel to Planet Home Lending, LLC (“Planet”). The sale of the correspondent channel reduces the Company’s expenses and enables reallocation of resources to our Wholesale channel.
The purchase price for such assets was $2.5 million in cash, plus an earnout payment based on certain of Planet’s correspondent origination volume during the two-year period commencing on the Closing Date. The Company records the earnout payment when the consideration is determined to be realizable. The sale resulted in a $0.4 million loss in Other expenses in the condensed consolidated statements of operations.
Note 20 – Subsequent Events
Credit Suisse Warehouse Facility Amendment
On August 8, 2022, the Company amended $1.2 billion warehouse facility with Credit Suisse. The amendment reduced the capacity of this warehouse facility to $300 million.
HPMAC
On August 9, 2022, HPC entered into a definitive agreement with MS Investorco, LLC to sell its equity interests in HPAM for the estimated tangible book value of the Acquired Companies (as defined below) plus an immaterial cash amount (the “HPAM Transaction”). HPAM is the owner of 100% of the outstanding and issued shares of capital stock in HPMAC (each of HPAM and HPMAC, an “Acquired Company”, and collectively the “Acquired Companies”). The HPAM Transaction is expected to close in the second half of 2022, subject to customary closing conditions, including regulatory approvals and notices.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis supplements our management’s discussion and analysis for the year ended December 31, 2021 as contained in our 2021 Annual Report, and presumes that readers have read or have access to such discussion and analysis. The following discussion and analysis should also be read together with the condensed consolidated financial statements and the related notes thereto included elsewhere in this Report. This discussion contains forward-looking statements that reflect our plans and strategy for our business, and involve risks and uncertainties. You should review the “Risk Factors” section of our 2021 Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. You should carefully read “Cautionary Note on Forward-Looking Statements” in this Report .
Data as of and for the three and six months ended June 30, 2022 and 2021, have been derived from our condensed consolidated financial statements included elsewhere in this Report.
Overview
We are a leading residential mortgage originator and servicer driven by a mission to create financially healthy, happy homeowners. We do this by delivering scale, efficiency and savings to our partners and customers. Our business model is focused on leveraging a nationwide network of partner relationships to drive sustainable origination growth. We support our origination operations through a robust operational infrastructure and a highly responsive customer experience. We then leverage our servicing platform to manage the customer experience. We believe that the complementary relationship between our origination and servicing businesses allows us to provide a best-in-class experience to our customers throughout their homeownership lifecycle.
Our primary focus is our Wholesale channel, which is a business-to-business-to-customer distribution model in which we utilize our relationships with 8,744 partnering independent mortgage brokerages (“Broker Partners”) to reach our end-borrower customers. In the second quarter of 2022, we had 3,573 active broker partners. Through our Wholesale channel, we propel the success of our Broker Partners through a combination of full service, localized sales coverage, and an efficient loan fulfillment process supported by our fully integrated technology platform. On June 1, 2022, the Company completed the previously announced sale of the Correspondent channel, through which we purchased closed and funded mortgages from a trusted network of 670 correspondent sellers (“Correspondent Partners”). For additional information refer to Note 19 – Sale of The Correspondent Channel. In our Direct channel, we originate residential mortgages primarily for existing servicing customers who are seeking new financing options.
While we initiate our customer relationships at the time the mortgage is originated, we maintain ongoing connectivity with our approximately 320 thousand servicing customers, with the ultimate objective of securing them as a Customer for Life. In February 2022, we announced an agreement with ServiceMac, pursuant to which ServiceMac will subservice all mortgage loans underlying MSRs we hold. ServiceMac began subservicing newly originated agency loans for us in the second quarter of 2022. The balance of the agency portfolio and all of the Ginnie Mae portfolio will transition to ServiceMac in the third quarter of 2022. ServiceMac will perform servicing functions on the Company’s behalf, but we will continue to hold the MSRs. We expect that our relationship with ServiceMac will allow us to maintain a leaner cost structure with a greater variable component and will provide greater flexibility when strategically selling certain non-core MSRs. The number of our servicing portfolio customers was 320 thousand and 426 thousand, while the unpaid principal balance (“UPB”) was $92.2 billion and $133.9 billion as of June 30, 2022 and December 31, 2021, respectively.
According to Inside Mortgage Finance, we are the third largest wholesale lender by origination volume for the year ended December 31, 2021.
Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021 Summary
We generated $70.0 million of total revenue, net for the three months ended June 30, 2022 compared to $84.4 million of total revenue, net for the three months ended June 30, 2021. We had $44.4 million of net loss for the three months ended June 30, 2022 compared to $73.2 million of net loss for the three months ended June 30, 2021. We generated $57.4 million of Adjusted revenue for the three months ended June 30, 2022 compared to $126.8 million for the three months ended June 30, 2021. We had $46.9 million of Adjusted net loss for the three months ended June 30, 2022 compared to $51.0 million Adjusted net loss for the three months ended June 30, 2021. Refer to “Non-GAAP Financial Measures” for further information regarding our use of Adjusted revenue and Adjusted net income, including limitations related to such non-GAAP measures and a reconciliation of such measures to net income, the nearest comparable financial measure calculated and presented in accordance with U.S. GAAP.
We originated $9.3 billion of mortgage loans for the three months ended June 30, 2022 compared to $25.5 billion for the three months ended June 30, 2021, representing a decrease of $16.2 billion or 63.5%. Our MSR Servicing Portfolio was $90.5 billion as of June 30, 2022 compared to $124.3 billion as of June 30, 2021. Year-over-year decreases were due to rising interest rates and increased competition in the industry. Our gain on sale margins decreased 16 basis points for the three months ended June 30, 2022 compared to the three months ended June 30, 2021. Additionally, according to the Mortgage Bankers Association Mortgage Finance Forecast, average 30-year mortgage rates increased by approximately 210 basis points from June 30, 2021 to June 30, 2022. An increase of this nature generally results in our Origination volume declining as refinance opportunities decrease, which also increases competition, resulting in lower gain on sale margins. However, when rates increase, we experience lower prepayment speeds and a subsequent upward adjustment to the fair value of our MSRs for the loans that still exist in our portfolio.
Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021 Summary
We generated $228.2 million of total revenue, net for the six months ended June 30, 2022 compared to $506.3 million of total revenue, net for the six months ended June 30, 2021. We had $32.6 million of net loss for the six months ended June 30, 2022 compared to $75.8 million of net income for the six months ended June 30, 2021. We generated $144.1 million of Adjusted revenue for the six months ended June 30, 2022 compared to $450.9 million for the six months ended June 30, 2021. We had $77.8 million of Adjusted net loss for the six months ended June 30, 2022 compared to $23.4 million Adjusted net income for the six months ended June 30, 2021. Refer to “Non-GAAP Financial Measures” for further information regarding our use of Adjusted revenue and Adjusted net income, including limitations related to such non-GAAP measures and a reconciliation of such measures to net income, the nearest comparable financial measure calculated and presented in accordance with U.S. GAAP.
We originated $21.8 billion of mortgage loans for the six months ended June 30, 2022 compared to $54.9 billion for the six months ended June 30, 2021, representing a decrease of $33.1 billion or 60.2%. As noted above, our MSR Servicing Portfolio was $90.5 billion as of June 30, 2022 compared to $124.3 billion as of June 30, 2021. Year-over-year decreases were due to rising interest rates and increased competition in the industry. Our gain on sale margins also decreased 50 basis points for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. Additionally, as noted above, average 30-year mortgage rates increased by approximately 210 basis points from June 30, 2021 to June 30, 2022. As noted above, an increase of this nature generally results in lower Origination volume and lower gain on sale margins. However, the higher rates result in an upward adjustment to the fair value of our MSRs for the loans that still exist in our portfolio.
Segments
Our operations are organized into two separate reportable segments: Origination and Servicing.
In our Origination segment, we source loans through three distinct production channels: Direct, Wholesale and Correspondent. The Direct channel provides the Company’s existing servicing customers with various financing options. At the same time, it supports the servicing assets in the ecosystem by retaining existing servicing customers who may otherwise refinance their existing mortgage loans with a competitor. The Wholesale channel consists of mortgages originated through a nationwide network of 8,744 Broker Partners. The Correspondent channel consists of closed and funded mortgages that we purchase from a trusted network of Correspondent Partners. Once a loan is locked, it becomes channel agnostic. As discussed in Note 19 – Sale of The Correspondent Channel above, on June 1, 2022, the Company completed the previously announced sale of the Correspondent channel. The channels in our Origination segment function in unison through the following activities: hedging, funding, and production. Our Origination segment generated contribution margin of $(29.9) million and $(38.2) million for the three and six months ended June 30, 2022, respectively and $(20.9) million and $166.4 million for the three and six months ended June 30, 2021, respectively.
Our Servicing segment consists of servicing loans that were produced in our Originations segment where the Company retained the servicing rights. Servicing consists of collecting loan payments, remitting principal and interest payments to investors, managing escrow funds for the payment of mortgage-related expenses, such as taxes and insurance, performing loss mitigation activities on behalf of investors and otherwise administering our mortgage loan servicing portfolio in compliance with state and federal regulations. We also strategically buy and sell MSRs. Our Servicing segment generated Contribution margins of $20.0 million and $103.3 million for the three and six months ended June 30, 2022, respectively and $(39.6) million and $25.2 million for the three and six months ended June 30, 2021, respectively.
We believe that maintaining both an Origination segment and a Servicing segment provides us with a more balanced business model in both rising and declining interest rate environments, as compared to other industry participants that predominantly focus on either origination or servicing, instead of both.
Key Factors Affecting Results of Operations for Periods Presented
Residential Real Estate Market Conditions
Our Origination volume is impacted by broader residential real estate market conditions and the general economy. Housing affordability, availability and general economic conditions influence the demand for our products. Housing affordability and availability are impacted by mortgage interest rates, availability of funds to finance purchases, availability of alternative investment products and the relative relationship of supply and demand. General economic conditions are impacted by unemployment rates, changes in real wages, inflation, consumer confidence, seasonality and the overall economic environment. Recent market conditions, such as rising interest rates, high inflation and home price appreciation due to limited housing supply, have led to a decrease in the affordability index and negatively impacted Origination volume. These trends are partially offset by the effects of strong employment market with continuing wage growth.
Changes in Interest Rates
Origination volume is impacted by changes in interest rates. Decreasing interest rates tend to increase the volume of purchase loan origination and refinancing whereas increasing interest rates tend to decrease the volume of purchase loan origination and refinancing.
Changes in interest rates impact the value of interest rate lock commitments and loans held for sale. Interest rate lock commitments represent an agreement to extend credit to a customer whereby the interest rate is set prior to the loan funding. These commitments bind us to fund the loan at a specified rate. When loans are funded, they are classified as held for sale until they are sold. During the origination and sale process, the value of interest rate lock commitments and loans held for sale inventory fluctuates with changes in interest rates; for example, if we enter into interest rate lock commitments at low interest rates followed by an increase in interest rates in the market, the value of our interest rate lock commitment will decrease.
The fair value of MSRs is also driven primarily by interest rates, which impact the likelihood of loan prepayments. In periods of rising interest rates, the fair value of the MSRs generally increases as prepayments decrease, and therefore the estimated life of the MSRs and related expected cash flows increase. In a declining interest rate environment, the fair value of MSRs generally decreases as prepayments increase and therefore the estimated life of the MSRs, and related cash flows, decrease.
Early 2021 had a falling interest rate environment. In the second half of 2021, interest rates started to rise, which continued into the first half of 2022. Because origination volumes tend to increase in declining interest rate environments and decrease in increasing rate environments, we believe that our two principal sources of revenue, mortgage origination and mortgage loan servicing, create a natural hedge against changes in the interest rate environment. Additionally, to mitigate the interest rate risk impact, we employ economic hedging strategies. Our economic hedging strategies allow us to protect our investment and help us manage our liquidity through forward delivery commitments on mortgage-backed securities or whole loans and options on forward contracts.
Key Performance Indicators
We review several operating metrics, including the following key performance indicators to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. We believe these key metrics are useful to investors both because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making, and they may be used by investors to help analyze the health of our business.
Our origination metrics enable us to monitor our ability to generate revenue and expand our market share across different channels. In addition, they help us track origination quality and compare our performance against the nationwide originations market and our competitors. Other key performance indicators include the number of Broker Partners, prior to the sale of our Correspondent channel, number of Correspondent Partners, which enable us to monitor key inputs of our business model. As noted above, on June 1, 2022, the Company completed the previously announced sale of the Correspondent channel. For additional information refer to Note 19 – Sale of The Correspondent Channel. Our servicing metrics enable us to monitor the size of our customer base, the characteristics and value of our MSR Servicing Portfolio, and help drive retention efforts.
Origination Segment KPIs
The following presents key performance indicators for our business:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (dollars in thousands) |
| Origination Volume by Channel | | | | | | | |
| Wholesale | $ | 7,382,358 | | | $ | 18,380,041 | | | $ | 16,700,059 | | | $ | 38,048,305 | |
| Correspondent | 1,731,820 | | | 5,695,078 | | | 4,465,121 | | | 13,938,458 | |
| Direct | 177,689 | | | 1,390,698 | | | 681,760 | | | 2,904,985 | |
| Origination volume | $ | 9,291,867 | | | $ | 25,465,817 | | | $ | 21,846,940 | | | $ | 54,891,748 | |
| | | | | | | |
Fallout Adjusted (“FOA”) Lock Volume by Channel | | | | | | | |
| Wholesale | $ | 7,483,278 | | | $ | 15,566,192 | | | $ | 17,046,986 | | | $ | 31,706,115 | |
| Correspondent | 1,269,053 | | | 3,962,583 | | | 3,879,896 | | | 10,635,642 | |
| Direct | 125,874 | | | 835,980 | | | 540,444 | | | 1,575,776 | |
| FOA Lock Volume | $ | 8,878,205 | | | $ | 20,364,755 | | | $ | 21,467,326 | | | $ | 43,917,533 | |
| | | | | | | |
| Gain on sale margin by Channel | | | | | | | |
| Wholesale | $ | 47,654 | | | $ | 114,486 | | | $ | 110,240 | | | $ | 359,536 | |
| Correspondent | 2,002 | | | 9,270 | | | 5,452 | | | 31,432 | |
| Direct | 3,214 | | | 26,322 | | | 13,911 | | | 53,080 | |
Gain on sale margin attributable to channels | 52,870 | | | 150,078 | | | 129,603 | | | 444,048 | |
Other (loss) gain on sale(a) | (15,685) | | | (32,869) | | | (19,653) | | | 19,791 | |
Total gain on sale margin(b) | $ | 37,185 | | | $ | 117,209 | | | $ | 109,950 | | | $ | 463,839 | |
| | | | | | | |
| Gain on sale margin by Channel (bps) | | | | | | | |
| Wholesale | 64 | | 74 | | 65 | | 113 |
| Correspondent | 16 | | 23 | | 14 | | 29 |
| Direct | 256 | | 315 | | 257 | | 334 |
Gain on sale margin attributable to channels | 60 | | 74 | | 60 | | 101 |
Other (loss) gain on sale(a) | (18) | | (16) | | (9) | | — |
Total gain on sale margin(b) | 42 | | 58 | | 51 | | 101 |
| | | | | | | |
| Origination Volume by Purpose | | | | | | | |
| Purchase | 71.3 | % | | 35.2 | % | | 55.9 | % | | 20.4 | % |
| Refinance | 28.7 | % | | 64.8 | % | | 44.1 | % | | 79.6 | % |
| | | | | | | | | | | |
| June 30, |
| 2022 | | 2021 |
| Market Share | | | |
Overall share of origination market(c) | 1.7 | % | | 2.2 | % |
Share of wholesale channel(d) | 8.3 | % | | 10.2 | % |
| | | |
| Third Party Partners | | | |
Number of Broker Partners(e) | 8,744 | | 6,738 |
Number of Correspondent Partners(f) | 670 | | 642 |
(a) Includes loan fee income, interest income (expense), net, realized and unrealized gains (losses) on locks and mortgage loans held for sale, net hedging results, the provision for the representation and warranty reserve and differences between modeled and actual pull-through.
(b) Gain on sale margin calculated as gain on sale divided by Fallout Adjusted Lock volume. Gain on sale includes gain on loans, net, loan fee income, interest income (expense), net, and loan servicing fees (expense) for the Origination segment.
(c) Overall share of origination market share data for June 30, 2022 is as of March 31, 2022 obtained from Inside Mortgage Finance, a third party provider of residential mortgage industry news and statistics. The data as of June 30, 2022 is not yet available from Inside Mortgage Finance as of the date of this filing.
(d) Share of wholesale channel for June 30, 2022 is as of March 31, 2022 obtained from Inside Mortgage Finance, a third party provider of residential mortgage industry news and statistics. The data as of June 30, 2022 is not yet available from Inside Mortgage Finance as of the date of this filing.
(e) Number of Broker Partners with whom the Company sources loans.
(f) Number of Correspondent Partners from whom the Company purchased loans prior to the completion of the previously announced sale of the Correspondent channel on June 1, 2022.
Servicing Segment KPIs
The following presents key performance indicators for our business:
| | | | | | | | | | | |
| June 30, |
| 2022 | | 2021 |
| (dollars in thousands) |
| Mortgage Servicing | | | |
MSR Servicing Portfolio - UPB(a) | $ | 90,516,421 | | $ | 124,258,935 |
MSR Servicing Portfolio - Units(b) | 320,215 | | 449,029 |
| | | |
60 days or more delinquent(c) | 0.9 | % | | 1.6 | % |
| | | |
| MSR Portfolio | | | |
MSR multiple(d) | 5.83 | | 3.69 |
Weighted Average Note Rate (e) | 3.18 | % | | 3.09 | % |
(a) The unpaid principal balance of loans we service on behalf of Ginnie Mae, Fannie Mae, Freddie Mae and others, at period end.
(b) Number of loans in our capitalized servicing portfolio at period end.
(c) Total balances of outstanding loan principals for which installment payments are at least 60 days past due as a percentage of the outstanding loan principal as of a specified date.
(d) Calculated as the MSR fair market value as of a specified date divided by the related UPB divided by the weighted average service fee.
(e) Weighted average interest rate of our MSR portfolio at period end.
Non-GAAP Financial Measures
We believe that certain non-GAAP financial measures presented in this Report, including Adjusted revenue and Adjusted net income provide useful information to investors and others in understanding and evaluating our operating results. These measures are not financial measures calculated in accordance with U.S. GAAP and should not be considered as a substitute for net income, or any other operating performance measure calculated in accordance with U.S. GAAP and may not be comparable to a similarly titled measure reported by other companies.
We believe that the presentation of Adjusted revenue and Adjusted net income provides useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. Adjusted revenue and Adjusted net income provide indicators of performance that are not affected by fluctuations in certain costs or other items. Accordingly, management believes that these measurements are useful for comparing general operating performance from period to period, and management relies on these measures for planning and forecasting of future periods. The Company measures the performance of the segments primarily on a contribution margin basis. Additionally, these measures allow management to compare our results with those of other companies that have different financing and capital structures. However, other companies may define Adjusted revenue and Adjusted net income differently, and as a result, our measures of Adjusted revenue and Adjusted net income may not be directly comparable to those of other companies.
Adjusted revenue. We define Adjusted revenue as Total net revenue exclusive of the impact of the change in fair value of MSRs related to changes in valuation inputs and assumptions, net of MSRs hedge, and adjusted for Income from equity method investment.
Adjusted net income. We define Adjusted net income as Net income exclusive of the impact of the change in fair value of MSRs related to changes in valuation inputs and assumptions, net of MSRs economic hedging results.
The non-GAAP information presented below should be read in conjunction with the Company’s consolidated financial statements and the related notes.
The following presents a reconciliation of Adjusted revenue and Adjusted net (loss) income to the nearest U.S. GAAP financial measures of Total revenue, net and Net (loss) income, as applicable:
Reconciliation of Adjusted Revenue to Total Revenue, Net
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (dollars in thousands) |
| Total revenue, net | $ | 70,008 | | | $ | 84,372 | | | $ | 228,179 | | | $ | 506,344 | |
| (Loss) income from equity method investment | (9,144) | | | 13,198 | | | (14,416) | | | 17,361 | |
Change in fair value of MSR (due to inputs and assumptions), net of hedge(a) | (3,502) | | | 29,181 | | | (69,635) | | | (72,837) | |
| Adjusted revenue | $ | 57,362 | | | $ | 126,751 | | | $ | 144,128 | | | $ | 450,868 | |
Reconciliation of Adjusted Net (Loss) Income to Total Net (Loss) Income
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (dollars in thousands) |
| Net (loss) income | $ | (44,417) | | | $ | (73,213) | | | $ | (32,553) | | | $ | 75,756 | |
Change in fair value of MSR (due to inputs and assumptions), net of hedge(a) | (3,502) | | | 29,181 | | | (69,635) | | | (72,837) | |
Income tax effect of change in fair value of MSR (due to inputs and assumptions), net of hedge(b) | 1,001 | | | (6,988) | | | 24,424 | | | 20,523 | |
| Adjusted net (loss) income | $ | (46,918) | | | $ | (51,020) | | | $ | (77,764) | | | $ | 23,442 | |
(a)MSR fair value changes due to valuation inputs and assumptions are measured using a stochastic discounted cash flow model that includes assumptions such as prepayment speeds, delinquencies, discount rates, and effects of changes in market interest rates. Refer to Note 4 – Mortgage Servicing Rights to our condensed consolidated financial statements included elsewhere in this Report. We exclude changes in fair value of MSRs (due to inputs and assumptions), net of hedge from Adjusted revenue as they add volatility and we believe that they are not indicative of the Company’s operating performance or results of operations. This adjustment does not include changes in fair value of MSRs due to realization of cash flows. Realization of cash flows occurs when cash is collected as customers make scheduled payments, partial prepayments of principal, or pay their mortgage in full. The adjustment includes the loss on MSR sales since it is not indicative of the Company’s results of operations.
(b)The income tax effect of change in fair value of MSR (due to inputs and assumptions), net of hedge is calculated as the MSR valuation change, net of hedge multiplied by the quotient of Income tax expense (benefit) divided by Income (loss) before income tax.
Results of Operations – Three and Six Months Ended June 30, 2022 and 2021
Consolidated Results of Operations
The following presents certain consolidated financial data:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | | | |
| 2022 | | 2021 | | $ Change | | % Change |
| (dollars in thousands) | | | | |
| Revenue: | | | | | | | |
| Gain on loans, net | $ | 13,234 | | | $ | 75,029 | | | $ | (61,795) | | | (82.4 | %) |
| Loan fee income | 15,255 | | | 39,500 | | | (24,245) | | | (61.4 | %) |
| | | | | | | |
| Interest income | 27,533 | | | 34,648 | | | (7,115) | | | (20.5 | %) |
| Interest expense | (28,920) | | | (44,136) | | | 15,216 | | | (34.5 | %) |
| Interest expense, net | (1,387) | | | (9,488) | | | 8,101 | | | (85.4 | %) |
| Loan servicing fees | 62,872 | | | 85,584 | | | (22,712) | | | (26.5 | %) |
| Change in fair value of mortgage servicing rights | (29,887) | | | (106,905) | | | 77,018 | | | (72.0 | %) |
| Other income | 9,921 | | | 652 | | | 9,269 | | | 1421.6 | % |
| Total revenue, net | 70,008 | | | 84,372 | | | (14,364) | | | (17.0 | %) |
| Expenses: | | | | | | | |
| Compensation and benefits | 75,601 | | | 127,296 | | | (51,695) | | | (40.6 | %) |
| Loan expense | 6,969 | | | 17,483 | | | (10,514) | | | (60.1 | %) |
| Loan servicing expense | 7,121 | | | 7,507 | | | (386) | | | (5.1 | %) |
| Production technology | 4,343 | | | 8,170 | | | (3,827) | | | (46.8 | %) |
| General and administrative | 16,969 | | | 26,549 | | | (9,580) | | | (36.1 | %) |
| Depreciation and amortization | 2,627 | | | 2,350 | | | 277 | | | 11.8 | % |
| Other expenses | 5,772 | | | 8,637 | | | (2,865) | | | (33.2 | %) |
| Total expenses | 119,402 | | | 197,992 | | | (78,590) | | | (39.7 | %) |
| Loss before income tax | (49,394) | | | (113,620) | | | 64,226 | | | (56.5 | %) |
| Income tax benefit | 14,121 | | | 27,209 | | | (13,088) | | | (48.1 | %) |
| (Loss) income from equity method investment | (9,144) | | | 13,198 | | | (22,342) | | | (169.3 | %) |
| Net (loss) income | $ | (44,417) | | | $ | (73,213) | | | $ | 54,972 | | | (75.1 | %) |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, | | | | |
| 2022 | | 2021 | | $ Change | | % Change |
| (dollars in thousands) | | | | |
| Revenue: | | | | | | | |
| Gain on loans, net | $ | 58,638 | | | $ | 376,257 | | | $ | (317,619) | | | (84.4 | %) |
| Loan fee income | 35,159 | | | 83,615 | | | (48,456) | | | (58.0 | %) |
| | | | | | | |
| Interest income | 54,610 | | | 60,225 | | | (5,615) | | | (9.3 | %) |
| Interest expense | (62,015) | | | (77,071) | | | 15,056 | | | (19.5 | %) |
| Interest expense, net | (7,405) | | | (16,846) | | | 9,441 | | | (56.0 | %) |
| Loan servicing fees | 143,936 | | | 155,922 | | | (11,986) | | | (7.7 | %) |
| Change in fair value of mortgage servicing rights | (12,704) | | | (94,057) | | | 81,353 | | | (86.5 | %) |
| Other income | 10,555 | | | 1,453 | | | 9,102 | | | 626.4 | % |
| Total revenue, net | 228,179 | | | 506,344 | | | (278,165) | | | (54.9 | %) |
| Expenses: | | | | | | | |
| Compensation and benefits | 165,033 | | | 280,938 | | | (115,905) | | | (41.3 | %) |
| Loan expense | 15,984 | | | 35,178 | | | (19,194) | | | (54.6 | %) |
| Loan servicing expense | 12,867 | | | 15,600 | | | (2,733) | | | (17.5 | %) |
| Production technology | 9,208 | | | 17,455 | | | (8,247) | | | (47.2 | %) |
| General and administrative | 36,640 | | | 52,786 | | | (16,146) | | | (30.6 | %) |
| Depreciation and amortization | 5,314 | | | 5,111 | | | 203 | | | 4.0 | % |
| Other expenses | 11,068 | | | 17,973 | | | (6,905) | | | (38.4 | %) |
| Total expenses | 256,114 | | | 425,041 | | | (168,927) | | | (39.7 | %) |
| (Loss) income before income tax | (27,935) | | | 81,303 | | | (109,238) | | | (134.4 | %) |
| Income tax benefit (expense) | 9,798 | | | (22,908) | | | 32,706 | | | (142.8 | %) |
| (Loss) income from equity method investment | (14,416) | | | 17,361 | | | (31,777) | | | (183.0 | %) |
| Net (loss) income | $ | (32,553) | | | $ | 75,756 | | | $ | (173,721) | | | (229.3 | %) |
Consolidated results are further analyzed in our segment disclosure below.
Origination Segment
The following presents certain financial data for the Origination segment:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | | | |
| 2022 | | 2021 | | $ Change | | % Change |
| (dollars in thousands) | | | | |
| Revenue: | | | | | | | |
| Gain on loans, net | $ | 13,234 | | | $ | 75,011 | | | $ | (61,777) | | | (82.4) | % |
| Loan fee income | 15,255 | | | 39,500 | | | (24,245) | | | (61.4) | % |
| | | | | | | |
| Interest income | 26,104 | | | 33,903 | | | (7,799) | | | (23.0) | % |
| Interest expense | (17,463) | | | (31,205) | | | 13,742 | | | (44.0) | % |
| Interest income, net | 8,641 | | | 2,698 | | | 5,943 | | | 220.3 | % |
| Other income | 55 | | | — | | | 55 | | | N/A |
| Total origination revenue, net | 37,185 | | | 117,209 | | | (80,024) | | | (68.3) | % |
| Expenses: | | | | | | | |
| Compensation and benefits | 48,094 | | | 98,806 | | | (50,712) | | | (51.3) | % |
| Loan expense | 6,969 | | | 17,277 | | | (10,308) | | | (59.7) | % |
| Loan servicing expense | — | | | 20 | | | (20) | | | (100.0) | % |
| Production technology | 3,893 | | | 7,613 | | | (3,720) | | | (48.9) | % |
| General and administrative | 6,849 | | | 12,053 | | | (5,204) | | | (43.2) | % |
| Other expenses | 1,237 | | | 2,290 | | | (1,053) | | | (46.0) | % |
| Total origination expenses | 67,042 | | | 138,059 | | | (71,017) | | | (51.4) | % |
| Origination net loss | $ | (29,857) | | | $ | (20,850) | | | $ | (9,007) | | | 43.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, | | | | |
| 2022 | | 2021 | | $ Change | | % Change |
| (dollars in thousands) | | | | |
| Revenue: | | | | | | | |
| Gain on loans, net | $ | 58,638 | | | $ | 376,239 | | | $ | (317,601) | | | (84.4) | % |
| Loan fee income | 35,159 | | | 83,615 | | | (48,456) | | | (58.0) | % |
| | | | | | | |
| Interest income | 52,475 | | | 58,894 | | | (6,419) | | | (10.9) | % |
| Interest expense | (36,378) | | | (54,908) | | | 18,530 | | | (33.7) | % |
| Interest income, net | 16,097 | | | 3,986 | | | 12,111 | | | 303.8 | % |
| Other income | 55 | | | — | | | 55 | | | N/A |
| Total origination revenue, net | 109,949 | | | 463,840 | | | (353,891) | | | (76.3) | % |
| Expenses: | | | | | | | |
| Compensation and benefits | 106,489 | | | 219,384 | | | (112,895) | | | (51.5) | % |
| Loan expense | 15,984 | | | 34,672 | | | (18,688) | | | (53.9) | % |
| Loan servicing expense | — | | | 319 | | | (319) | | | (100.0) | % |
| Production technology | 8,000 | | | 16,511 | | | (8,511) | | | (51.5) | % |
| General and administrative | 15,136 | | | 21,901 | | | (6,765) | | | (30.9) | % |
| Other expenses | 2,587 | | | 4,641 | | | (2,054) | | | (44.3) | % |
| Total origination expenses | 148,196 | | | 297,428 | | | (149,232) | | | (50.2) | % |
| Origination net (loss) income | $ | (38,247) | | | $ | 166,412 | | | $ | (204,659) | | | (123.0) | % |
Origination Revenue, net
Gain on loans, net
The following presents components of Gain on loans, net:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (dollars in thousands) |
| FOA Lock Volume by Channel | | | | | | | |
| Wholesale | $ | 7,483,278 | | | $ | 15,566,192 | | $ | 17,046,986 | | | $ | 31,706,115 |
| Correspondent | 1,269,053 | | | 3,962,583 | | 3,879,896 | | | 10,635,642 |
| Direct | 125,874 | | | 835,980 | | 540,444 | | | 1,575,776 |
| FOA Lock Volume | $ | 8,878,205 | | | $ | 20,364,755 | | | $ | 21,467,326 | | | $ | 43,917,533 | |
| | | | | | | |
| Gain on sale margin by Channel | | | | | | | |
| Wholesale | $ | 47,654 | | | $ | 114,486 | | | $ | 110,240 | | | $ | 359,536 | |
| Correspondent | 2,002 | | | 9,270 | | | 5,452 | | | 31,432 | |
| Direct | 3,214 | | | 26,322 | | | 13,911 | | | 53,080 | |
Gain on sale margin attributable to channels | 52,870 | | | 150,078 | | | 129,603 | | | 444,048 | |
Other (loss) gain on sale(a) | (15,685) | | | (32,869) | | | (19,653) | | | 19,791 | |
Total gain on sale margin(b) | $ | 37,185 | | | $ | 117,209 | | | $ | 109,950 | | | $ | 463,839 | |
| | | | | | | |
| Gain on sale margin by Channel (bps) | | | | | | | |
| Wholesale | 64 | | | 74 | | | 65 | | | 113 | |
| Correspondent | 16 | | | 23 | | | 14 | | | 29 | |
| Direct | 256 | | | 315 | | | 257 | | | 334 | |
Gain on sale margin attributable to channels | 60 | | | 74 | | | 60 | | | 101 | |
Other (loss) gain on sale(a) | (18) | | | (16) | | | (9) | | | — | |
Total gain on sale margin(b) | 42 | | | 58 | | | 51 | | | 101 | |
| | | | | | | |
(a) Includes loan fee income, interest income (expense), net, realized and unrealized gains (losses) on locks and mortgage loans held for sale, net hedging results, the provision for the representation and warranty reserve, and differences between modeled and actual pull-through.
(b) Gain on sale margin calculated as gain on sale divided by Fallout Adjusted Lock volume. Gain on sale includes gain on loans, net, loan fee income, interest income (expense), net, and loan servicing fees (expense) for the Origination segment.
The following presents details of the characteristics of our mortgage loan production:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (dollars in thousands) |
| Origination volume | $ | 9,291,867 | | $ | 25,465,817 | | $ | 21,846,940 | | $ | 54,891,748 |
| Originated MSR UPB | 9,730,325 | | 26,284,323 | | 23,793,090 | | 54,306,349 |
Gain on sale margin (a) | 0.42% | | 0.58% | | 0.51% | | 1.01% |
Retained servicing (UPB)(b) | 97.3% | | 95.8% | | 97.3% | | 97.1% |
(a) Includes loan fee income, interest income (expense), net, realized and unrealized gains (losses) on locks and mortgage loans held for sale, net hedging results, the provision for the representation and warranty reserve and differences between modeled and actual pull-through.
(b) Represents the percentage of our loan sales UPBs for which we retained the underlying servicing UPB during the period.
Gain on loans, net decreased by $61.8 million, or 82.4% and $317.6 million, or 84.4% for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021, respectively. The decrease was primarily due to decreases of $80.0 million and $353.9 million or 68.3% and 76.3% in gain on sale margin for the respective periods.
We experienced a decrease in FOA lock volume and Origination volume across all of our origination channels primarily due to rising interest rates. Additionally, we saw a significant decrease in gain on sale margins due to the competitive environment during the three and six months ended June 30, 2022 compared to the prior year. As mortgage interest rates rise, the origination market contracts, primarily due to a decline in refinance volume, which generally leads to increased competition and lower gain on sale margins. Our origination market share decreased from 2.2% to 1.7% and our share of the wholesale channel decreased from 10.2% to 8.3% compared to the prior year.
Loan fee income
Loan fee income decreased by $24.2 million and $48.5 million, or 61.4% and 58.0%, for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. The decrease was consistent with the decrease in Origination volume.
Interest expense, net
Interest income, net increased by $5.9 million and $12.1 million for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. The increase in interest income, net was driven by a decrease in warehouse borrowing and related fees due to the decrease in origination volume. Interest income decreased $7.9 million and $6.9 million for the respective three and six months periods due to lower loans held for sale balance partially offset by the impact of the rising interest rates.
Expenses
Total expenses decreased by $71.0 million and $149.2 million, or 51.4% and 50.2%, for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. The decrease was primarily driven by decreases in compensation and benefits expense, loan expense, production technology expense, and general and administrative expenses.
Compensation and benefits expense decreased by $50.7 million and $112.9 million, or 51.3% and 51.5%, for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. The decrease in the respective three and six months periods was primarily driven by a decrease of $27.9 million and $54.7 million in salary and benefits due to a decrease in employee headcount and a $22.9 million and $58.5 million decrease in variable compensation resulting from the decrease in Origination volume and the sale of the Correspondent channel. Compensation and benefits expense was 0.5% of Origination volume for the three and six months ended June 30, 2022 and 0.5% and 0.4% for the three and six months ended June 30, 2021.
Loan expense decreased by $10.3 million and $18.7 million, or 59.7% and 53.9%, for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. The decrease was consistent with the decrease in Origination volume.
Production technology expense decreased by $3.7 million and $8.5 million, or 48.9% and 51.5%, for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. The decrease was primarily driven by lower variable expenses associated with the Company’s origination systems as a result of the decline in origination volume, combined with the investment the Company made in improving and upgrading the Company’s origination technologies in 2021.
General and administrative expenses decreased $5.2 million and $6.8 million, or 43.2% and 30.9%, for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. The decrease was primarily driven by decrease in outsourced loan review services due to the decline in origination volume, as well as lower expenses as a result of cost-saving initiatives implemented in the second half of 2021 and continuing during the first half of 2022.
Servicing Segment
The following presents certain financial data for the Servicing segment:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | | | |
| 2022 | | 2021 | | $ Change | | % Change |
| (dollars in thousands) | | | | |
| Revenue: | | | | | | | |
| Gain on loans, net | $ | — | | | $ | 18 | | | $ | (18) | | | (100.0) | % |
| Loan servicing fees | 62,872 | | | 85,584 | | | (22,712) | | | (26.5) | % |
| Change in fair value of mortgage servicing rights | (29,887) | | | (106,905) | | | 77,018 | | | (72.0) | % |
| | | | | | | |
| Interest income | 1,429 | | | 746 | | | 683 | | | 91.6 | % |
| Interest expense | — | | — | | (330) | | | 330 | | | (100.0) | % |
| Interest income, net | 1,429 | | | 416 | | | 1,013 | | | 243.5 | % |
| Other income | — | | | 48 | | | (48) | | | (100.0) | % |
| Total servicing revenue, net | 34,414 | | | (20,839) | | | 55,253 | | | (265.1) | % |
| Expenses: | | | | | | | |
| Compensation and benefits | 5,201 | | | 7,580 | | | (2,379) | | | (31.4) | % |
| Loan expense | — | | | 206 | | | (206) | | | (100.0) | % |
| Loan servicing expense | 7,121 | | | 7,487 | | | (366) | | | (4.9) | % |
| Production technology | 450 | | | 556 | | | (106) | | | (19.1) | % |
| General and administrative | 1,597 | | | 2,986 | | | (1,389) | | | (46.5) | % |
| Other expenses | 22 | | | (58) | | | 80 | | | (137.9) | % |
| Total servicing expenses | 14,391 | | | 18,757 | | | (4,366) | | | (23.3) | % |
| Servicing net income | $ | 20,023 | | | $ | (39,596) | | | $ | 59,619 | | | (150.6) | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, | | | | |
| 2022 | | 2021 | | $ Change | | % Change |
| (dollars in thousands) | | | | |
| Revenue: | | | | | | | |
| Gain on loans, net | $ | — | | | $ | 18 | | | $ | (18) | | | (100.0) | % |
| Loan servicing fees | 143,936 | | | 155,922 | | | (11,986) | | | (7.7) | % |
| Change in fair value of mortgage servicing rights | (12,704) | | | (94,057) | | | 81,353 | | | (86.5) | % |
| | | | | | | |
| Interest income | 2,135 | | | 1,332 | | | 803 | | | 60.3 | % |
| Interest expense | — | | | (664) | | | 664 | | | (100.0) | % |
| Interest income, net | 2,135 | | | 668 | | | 1,467 | | | 219.6 | % |
| Other income | — | | | 176 | | | (176) | | | (100.0) | % |
| Total servicing revenue, net | 133,367 | | | 62,727 | | | 70,640 | | | 112.6 | % |
| Expenses: | | | | | | | |
| Compensation and benefits | 12,885 | | | 15,160 | | | (2,275) | | | (15.0) | % |
| Loan expense | — | | | 506 | | | (506) | | | (100.0) | % |
| Loan servicing expense | 12,867 | | | 15,281 | | | (2,414) | | | (15.8) | % |
| Production technology | 1,206 | | | 944 | | | 262 | | | 27.8 | % |
| General and administrative | 3,084 | | | 5,348 | | | (2,264) | | | (42.3) | % |
| Other expenses | 68 | | | 240 | | | (172) | | | (71.7) | % |
| Total servicing expenses | 30,110 | | | 37,479 | | | (7,369) | | | (19.7) | % |
| Servicing net income | $ | 103,257 | | | $ | 25,248 | | | $ | 78,009 | | | 309.0 | % |
| | | | | | | |
Servicing Revenue, Net
Loan servicing fees
The following presents certain characteristics of our mortgage loan servicing portfolio:
| | | | | | | | | | | |
| June 30, |
| 2022 | | 2021 |
| (dollars in thousands) |
| MSR Servicing Portfolio (UPB) | $ | 90,516,421 | | | $ | 124,258,935 | |
| Average MSR Servicing Portfolio (UPB) | $ | 96,250,600 | | | $ | 106,268,092 | |
| MSR Servicing Portfolio (Loan Count) | 320,215 | | | 449,029 | |
| MSRs Fair Value Multiple (x) | 5.83 | | | 3.69 | |
| Delinquency Rates (%) | 1.7 | % | | 1.6 | % |
| Weighted average credit score | 747 | | | 746 | |
| Weighted average servicing fee, net (bps) | 26.9 | | | 27.7 | |
Loan servicing fees decreased by $22.7 million and $12.0 million, or 26.5% and 7.7%, for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. The decrease for the respective three and six month periods was primarily driven by $7.7 million and $10.3 million lower ancillary servicing income due to lower loan modification fees earned on GNMA loans as a result of the Company selling 77% of its GNMA MSR portfolio during the fourth quarter of 2021. Additionally, a decrease in servicing fees of $15.0 million and $1.7 million was due to a decrease in the Average MSR Servicing Portfolio of $10.0 billion, or 9.4%, as of June 30, 2022 compared to June 30, 2021.
Change in fair value of MSRs
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (dollars in thousands) |
| Realization of cash flows | $ | (33,389) | | | $ | (77,724) | | | $ | (82,339) | | | $ | (166,894) | |
| Valuation inputs and assumptions | 72,395 | | | (94,713) | | | 349,381 | | | 103,183 | |
| Economic hedging results | (68,893) | | | 65,532 | | | (279,746) | | | (30,346) | |
| Change in fair value of MSRs | $ | (29,887) | | | $ | (106,905) | | | $ | (12,704) | | | $ | (94,057) | |
Change in fair value of MSRs presented losses for both three and six months ended June 30, 2022 and 2021. Fair value losses decreased by $77.0 million, or 72.0% and $81.4 million, or 86.5% for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. The change was primarily driven by the changes in valuation inputs and assumptions net of hedge that were favorably affected by an increase in interest rates during the period. The change in fair value of MSRs was also attributable to a decrease in loss from realization of cash flows resulting from a decrease in prepayments due to higher interest rates and higher scheduled payments collected on loans in our MSR portfolio. These favorable changes were partially offset by $21.4 million and $77.5 million MSR sale losses for the three and six months ended June 30, 2022.
Expenses
Total expenses decreased by $4.4 million and $7.4 million, or 23.3% and 19.7% for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. The decrease was primarily driven by decreases in compensation and benefits expense, loan servicing expense, and general and administrative expenses.
Compensation and benefits expense decreased by $2.4 million and $2.3 million, or 31.4% and 15.0% for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. The decrease was primarily driven by the salary expense decreases due to employee headcount reductions and efficiencies gained from the subservicing to ServiceMac.
Loan servicing expense decreased by $0.4 million and $2.4 million, or 4.9% and 15.8%, for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. The decrease for the respective three and six month periods was primarily due to $1.5 million and $3.1 million reduction in the provision for servicing advance reserves resulting from the sale of MSRs partially offset by $1.0 million and $1.1 million increase in subservicing fee due to outsourcing of the servicing to ServiceMac.
General and administrative expenses decreased $1.4 million and $2.3 million, or 46.5% and 42.3%, for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. The decrease was primarily driven by a decrease in professional services and consulting fees resulting from the Company’s cost savings initiatives.
Corporate
The following presents certain corporate financial data:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | | | |
| 2022 | | 2021 | | $ Change | | % Change |
| (dollars in thousands) | | | | |
| Revenue: | | | | | | | |
| Interest expense | $ | (11,457) | | | $ | (12,602) | | | $ | 1,145 | | | (9.1) | % |
| Interest expense, net | (11,457) | | | (12,602) | | | 1,145 | | | (9.1) | % |
| Other income | 722 | | | 13,802 | | | (13,080) | | | (94.8) | % |
| Total corporate revenue, net | (10,735) | | | 1,200 | | | (11,935) | | | (994.6) | % |
| Expenses: | | | | | | | |
| Compensation and benefits | 22,306 | | | 20,910 | | | 1,396 | | | 6.7 | % |
| Production technology | — | | | — | | | — | | | N/A |
| General and administrative | 8,523 | | | 11,510 | | | (2,987) | | | (26.0) | % |
| Depreciation and amortization | 2,804 | | | 2,350 | | | 454 | | | 19.3 | % |
| Other expenses | 4,336 | | | 6,405 | | | (2,069) | | | (32.3) | % |
| Total corporate expenses | 37,969 | | | 41,175 | | | (3,206) | | | (7.8) | % |
| Corporate net loss | $ | (48,704) | | | $ | (39,975) | | | $ | (8,729) | | | 21.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, | | | | |
| 2022 | | 2021 | | $ Change | | % Change |
| (dollars in thousands) | | | | |
| Revenue: | | | | | | | |
| Interest expense | $ | (25,637) | | | $ | (21,500) | | | $ | (4,137) | | | 19.2 | % |
| Interest expense, net | (25,637) | | | (21,500) | | | (4,137) | | | 19.2 | % |
| Other income | (3,916) | | | 18,638 | | | (22,554) | | | (121.0) | % |
| Total corporate revenue, net | (29,553) | | | (2,862) | | | (26,691) | | | 932.6 | % |
| Expenses: | | | | | | | |
| Compensation and benefits | 45,659 | | | 46,394 | | | (735) | | | (1.6) | % |
| Production technology | 2 | | | — | | | 2 | | | N/A |
| General and administrative | 18,420 | | | 25,537 | | | (7,117) | | | (27.9) | % |
| Depreciation and amortization | 5,491 | | | 5,111 | | | 380 | | | 7.4 | % |
| Other expenses | 8,236 | | | 13,092 | | | (4,856) | | | (37.1) | % |
| Total corporate expenses | 77,808 | | | 90,134 | | | (12,326) | | | (13.7) | % |
| Corporate net loss | $ | (107,361) | | | $ | (92,996) | | | $ | (14,365) | | | 15.4 | % |
Total Corporate Revenue
Interest expense, net
Interest expense, net decreased by $1.1 million, or 9.1% and increased $4.1 million, or 19.2%, for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021, respectively. The decrease in interest expense for the three month period was driven by the reduction in the Company’s outstanding debt during the three months ended June 30, 2021. The increase in expense for the six months was driven by an increase in corporate debt interest due to issuance of the Senior Notes in January 2021.
Other income
Other income decreased by $13.1 million and $22.6 million for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. The decrease was primarily driven by $22.3 million and $31.8 million decrease in income from our equity method investment for the respective three and six month periods, partially offset by $9.3 million debt extinguishment gain related to the repurchase and retirement of $50 million Senior Notes during the three and six months ended June 30, 2022.
Expenses
Total expenses decreased by $3.2 million and $12.3 million, or 7.8% and 13.7%, for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. The decrease was primarily driven by decreases in compensation and benefits, general and administrative, and other expenses.
Compensation and benefits expense increased by $1.4 million, or 6.7%, for the three months ended June 30, 2022 compared to the three months ended June 30, 2021. The increase was primarily driven by an increase in severance expense due to headcount reduction resulting from the decrease in Origination volume and variable compensation, partially offset by $2.5 million lower salary expense. Compensation and benefits expense decreased by $0.7 million, or 1.6%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The decrease was primarily driven by a $3.0 million decrease in salaries, partially offset by $2.2 million higher severance pay due to headcount reductions.
General and administrative expense decreased $3.0 million and $7.1 million, or 26.0% and 27.9%, for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. The decrease was primarily driven by a decrease in professional services fees of $2.7 million and $7.3 million for the three and six months periods respectively, as a result of increased costs in 2021 associated with the Company’s IPO.
Other expenses decreased $2.1 million, or 32.3% and $4.9 million, or 37.1% for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. The decrease was driven by $1.1 million and $2.6 million reduction in employee related costs for the respective three and six month periods as well as $1.2 million reduction in loss on asset disposal. The decrease in other expense was partially offset by the $0.4 million loss from the sale of the Correspondent channel.
Income Tax Benefit (Expense)
Income tax benefit (expense) is recognized for the entire company rather than on a segment basis. Income tax benefit decreased by $13.1 million and increased by $32.7 million for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. The change is primarily due to the change in (loss) income before income tax. Our overall effective tax rate of 28.6% and 35.1% for the three and six months ended June 30, 2022, respectively and 23.9% and 28.2% for the three and six months ended June 30, 2021, respectively, differed from the U.S. statutory rate of 21.0% primarily due to the impact of the equity investment, state incomes taxes, limitations on the tax deductibility of officers’ compensation applicable to a public entity in both periods, equity-based compensation, and non-deductible transaction costs in 2021 associated with the Company’s IPO.
Liquidity and Capital Resources
Sources and Uses of Cash
Historically, our primary sources of liquidity have included:
•Borrowings, including under our warehouse funding facilities and other secured and unsecured financing facilities
•Cash flow from our operations, including:
•Sale of mortgage loans held for sale
•Loan origination fees
•Servicing fee income
•Interest income on loans held for sale, and
•Cash and marketable securities on hand
Historically, our primary uses of funds have included:
•Origination of loans
•Payment of interest expense
•Repayment of debt
•Payment of operating expenses, and
•Changes in margin requirements for derivative contracts
We are also subject to contingencies which may have a significant impact on the use of our cash.
Summary of Certain Indebtedness
To originate and aggregate loans for sale into the secondary market, we use our own working capital and borrow on a short-term basis primarily through committed and uncommitted mortgage warehouse lines of credit that we have established with different large global and regional banks and financial institutions. Our loan funding facilities are primarily in the form of master repurchase agreements and participation agreements. New loan originations that are financed under these facilities are generally financed at approximately 95% to 100% of the principal balance of the loan (although certain types of loans are financed at lower percentages of the principal balance of the loan).
At the time of either the funding or purchase, mortgage loans are pledged as collateral for borrowings on mortgage warehouse lines of credit. In most cases, loans will remain on one of the warehouse lines of credit facilities for only a short time, generally less than one month, until the loans are pooled and sold. During the time the loans are held for sale, we earn Interest income from the borrower on the underlying mortgage loan. This income is partially offset by the interest and fees we have to pay under the mortgage warehouse lines of credit.
When we sell a pool of loans in the secondary market, the proceeds received from the sale of the loans are used to pay back the amounts we owe on the mortgage warehouse lines of credit. We rely on the cash generated from the sale of loans to fund future loans and repay borrowings under our mortgage warehouse lines of credit. Delays or failures to sell loans in the secondary market could have an adverse effect on our liquidity position.
We held mortgage warehouse lines of credit arrangements with 11 separate financial institutions with a total maximum borrowing capacity of $6.0 billion and an unused borrowing capacity of $4.1 billion as of June 30, 2022. Refer to Note 7 – Warehouse Lines of Credit of our condensed consolidated financial statements.
We maintained a servicing advance financing facility, MSR financing facility and an operating line of credit with total combined maximum borrowing capacity of $632.7 million and unused borrowing capacity of $496.9 million as of June 30, 2022. Refer to Note 8 – Term Debt and Other Borrowings, net of our condensed consolidated financial statements.
The amount owed and outstanding on our loan funding facilities fluctuates significantly based on our Origination volume and the amount of time it takes us to sell the loans we originate.
Our debt financing agreements also contain margin call provisions that, upon notice from the applicable lender at its option, require us to transfer cash or, in some instances, additional assets in an amount sufficient to eliminate any margin deficit. A margin deficit generally will result from any decline in the market value (as determined by the applicable lender) of the assets subject to the related financing agreement relative to the available financing and offsetting hedges. Upon notice from the applicable lender, we generally will be required to satisfy the margin call on the day of such notice or the following business day.
The warehouse facilities and other lines of credit require maintenance of certain operating and financial covenants, and the availability of funds under these facilities is subject to, among other conditions, our continued compliance with these covenants. These financial covenants include, but are not limited to, maintaining a certain minimum tangible net worth, minimum liquidity, minimum profitability levels, and ratio of indebtedness to tangible net worth, among others. A breach of these covenants can result in an event of default under these facilities following which the lenders would be able to pursue certain remedies against us. In addition, each of these facilities includes cross-default or cross-acceleration provisions that could result in all facilities terminating if an event of default or acceleration of maturity occurs under any facility.
In January, 2021, the Company issued $550.0 million aggregate principal amount of its Senior Notes (the “Senior Notes”) in a private placement transaction. The Senior Notes are guaranteed on a senior unsecured basis by each of the Company’s wholly owned subsidiaries existing on the date of issuance, other than HPAM and HPMAC. The Senior Notes bear interest at a rate of 5.0% per annum, payable semi-annually in arrears. The Senior Notes will mature on February 1, 2026.
The Indenture governing the Senior Notes (the “Indenture”) contains covenants and restrictions that, among other things and subject to certain exceptions, limit the ability of the Company and its restricted subsidiaries to (i) incur certain additional debt or issue certain preferred shares; (ii) incur liens; (iii) make certain distributions, investments, and other restricted payments; (iv) engage in certain transactions with affiliates; and (v) merge or consolidate or sell, transfer, lease, or otherwise dispose of all or substantially all of their assets. The Indenture governing the Senior Notes does not include any financial maintenance covenants. Refer to Note 8 – Term Debt and Other Borrowings, net of our condensed consolidated financial statements.
The Company was in compliance with all covenants under the indenture and our warehouse facilities and other lines of credit as of June 30, 2022.
The Company may, at any time and from time to time, seek to retire or purchase the Company’s outstanding Senior Notes through cash purchases in the form of open-market purchases, privately negotiated transactions, or otherwise. Such repurchases, if any, will be upon such terms and at such prices as the Company may determine, and will depend on prevailing market conditions, the Company’s liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material. The Company repurchased $50 million Senior Notes during the six months ended June 30, 2022.
Summary of Mortgage Loan Participation Agreement
In November, 2021, we entered into a Mortgage Loan Participation Sale Agreement (the “Gestation Agreement”) with JPMorgan Chase Bank, National Association, as purchaser (the “Gestation Purchaser”). Subject to compliance with the terms and conditions of the Gestation Agreement, including the affirmative and negative covenants contained therein, the Gestation Agreement permits the Gestation Purchaser to purchase from us from time to time during the term of the Gestation Agreement participation certificates evidencing a 100% undivided beneficial ownership interest in designated pools of fully amortizing first
lien residential mortgage loans that are intended to ultimately be included in MBS issued or guaranteed, as applicable, by Fannie Mae, Freddie Mac, and Ginnie Mae.
The aggregate purchase price of participation certificates owned by the Gestation Purchaser at any given time for which the Gestation Purchaser has not been paid the purchase price for the related MBS by the applicable takeout investor as specified in the applicable takeout commitment cannot exceed $1.5 billion. The Gestation Agreement expires on November 2, 2022.
The Gestation Agreement and certain ancillary agreements thereto contain various financial and non-financial covenants, including financial covenants relating to the maintenance of tangible net worth, liquidity, and a ratio of total indebtedness to tangible net worth. The Company was in compliance with these covenants as of June 30, 2022.
Cash Flows
The following presents the summary of the Company’s cash flows:
| | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 |
| (dollars in thousands) |
| Net cash provided by (used for) operating activities | $ | 2,551,017 | | | $ | (2,384,211) | |
| Net cash provided by (used for) investing activities | 609,828 | | | (25,452) | |
| Net cash (used for) provided by financing activities | (3,205,727) | | | 2,465,644 | |
| Net (decrease) increase in cash, cash equivalents and restricted cash | (44,882) | | | 55,981 | |
| Cash, cash equivalents and restricted cash at end of period | $ | 162,908 | | | $ | 252,874 | |
Our Cash and cash equivalents and restricted cash as of June 30, 2022 decreased by $90.0 million from June 30, 2021.
Operating Activities
Our Cash flows from operating activities are primarily influenced by changes in the levels of our inventory of loans held for sale as shown below:
| | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 |
| Cash flows from: | (dollars in thousands) |
| Mortgage loans held for sale | $ | 2,463,815 | | | $ | (2,339,287) | |
| Gain on loans, net | (58,638) | | | (376,257) | |
| Decrease in fair value of derivative assets | 25,105 | | | 209,106 | |
| Other operating sources | 120,735 | | | 122,227 | |
| Net cash provided by (used for) operating activities | $ | 2,551,017 | | | $ | (2,384,211) | |
Cash provided by operating activities increased by $4,935.2 million for the six months ended June 30, 2022 compared to the cash used for operating activities for the six months ended June 30, 2021. The increase provided by operating activities is primarily driven by decrease in the level of inventory of loans held for sale as a result of a decrease in Origination volume for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.
Investing Activities
Cash provided by investing activities increased by $635.3 million primarily due to proceeds from sale of MSRs of $630.6 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.
Financing Activities
Our Cash flows from financing activities are primarily influenced by changes in Warehouse borrowings as shown below:
| | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 |
| Cash flows from: | (dollars in thousands) |
| Warehouse borrowings, net | $ | (2,808,263) | | | $ | 2,052,175 | |
Distributions to parent, net (a) | — | | | (294,897) | |
| Other financing sources | (397,464) | | | 708,366 | |
| Net cash (used for) provided by financing activities | $ | (3,205,727) | | | $ | 2,465,644 | |
(a) distributions to HPLP, our direct parent prior to the consummation of the merger consummated in connection with the IPO. |
Cash used for financing activities increased for the six months ended June 30, 2022 compared to the cash provided by financing activities for the six months ended June 30, 2021. The increase in use was primarily driven by decrease in proceeds, net of payments, on warehouse borrowings due to a decrease in Origination volume.
Contractual Obligations and Other Commitments
For a discussion of our contractual obligations, refer to “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Contractual Obligations and Other Commitments” in our 2021 Annual Report. There have not been any material changes to our contractual obligations since December 31, 2021.
Repurchase and Indemnification Obligations
In the ordinary course of business, we are exposed to liability with respect to certain representations and warranties that we make to the investors who purchase the loans that we originate. Under certain circumstances, we may be required to repurchase mortgage loans, or indemnify the purchaser of such loans for losses incurred, if there has been a breach of these representations and warranties, or in the case of early payment defaults. In addition, in the event of an early payment default, we are contractually obligated to refund certain premiums paid to us by the investors who purchased the related loan. Refer to Note 11 – Representation and Warranty Reserve to our condensed consolidated financial statements for additional information.
Suspension of Dividend
Our Board has determined not to declare a dividend on our common stock for the three month period ended June 30, 2022. The Board’s determination reflects our desire to maintain a strong liquidity position to support operations in the current macroeconomic environment, including rising interest rates and inflationary pressure, and the potential impact on our results of operations and financial condition.
The Board intends to reassess the payment of cash dividends on a quarterly basis. Future determinations to declare and pay cash dividends, if any, will be made at the discretion of the Board and will depend on a variety of factors, including general macroeconomic, business and financial market conditions; applicable laws; our financial condition, results of operations, contractual restrictions, capital requirements, and business prospects; and other factors the Board may deem relevant at the time.
New Accounting Pronouncements Not Yet Effective
Refer to Note 2 – Basis of Presentation and New Accounting Pronouncements to our condensed consolidated financial statements for a discussion of recent accounting developments and the expected effect on the Company.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to provide information for this item.
Item 4. Controls and Procedures
Management's Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”) Rules 13a-15(e) and 15d-15(e)) are designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the appropriate time periods, and that such information is accumulated and communicated to the Chief Executive Officer and Chief Financial Officer, as appropriate, to
allow timely discussions regarding required disclosure. We, under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures were effective as of June 30, 2022.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
For a discussion of our “Legal Proceedings,” refer to Note 9 – Commitments and Contingencies of our unaudited condensed consolidated financial statements included elsewhere in this Report.
Item 1A. Risk Factors
We have disclosed the risk factors affecting our business, financial condition and operating results in the section entitled “Risk Factors” in our 2021 Annual Report. There have been no material changes from the risk factors previously disclosed.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Recent Sales of Unregistered Equity Securities
None.
Issuer Repurchases of Equity Securities
The following table summarizes the Company’s common stock repurchase activity for the three months ended June 30, 2022.
| | | | | | | | | | | | | | | | | | | | | | | |
| ISSUER REPURCHASES OF COMMON STOCK |
| Period | Total Number of Shares Purchased | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Programs(a) | | Approximate Dollar Value of Shares that May Yet be Purchased Under the Programs(a) |
| April 1, 2022 - April 30, 2022 | 487,808 | | | $ | 3.07 | | | 487,808 | | | $ | 4,997,630 | |
| May 1, 2022 - May 31, 2022 | 230,298 | | | 3.17 | | | 230,298 | | | 4,250,020 | |
| June 1, 2022 - June 30, 2022 | — | | | — | | | — | | | 4,250,020 | |
Total for the three months ended June 30, 2022 | 718,106 | | | $ | 3.13 | | | 718,106 | | | $ | 4,250,020 | |
(a) On February 24, 2022, we announced a stock repurchase program whereby we may repurchase up to a total of $8.0 million of our issued and outstanding common stock from time to time until the program’s expiration on December 31, 2022 on the open market or in privately negotiated transactions. The timing and amount of stock repurchases, if any, will depend on price, market conditions, applicable regulatory requirements, and other factors. Repurchases under the stock repurchase program may also be made from time to time pursuant to one or more plans adopted under Rule 10b5-1 of the Exchange Act. The program does not require us to repurchase any specific number of shares, and may be modified, suspended or terminated at any time without prior notice. Shares repurchased under the program are subsequently retired.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
Item 6. Exhibits
| | | | | | | | |
| Exhibit Number | | Description |
| 3.1 | | |
| 3.2 | | |
| 10.1*+ | | |
| 10.2 | | |
| 10.3*+ | | |
| 10.3.1*+ | | |
| 10.4*+ | | |
| 10.5* | | |
| 10.6*+ | | Eighth Amendment to the Amended and Restated Master Repurchase Agreement and Amended and Restated Pricing Letter, dated as of June 29, 2022, by and among Home Point Financial Corporation, as seller, TIAA, FSB, formerly known as EverBank, as administrative agent and buyer, and Capital One, National Association, as buyer. |
| 10.7*+ | | Amendment No. 8 to the Master Repurchase Agreement, dated as of June 30, 2022, by and among Credit Suisse First Boston Mortgage Capital LLC, as administrative agent, Credit Suisse AG, acting through its Cayman Islands Branch, as buyer, Alpine Securitization LTD, as buyer, and Home Point Financial Corporation, as seller. |
| 10.8*+ | | |
| 31.1* | | |
| 31.2* | | |
| 32.1* | | |
| 101.INS* | | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). |
| 101.SCH* | | Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL* | | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF* | | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB* | | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE* | | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104* | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* Filed herewith.
+ Certain portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The Company agrees to furnish supplementally an unredacted copy of the exhibit to the Securities and Exchange Commission upon its request.
++ Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish a copy of such schedules and exhibits to the Securities and Exchange Commission upon its request.
The agreements and other documents filed as exhibits to this Report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | HOME POINT CAPITAL INC. |
| | | |
| | | |
| Dated: August 11, 2022 | | By: | /s/ William A. Newman |
| | Name: | William A. Newman |
| | Title: | President and Chief Executive Officer
(Principal Executive Officer) |
| | | |
| Dated: August 11, 2022 | | By: | /s/ Mark E. Elbaum |
| | Name: | Mark E. Elbaum |
| | Title: | Chief Financial Officer
(Principal Financial Officer) |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
THIRD AMENDMENT
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”), is entered into as of April 29, 2022, by and among HOME POINT FINANCIAL CORPORATION, a New Jersey corporation, as borrower (the “Borrower”), HOME POINT CAPITAL INC., a Delaware corporation, as guarantor (the “Guarantor”), the financial institutions that are parties hereto, as lenders (each such financial institution, a “Lender” and collectively, the “Lenders”) and GOLDMAN SACHS BANK USA, as administrative agent (the “Administrative Agent”).
WHEREAS, the Borrower, the Guarantor, the Administrative Agent and Goldman Sachs Bank USA, as the initial lender (the “Initial Lender”) have entered into that certain Second Amended and Restated Credit Agreement, dated as of May 4, 2021 (as previously amended, the “Existing Credit Agreement”);
WHEREAS, the Borrower, the Administrative Agent and the Lenders agree to amend the Existing Credit Agreement to make certain changes to the interest rate calculations (the Existing Credit Agreement, as amended by this Amendment, being referred to herein as the “Amended Credit Agreement”); and
WHEREAS, subject to the terms and conditions set forth in this Amendment, the Administrative Agent and the Lenders are willing to amend the Existing Credit Agreement pursuant to Section 10.2(a) of the Existing Credit Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, the parties hereto agree as follows:
1. Definitions and Construction. Unless otherwise defined or provided herein, capitalized terms used herein have the respective meanings attributed thereto in, or by reference in, the Amended Credit Agreement. The rules of construction in Article I of the Amended Credit Agreement shall apply mutatis mutandis to this Amendment.
2. Amendment to the Existing Credit Agreement. Upon satisfaction of the conditions set forth in Section 3 hereof, the parties hereto hereby agree that the Existing Credit Agreement is hereby amended in its entirety to read as set forth on Exhibit A hereto.
3. Conditions to Effectiveness. This Amendment shall be effective as of the date first above written upon the Administrative Agent’s receipt of the following:
(a) counterparts of this Amendment executed by the Borrower, the Guarantor and the Lender;
(b) evidence, satisfactory in form and substance to the Administrative Agent that the Borrower has provided all notices required by the Agencies and the Acknowledgement Agreements for the Borrower’s execution and delivery of this Amendment and performance of the Amended Credit Agreement; and
(c) confirmation that the Administrative Agent shall have received payment in full of all fees and expenses (including reasonable accrued fees and expenses of counsel to the Administrative Agent), which are due and payable under the Transaction Documents on or before the date hereof.
4. Certain Representations and Warranties. In order to induce the Administrative Agent and the Lenders to enter into this Amendment, the Borrower and the Guarantor each hereby represent and warrant to the Administrative Agent and each Lender as of the date hereof, as follows:
(a) Authorization. It has the power and authority to execute and deliver this Amendment and perform its obligations under the Amended Credit Agreement. It has taken all necessary action to authorize its execution and delivery of this Amendment and performance of the Amended Credit Agreement.
(b) Consents. No consent, approval or authorization of, or declaration or filing with, any governmental authority, and no consent of any other Person, is required in connection with its execution and delivery of this Amendment and performance of the Amended Credit Agreement except for (x) those already obtained and (y) all consents, approvals and authorizations required by the Agencies and the Acknowledgement Agreements for the Borrower’s execution and delivery of this Amendment and performance of the Amended Credit Agreement.
(c) Execution, No Conflict. This Amendment has been duly executed and delivered by it and the Amended Credit Agreement constitutes a legal, valid and binding obligation of it, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally (regardless of whether such enforceability is considered in a proceeding in equity or at law). Its execution and delivery of the Amendment or performance of the Amended Credit Agreement does not conflict with, or constitute a violation or breach of, or constitute a default under, the terms of (i) any material contract, mortgage, lease, agreement or instrument to which it is a party or which is binding upon it, (ii) any law or regulation or order or decree of any court applicable to it in any material respect or (iii) the organizational documents of it.
(d) No Defaults. As of the date hereof and after giving effect to this Amendment, no Potential Event of Default or Event of Default has occurred and is continuing.
(e) Representations and Warranties. The representations and warranties made by the Borrower and the Guarantor in the Amended Credit Agreement and each of the other Transaction Documents to which either is a party are true and correct as of the date hereof (except to the extent such representations and warranties relate solely to an earlier date and then as of such earlier date).
5. Reference to, and Effect on, the Credit Agreement and the Transaction Documents.
(a) This Amendment constitutes a Transaction Document for all purposes of, or in connection with, the Amended Credit Agreement and the other Transaction Documents.
(b) Except as expressly set forth herein, all of the terms, conditions and covenants of the Existing Credit Agreement and the other Transaction Documents are hereby ratified and confirmed in all respects by each of the parties hereto and shall remain in full force and effect in accordance with its terms.
(c) On and after the effectiveness of this Amendment, each reference in the Amended Credit Agreement to “this Agreement”, “this Credit Agreement”, “hereunder”, “hereof” or words of like import referring to the Agreement, and each reference in each of the other Transaction Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Existing Credit Agreement as amended by this Amendment.
(d) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of or amendment to, any right, power or remedy of the Administrative Agent under, nor constitute a waiver of or amendment to, any other provision of, the Amended Credit Agreement or any other Transaction Document.
(e) The relationship of Administrative Agent and the Lender, on the one hand, and the Borrower, on the other hand, has been and shall continue to be, at all times, that of creditor and debtor and not as joint venturers or partners. Nothing contained in this Amendment, any instrument, document or agreement delivered in connection herewith or in the Amended Credit Agreement or any of the other Transaction Documents shall be deemed or construed to create a fiduciary relationship between or among the parties.
6. No Novation. This Amendment is not intended by the parties to be, and shall not be construed to be, a novation of the Amended Credit Agreement or any other Transaction Document or an accord and satisfaction in regard thereto and the Borrower reaffirms that the existing security interest created by the Existing Credit Agreement and each other Transaction Document is and remains in full force and effect.
7. Miscellaneous. The provisions of Section 10.9 (Governing Law), Section 10.10 (Jurisdiction) and Section 10.11 (Waiver of Jury Trial) of the Credit Agreement are incorporated into this Amendment as if fully set forth herein, mutatis mutandis.
8. Entire Agreement. This Amendment constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all other understandings, oral or written, with respect to the subject matter hereof.
9. Severability. In case any provision in or obligation under this Amendment shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
10. Section Headings. All Section headings are inserted for convenience of reference only and shall not affect any construction or interpretation of this Amendment.
11. General. This Amendment shall be binding on and shall inure to the benefit of the Borrower, the Guarantor, the Administrative Agent, the Lenders and their respective successors and permitted assigns under the Transaction Documents.
12. Execution. This Amendment may be executed in any number of counterparts and by each party hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or by e-mail in portable document format (.pdf) shall be effective as delivery of a manually executed counterpart of this Amendment.
(Signature pages follow)
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to Second Amended and Restated Credit Agreement be executed by their respective officers thereunto duly authorized, as of the date first above written.
| | | | | |
| HOME POINT FINANCIAL CORPORATION, as Borrower By: /s/ Maria Fregosi
Name: Maria Fregosi
Title: Chief Investment Officer |
| HOME POINT CAPITAL, INC., as Guarantor
By: /s/ Maria Fregosi Name: Maria Fregosi
Title: Chief Investment Officer |
| |
| | | | | |
| GOLDMAN SACHS BANK USA, as Administrative Agent By: /s/ Jeff Hartwick
Name: Jeff Hartwick
Title: Authorized Person |
| |
| GOLDMAN SACHS BANK USA, as Lender
By: /s/ Jeff Hartwick Name: Jeff Hartwick
Title: Authorized Person |
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
among
HOME POINT FINANCIAL CORPORATION
as Borrower,
HOME POINT CAPITAL INC.
as Guarantor,
GOLDMAN SACHS BANK USA,
as Administrative Agent for the financial institutions
that may from time to time become parties hereto as Lenders,
and
LENDERS
from time to time party hereto
dated as of May 4, 2021
TABLE OF CONTENTS
Page
SCHEDULES
Schedule I Borrower’s Account, Collection Account and Administrative Agent’s Account
Schedule II Valuation Agents
Schedule III Dealers
Schedule IV Minimum Haircut Trigger Event
Schedule 4.1(c) Ownership Structure of the Borrower and its Subsidiaries
Schedule 4.1(q) Indebtedness of the Borrower and the Guarantor
Schedule 5.2(a) Liens
Schedule 10.3 Notice Addresses
EXHIBITS
EXHIBIT A -- Form of Compliance Certificate
EXHIBIT B -- Form of Notice of Borrowing
EXHIBIT C -- Form of Loan Note
EXHIBIT D -- Form Assignment and Assumption
EXHIBIT E -- Commitments
EXHIBIT F -- Form of Monthly Report
EXHIBIT G -- Form of Notice of Prepayment
EXHIBIT A
to Third Amendment to Second Amended and Restated Credit Agreement
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) is entered into as of May 4, 2021, by and among Home Point Financial Corporation a New Jersey corporation, as borrower (the “Borrower”), Home Point Capital Inc., a Delaware corporation (the “Guarantor”), the financial institutions that may from time to time become parties hereto (each such financial institution, a “Lender” and collectively, the “Lenders”) and GOLDMAN SACHS BANK USA (“GS Bank”), as administrative agent (the “Administrative Agent”).
RECITALS
WHEREAS, the Borrower, the financial institutions party thereto and GS Bank, as Administrative Agent, are parties to that certain Amended and Restated Credit Agreement, dated as of July 11, 2019 (the “Existing Credit Agreement”);
WHEREAS, the Borrower, the Lenders and the Administrative Agent desire to amend and restate the Existing Credit Agreement as set forth in this Agreement; and
WHEREAS, the parties hereto intend that this Agreement and the documents executed in connection herewith not effect a novation of the obligations of the Borrower or the Guarantor under the Existing Credit Agreement, but merely a restatement of and, where applicable, an amendment to the terms governing such obligations;
NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Certain Defined Terms. Capitalized terms used but not otherwise defined herein have the meanings set forth below:
“1940 Act” shall mean the Investment Company Act of 1940, as amended.
“5 Year Swap Rate” shall mean, as of any date of determination, the average of the mid-market par swap rates for interest rate swaps with a maturity of five years offered by the Dealers.
“Accepted Servicing Practices” shall mean (i) with respect to any Mortgage Loan, the customary and usual standards of mortgage servicing practices of prudent mortgage lending institutions servicing mortgage loans for itself or for other third-party portfolios of mortgage loans of the same type as such Mortgage Loan in the jurisdiction where the related Mortgaged Property is located; and (ii) with respect to all MSRs related to the Servicing Contract of any Agency, those practices required by such Agency (including the Fannie Mae Agency Guide, the Freddie Mac Agency Guide, and the Ginnie Mae Agency Guide as applicable); provided, however, that in all cases the accepted servicing practices must (i) comply with the terms of Applicable Laws and the related loan documents and (ii) meet a standard of care not less than customary, reasonable and usual standards of practice for institutions that service loans that are similar to the Mortgage Loans.
“Account Bank” shall mean Merchants Bank of Indiana or such replacement financial institution, reasonably acceptable to the Administrative Agent, identified in writing to the Administrative Agent where the Collection Account is maintained.
“Account Control Agreement” shall mean a Deposit Account Agreement, dated as of March 7, 2019, by and among the Borrower, the Account Bank and the Administrative Agent, pursuant to which the Administrative Agent shall be granted “control” (as defined in Section 9-104 of the UCC) of the Collection Account.
“Acknowledgment Agreement” shall mean each of the Fannie Mae Acknowledgment Agreement, the Freddie Mac Acknowledgment Agreement, and the Ginnie Mae Acknowledgment Agreement, as applicable.
“Activation Notice” shall have the meaning set forth in the Account Control Agreement.
“Additional Collateral” shall mean all right, title and interest in, to and under all personal property of the Borrower, including but not limited to the following, in each case whether now owned or existing or hereafter acquired or arising and wherever located: (a) Accounts, (b) Contracts; (c) Chattel Paper, (d) Documents, (e) General Intangibles, (f) Goods (including all of its Equipment, Fixtures and Inventory), together with all accessions, additions, attachments, improvements, substitutions and replacements thereto and therefor, (g) Instruments, (h) Insurance, (i) Intellectual Property, (j) Investment Related Property (including, without limitation, Deposit Accounts), (k) Letter of Credit Rights, (l) Money, (m) Receivables and Receivables Records, (n) Commercial Tort Claims, (o) any other investments and investment property, (p) to the extent not otherwise included in the foregoing, all other personal property of any kind and all Collateral Records, Collateral support and Supporting Obligations relating to any of the foregoing; and (q) to the extent not otherwise included in the foregoing, all Proceeds, products, accessions, rents and profits of or in respect of any of (a) through (p); provided, however, that Additional Collateral shall not include Excluded Collateral or (for so long as such remains applicable) any of the foregoing to the extent that a security interest therein is prohibited by or in violation of any law, rule, or regulation, or the contractual terms or provisions related thereto.
Capitalized terms used in this definition shall have the meaning given thereto in Article 9 of the UCC.
“Additional Guarantor Collateral” shall mean all right, title and interest in, to and under all personal property of the Guarantor, including but not limited to the following, in each case whether now owned or existing or hereafter acquired or arising and wherever located: (a) Accounts, (b) Contracts, (c) Chattel Paper, (d) Documents, (e) General Intangibles, (f) Goods (including all of its Equipment, Fixtures and Inventory), together with all accessions, additions, attachments, improvements, substitutions and replacements thereto and therefor, (g) Instruments, (h) Insurance, (i) Intellectual Property, (j) Investment Related Property (including, without limitation, Deposit Accounts), (k) Letter of Credit Rights, (l) Money, (m) Receivables and Receivables Records, (n) Commercial Tort Claims, (o) any other investments and investment property (including its interests in Longbridge Financial, LLC and the Borrower), (p) to the extent not otherwise included in the foregoing, all other personal property of any kind and all Collateral Records, Collateral support and Supporting Obligations relating to any of the foregoing, (q) to the extent not otherwise included in the foregoing, all other personal property of any kind and all Collateral Records, Collateral support and Supporting Obligations relating to any of the foregoing, and (r) to the extent not otherwise included in the foregoing, all Proceeds, products, accessions, rents and profits of or in respect of any of (a) through (q); provided,
however, that Additional Guarantor Collateral shall not include Excluded Collateral or (for so long as such remains applicable) any of the foregoing to the extent that a security interest therein is prohibited by or in violation of any law, rule, or regulation, or the contractual terms or provisions related thereto.
Capitalized terms used in this definition shall have the meaning given thereto in Article 9 of the UCC.
“Additional Principal Amortization Amount” shall mean an amount due and payable on each Additional Principal Amortization Date equal to the quotient of (i) the Advances outstanding on the Availability Period End Date divided by (ii) 12.
“Additional Principal Amortization Date” shall mean the Monthly Payment Date occurring in the calendar month in which the Availability Period End Date occurs, and each Monthly Payment Date thereafter through the Maturity Date, as applicable.
“Adjusted Tangible Net Worth” shall mean, as of any date of determination, an amount equal to, on a consolidated basis, the stockholder or members’ equity, including capital stock or member interests, additional paid-in capital, retained earnings, deferred income, capitalized mortgage loan servicing rights and capitalized excess mortgage loan servicing fees, but excluding treasury stock, if any, and any intangible assets of the Guarantor, the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP.
“Administrative Agent” shall have the meaning set forth in the introductory paragraph hereof.
“Administrative Agent Asset Value” shall mean, as of any date of determination, the sum of (i) the Administrative Agent Fannie Mae Asset Value, (ii) the Administrative Agent Freddie Mac Asset Value, and (iii) the Administrative Agent Ginnie Mae Asset Value; provided that the Administrative Agent Ginnie Mae Asset Value of Ginnie Mae MSRs shall be reduced to the extent necessary such that the Ginnie Mae Borrowing Base remains at or below the Ginnie Mae Concentration Limit.
“Administrative Agent Fannie Mae Asset Value” shall mean, as of any date of determination, the product of (i) the Fannie Mae Advance Rate, (ii) the Administrative Agent Fannie Mae Market Value Percentage, and (iii) the aggregate unpaid principal balance of the Mortgage Loans related to the Fannie Mae MSRs.
“Administrative Agent Fannie Mae Market Value Percentage” shall mean, with respect to any Fannie Mae MSR as of any date of determination, the percentage to be applied to the unpaid principal balance of the applicable Mortgage Loans to arrive at the fair market value of such Fannie Mae MSR, as most recently determined by the Administrative Agent pursuant to Section 2.6 and in accordance with the Administrative Agent Methodology; provided that, in no event shall the Administrative Agent Fannie Mae Market Value Percentage be greater than the market value thereof implying a zero option-adjusted spread.
“Administrative Agent Fee Letter” shall mean that certain side letter, dated as of the Closing Date, by and between the Borrower, Guarantor, and the Administrative Agent, with respect to certain pricing terms of the facility established hereby.
“Administrative Agent Freddie Mac Asset Value” shall mean, as of any date of determination, the product of (i) the Freddie Mac Advance Rate, (ii) the Administrative Agent
Freddie Mac Market Value Percentage, and (iii) the aggregate unpaid principal balance of the Mortgage Loans related to the Freddie Mac MSRs.
“Administrative Agent Freddie Mac Market Value Percentage” shall mean, with respect to any Freddie Mac MSR as of any date of determination, the percentage to be applied to the unpaid principal balance of the applicable Mortgage Loans to arrive at the fair market value of such Freddie Mac MSR, as most recently determined by the Administrative Agent pursuant to Section 2.6 and in accordance with the Administrative Agent Methodology; provided that, in no event shall the Administrative Agent Freddie Mac Market Value Percentage be greater than the market value thereof implying a zero option-adjusted spread.
“Administrative Agent Ginnie Mae Asset Value” shall mean, as of any date of determination, the product of (i) the Ginnie Mae Advance Rate, (ii) the Administrative Agent Ginnie Mae Market Value Percentage, and (iii) the aggregate unpaid principal balance of the Mortgage Loans related to the Ginnie Mae MSRs.
“Administrative Agent Ginnie Mae Market Value Percentage” shall mean, with respect to any Ginnie Mae MSR as of any date of determination, the percentage to be applied to the unpaid principal balance of the applicable Mortgage Loans to arrive at the fair market value of such Ginnie Mae MSR, as most recently determined by the Administrative Agent pursuant to Section 2.6 and in accordance with the Administrative Agent Methodology; provided that, in no event shall the Administrative Agent Ginnie Mae Market Value Percentage be greater than the market value thereof implying a zero option-adjusted spread.
“Administrative Agent Methodology” shall mean, with respect to any Administrative Agent Fannie Mae Market Value Percentage, Administrative Agent Freddie Mac Market Value Percentage, or Administrative Agent Ginnie Mae Market Value Percentage calculated by the Administrative Agent, the assumptions, factors, parameters, methodology and calculations employed by the Administrative Agent in determining such Administrative Agent Fannie Mae Market Value Percentage, Administrative Agent Freddie Mac Market Value Percentage, or Administrative Agent Ginnie Mae Market Value Percentage for purposes of determining the Borrowing Base, which assumptions, factors, parameters, methodology and calculations shall be determined by the Administrative Agent in its sole discretion. Without limiting the foregoing, if as a result of a change by the Administrative Agent of its Administrative Agent Methodology, the aggregate of the Administrative Agent Fannie Mae Market Value Percentage, Administrative Agent Freddie Mac Market Value Percentage, and Administrative Agent Ginnie Mae Market Value Percentage changes by more than five percent (5%) over the course of one (1) Business Day, then upon request by the Borrower the Administrative Agent shall provide the Borrower with an explanation of the basis for such change; provided, however, that, except pursuant to a Borrowing Base Dispute under Section 2.6(b), neither such change in market value nor the Administrative Agent’s failure to provide information related thereto shall affect the validity of the Administrative Agent Methodology or Administrative Agent Asset Value.
“Administrative Agent’s Account” shall mean the Administrative Agent’s bank account, described on Schedule I attached hereto, designated by the Administrative Agent from time to time by written notice to the Borrower.
“Advance” shall have the meaning set forth in Section 2.2(a).
“Affected Financial Institution” shall mean (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affected Party” shall have the meaning set forth in Section 2.11(b).
“Affiliate” shall mean, with respect to a Person, any other Person that (i) directly or indirectly through one or more intermediaries, controls, is controlled by, or is under direct or indirect common control with such Person or (ii) is an officer or director of such Person; provided that each Agency shall be specifically excluded as an Affiliate of any Lender. Solely for purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 25% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors (or persons performing similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise; provided that other than the Borrower, Guarantor, and their respective Subsidiaries (as applicable), no other portfolio company of Stone Point Capital LLC or its Affiliates shall be deemed to be an “Affiliate” of the Borrower or Guarantor.
“Agency” shall mean Fannie Mae, Freddie Mac, and/or Ginnie Mae, as applicable.
“Agency Approvals” shall have the meaning set forth in Section 5.1(l).
“Agency Fee Letter” shall mean that certain side letter, dated as of the Closing Date, between the Borrower, Guarantor, and the Administrative Agent, with respect to certain pricing terms of the facility created hereby.
“Agency Guide” shall mean the Fannie Mae Agency Guide, the Freddie Mac Agency Guide, and/or the Ginnie Mae Agency Guide, as applicable.
“Agency Requirements” shall mean, collectively, the Fannie Mae Requirements, the Freddie Mac Requirements, and the Ginnie Mae Requirements.
“Agency Servicing Rights” shall mean, with respect to each Mortgage Loan, all of the Borrower’s right, title and interest in, to and under the related Servicing Contracts, whether now or hereafter existing, acquired or created, whether or not yet accrued, earned, due or payable, as well as all other present and future right and interest under such Servicing Contracts.
“Aggregate Advance Rate Cap” shall have the meaning set forth in the Agency Fee Letter.
“Aggregate Commitment Amount” shall mean at any time, the sum of the Commitments then in effect. The Aggregate Commitment Amount as of the Closing Date shall be equal to $500,000,000.
“Aggregate Facility Amount” shall mean $1,000,000,000.
“Aggregate Outstandings” shall mean the aggregate outstanding principal amount of the Advances.
“Agreement” shall have the meaning set forth in the introductory paragraph hereof.
“Alternative Rate” shall mean, for any day, a rate per annum equal to the sum of (a) [***] and (b) the rate calculated by the Federal Reserve Bank of New York based on such day’s federal funds transactions by depositary institutions (as determined in such manner as the Federal Reserve Bank of New York shall set forth on its public website from time to time) and
published on the next succeeding Business Day by the Federal Reserve Bank of New York as the federal funds effective rate; provided that if such rate is not published for any day that is a Business Day, the rate for a federal funds transaction quoted at 11:00 a.m. on such day received to the Administrative Agent from a federal funds broker of recognized standing selected by it; provided, that if at any time the Alternative Rate shall be less than the Floor, then the Alternative Rate shall be deemed to be the Floor at such time.
“Ancillary Income” shall mean all income derived from a Mortgage Loan, other than payments or collections in respect of principal, interest, escrow payments and prepayment penalties.
“Applicable Law” shall mean all applicable laws of any Governmental Authority, including laws relating to consumer leasing and protection and any ordinances, judgments, decrees, injunctions, writs and orders or like actions of any Governmental Authority and rules and regulations of any federal, regional, state, county, municipal or other Governmental Authority.
“Applicable Percentage” shall mean, for any Lender at any time, a percentage equal to a fraction, (a) the numerator of which is the amount of such Lender’s Commitment at such time plus, the amount of any Advances of such Lender in excess of such Lender’s Commitment then outstanding and (b) the denominator of which is the Aggregate Commitment Amount at such time plus, the Uncommitted Advance Amount at such time (provided that if the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon such Lender’s share of the aggregate Advances at such time. When a Defaulting Lender shall exist, the Applicable Percentage shall be calculated without inclusion of such Defaulting Lender’s Commitment and Advances.
“Applicable Tenor” shall mean the tenor applicable to the Cost of Funds Rate prior to the applicable Benchmark Replacement Date.
“ARRC” shall mean the Alternative Reference Rates Committee convened by the Federal Reserve Board and the Federal Reserve Bank of New York.
“Asset” shall mean all Fannie Mae MSRs, Freddie Mac MSRs, and Ginnie Mae MSRs of the Borrower, all of which are pledged to the Administrative Agent (on behalf of and for the ratable benefit of each Secured Party) pursuant to the terms hereof. For the avoidance of doubt, the Assets shall be identified on the applicable Schedule of Assets and updated no less frequently than monthly.
“Asset Management Strategy” shall mean the off-balance sheet asset management strategy disclosed by the Borrower to the Administrative Agent prior to the Closing Date, which strategy may be updated, from time to time, upon Borrower disclosing such updated strategy to the Administrative Agent; provided, however, that if such proposed strategy is substantially inconsistent with the strategy disclosed prior to the Closing Date, then such proposed strategy shall not constitute the “Asset Management Strategy” for purposes of this Agreement without prior consent of the Administrative Agent (such consent not to be unreasonably withheld).
“Assignment and Assumption” shall mean an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.8), and accepted by the Administrative Agent, in substantially the form of Exhibit D hereto or any other form approved by the Administrative Agent.
“Availability Period” shall mean, unless otherwise extended pursuant to and in accordance with Section 2.14, the period from the Closing Date until the earlier to occur of (i) an Event of Default, and (ii) the Availability Period End Date.
“Availability Period End Date” shall mean the earlier of (a) May 4, 2024, as such date may be extended pursuant to Section 2.14 and (b) the date the Obligations are accelerated pursuant to the terms of this Agreement.
“Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” shall mean (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Bankruptcy Code” shall mean the U.S. Bankruptcy Code, 11 U.S.C. § 101, et seq., as amended.
“Base Servicing Fee” shall mean, with respect to the Portfolio of Mortgage Loans for each Agency and each Collection Period, an amount equal to the product of (A) the aggregate outstanding principal balance of the Mortgage Loans for such Agency included in such Portfolio as of the first day of such Collection Period multiplied by (B) one-twelfth of the Base Servicing Fee Rate; provided, however, that (1) with respect to all Mortgage Loans in the Portfolio for such Agency, if the initial Collection Period is less than a full month, such fee for each such Mortgage Loan shall be an amount equal to the product of the fee otherwise described above multiplied by a fraction, the numerator of which is the number of days in such initial Collection Period and the denominator of which is 30; (2) if any Fannie Mae Mortgage Loan, Freddie Mac Mortgage Loan, or Ginnie Mae Mortgage Loan, as applicable, ceases to be part of such Portfolio during such Collection Period as a result of a termination of the Borrower’s duties as servicer under the applicable Servicing Contract, the portion of such amount that is attributable to such Fannie Mae Mortgage Loan, Freddie Mac Mortgage Loan, or Ginnie Mae Mortgage Loan, as applicable, shall be adjusted to an amount equal to the product of the fee otherwise described above multiplied by a fraction, the numerator of which is the number of days in such Collection Period during which such Mortgage Loan was included in such Portfolio and denominator of which is 30.
“Base Servicing Fee Rate” means (i) with respect to any Mortgage Loan serviced for Fannie Mae pursuant to the applicable Servicing Contract, unless otherwise adjusted pursuant to and in accordance with Section 2.22, [***] per annum, (ii) with respect to any Mortgage Loan serviced for Freddie Mac pursuant to the applicable Servicing Contract, unless otherwise adjusted pursuant to and in accordance with Section 2.22, [***] per annum, and (iii) with respect to any Mortgage Loan serviced for Ginnie Mae pursuant to the applicable Servicing Contract, unless otherwise adjusted pursuant to and in accordance with Section 2.22, [***] per annum.
“Basel III” shall mean Basel III: A global regulatory framework for more resilient banks and banking systems prepared by the Basel Committee on Banking Supervision, and all national implementations thereof.
“Benchmark” shall mean, initially, the SOFR Rate; provided that, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any determination of the Benchmark on any date, then, pursuant to Section 2.11(d)(i), the Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder in respect of such determination on such date and all determinations on all subsequent dates; provided further that if the Benchmark as determined would be less than the Floor for any calculation period under the Agreement, the Benchmark will be the Floor for such period. “Benchmark Replacement” shall mean, with respect to any Applicable Tenor, the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for Dollar denominated syndicated or bilateral credit facilities at such time and (b) the related Benchmark Replacement Adjustment; provided that, if the Benchmark Replacement as determined above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Transaction Documents.
“Benchmark Replacement Adjustment” shall mean, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Accrual Period and Applicable Tenor for any setting of such Unadjusted Benchmark Replacement the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent for the applicable Corresponding Tenor in its sole and absolute discretion.
“Benchmark Replacement Conforming Changes” shall mean, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Business Day,” the definition of “Interest Accrual Period,” the definition of “Collection Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of the Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Transaction Documents).
“Benchmark Replacement Date” shall mean the earliest to occur of the following events with respect to the then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark permanently or indefinitely ceases to provide such Benchmark; or
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein.
For the avoidance of doubt, if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination.
“Benchmark Transition Event” shall mean the occurrence of one or more of the following events with respect to the then-current Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark announcing that such administrator has ceased or will cease to provide such Benchmark, permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark;
(2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark, the central bank for the currency of such Benchmark, an insolvency official with jurisdiction over the administrator for such Benchmark, a resolution authority with jurisdiction over the administrator for such Benchmark or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark, which states that the administrator of such Benchmark has ceased or will cease to provide such Benchmark permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark; or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark announcing that such Benchmark is no longer representative.
“Benchmark Unavailability Period” shall mean (a) if a Benchmark Transition Event has not occurred, unless and until a Benchmark Replacement is implemented with respect to the then-current Benchmark in accordance with Section 2.11(d), each (if any) Interest Accrual Period for which, Administrative Agent for any reason determines (which determination shall be conclusive and binding absent manifest error) that, other than as a result of a Benchmark Transition Event reasonable and adequate means do not exist for ascertaining the then-current Benchmark for an applicable Interest Accrual Period, (b) if a Benchmark Transition Event has occurred, the period (if any) (i) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder in accordance with Section 2.11(d) and (ii) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark, or (c) at any time, (i) beginning at the time of the adoption of any requirement of law or any change therein or in the interpretation or application thereof that makes it unlawful for any Lender to maintain an Advance at the then current Benchmark as contemplated hereunder (such occurrence, an “Illegality Condition”) and (ii) ending at the time any such Illegality Condition is no longer in effect.
“Beneficial Ownership Certification” shall mean a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” shall mean 31 C.F.R. § 1010.230.
“BHC Act Affiliate” of a party shall mean an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Borrower” shall have the meaning set forth in the introductory paragraph hereof.
“Borrower’s Account” shall mean (i) the Borrower’s bank account, described on Schedule I attached hereto, for the account of the Borrower or (ii) such other account as may be designated by the Borrower from time to time by at least ten (10) Business Days’ prior written notice to the Administrative Agent and the Lenders, so long as such other account is acceptable to the Administrative Agent in its sole and absolute discretion.
“Borrower Collateral” shall have the meaning set forth in Section 2.17.
“Borrowing Base” shall mean, as of any date of determination, with respect to MSRs that are Eligible Assets, clause (a) or (b) below, as applicable:
(a) if a Borrowing Base Dispute has not been initiated with respect to such date, or a Borrowing Base Dispute has been initiated but the Valuation Agent Asset Value has not yet been determined pursuant to Section 2.6(b), the Administrative Agent Asset Value thereof; or
(b) if a Borrowing Base Dispute has been initiated and the Valuation Agent Asset Value has been determined pursuant to Section 2.6(b), the lesser of (1) the Valuation Agent Asset Value (provided that the value attributed to that portion of the Valuation Agent Asset Value pertaining to Ginnie Mae MSRs shall be reduced such that the Ginnie Mae Borrowing Base remains at or below the Ginnie Mae Concentration Limit), and (2) the Borrowing Base Cap.
“Borrowing Base Advance Rate Cap Amount” shall mean the product of (a) the sum of (1) the product of (A) the most recently determined Administrative Agent Fannie Mae Market Value Percentage, and (B) the aggregate unpaid principal balance of the Mortgage Loans related to the Fannie Mae MSRs, (2) the product of (A) the most recently determined Administrative Agent Freddie Mac Market Value Percentage, and (B) the aggregate unpaid principal balance of the Mortgage Loans related to the Freddie Mac MSRs, and (3) the product of (A) the most recently determined Administrative Agent Ginnie Mae Market Value Percentage, and (B) the aggregate unpaid principal balance of the Mortgage Loans related to the Ginnie Mae MSRs; provided however, that the Administrative Agent Ginnie Mae Asset Value of Ginnie Mae MSRs shall be reduced such that the Ginnie Mae Borrowing Base remains at or below the Ginnie Mae Concentration Limit and (b) the Aggregate Advance Rate Cap.
“Borrowing Base Cap” shall mean the lesser of (a) the sum of (1) Borrowing Base Cap Fannie Amount, (2) the Borrowing Base Cap Freddie Amount, and (3) the Borrowing Base Cap Ginnie Amount and (b) the Borrowing Base Advance Rate Cap Amount.
“Borrowing Base Cap Fannie Amount” shall mean the product of (A) the most recently determined Administrative Agent Fannie Mae Market Value Percentage, (B) the
aggregate unpaid principal balance of the Mortgage Loans related to the Fannie Mae MSRs, and (C) the Fannie Mae Advance Rate Cap.
“Borrowing Base Cap Freddie Amount” shall mean the product of (A) the most recently determined Administrative Agent Freddie Mac Market Value Percentage, (B) the aggregate unpaid principal balance of the Mortgage Loans related to the Freddie Mac MSRs, and (C) the Freddie Mac Advance Rate Cap.
“Borrowing Base Cap Ginnie Amount” shall mean the product of (A) the most recently determined Administrative Agent Ginnie Mae Market Value Percentage, (B) the aggregate unpaid principal balance of the Mortgage Loans related to the Ginnie Mae MSRs, and (C) the Ginnie Mae Advance Rate Cap; provided however, that the Administrative Agent Ginnie Mae Asset Value of Ginnie Mae MSRs shall be reduced such that the Ginnie Mae Borrowing Base remains at or below the Ginnie Mae Concentration Limit.
“Borrowing Base Certificate” shall mean the certificate in the form of Exhibit A attached to each Notice of Borrowing (a copy of which shall, at the request of Ginnie Mae, be delivered to Ginnie Mae).
“Borrowing Base Deficiency” shall exist with respect to the Borrowing Base on any date on which:
(i) the aggregate amount of Advances exceeds the Aggregate Commitment Amount plus the Uncommitted Advance Amount,
(ii) if no Borrowing Base Dispute has been initiated and is outstanding, the Effective Advance Rate with respect to the Eligible Assets of any Agency exceeds the Fannie Mae Advance Rate, Freddie Mac Advance Rate, or Ginnie Mae Advance Rate, as applicable, by [***] or more,
(iii) if a Borrowing Base Dispute has been initiated but the Valuation Agent Asset Value has not yet been determined pursuant to Section 2.6(b), the Effective Advance Rate with respect to the Eligible Assets of any Agency exceeds the Fannie Mae Advance Rate Cap, the Freddie Mac Advance Rate Cap or the Ginnie Mae Advance Rate Cap, as applicable,
(iv) if a Borrowing Base Dispute has been initiated, the Valuation Agent Asset Value has been determined pursuant to Section 2.6(b), and the Borrowing Base is being calculated pursuant to clause (b) of the definition thereof, (a) the Effective Advance Rate with respect to the Eligible Assets of any Agency exceeds the Fannie Mae Advance Rate, Freddie Mac Advance Rate, or the Ginnie Mae Advance Rate, as applicable, by [***] or more, or (b) the portion of Advances relating to the Eligible Assets of any Agency exceeds the Borrowing Base Cap Fannie Amount, the Borrowing Base Cap Freddie Amount or the Borrowing Base Cap Ginnie Amount, as applicable,
(v) the Effective Advance Rate of the Eligible Assets of all Agencies exceeds the Aggregate Advance Rate Cap or
(vi) there exists a Minimum Haircut Trigger Event.
“Borrowing Base Deficiency Notice” shall have the meaning set forth in Section 2.6.
“Borrowing Base Dispute” shall have the meaning set forth in Section 2.6(b).
“Borrowing Base Required Payment” shall mean the greater of an amount necessary to (a) cause the Aggregate Outstandings to equal the lesser of (i) the Aggregate Commitment Amount plus the Uncommitted Advance Amount as of such date and (ii) the Borrowing Base, or (b) eliminate any existing Minimum Haircut Trigger Event.
“Borrowing Date” shall mean, with respect to any Advance, the date of the making of such Advance, which date shall in any case be a Business Day.
“Business Day” shall mean (i) any day excluding Saturday, Sunday, any day which is a legal holiday under the laws of the State of New York, the State of Michigan or the State of Texas, any day on which banking institutions located in any such state are authorized or required by law or other governmental action to close, and any day on which the New York Stock Exchange or the Federal Reserve Bank of New York is authorized or obligated by law or executive order to be closed.
“Capital Stock” shall mean, with respect to any Person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or non-voting) of equity of such Person, including, if such Person is a partnership, partnership interests (whether general or limited) or any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership, but in no event will Capital Stock include any debt securities convertible or exchangeable into equity unless and until actually converted or exchanged.
“Capitalized Lease Obligation” shall mean, for any Person, the amount of Indebtedness under a lease of property by such Person that would be shown as a liability on a balance sheet of such Person prepared for financial reporting purposes in accordance with GAAP.
“Cash” shall mean money, currency or a credit balance on hand or in any demand or deposit account.
“Cash Equivalents” shall mean, as at any date of determination, any of the following: (i) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government or (b) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one year after such date and having, at the time of the acquisition thereof, a rating of at least “A-1” from S&P or at least “P-1” from Moody’s; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within [***] after such date and having, at the time of the acquisition thereof, a rating of at least “A-1” from S&P or at least “P-1” from Moody’s; (iii) certificates of deposit or bankers’ acceptances maturing within [***] after such date and issued or accepted by any Lender or by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that (a) is at least “adequately capitalized” (as defined in the regulations of its primary Federal banking regulator), (b) has Tier 1 capital (as defined in such regulations) of not less than [***] and (c) has a rating of at least “AA-“ from S&P and “Aa3” from Moody’s; and (iv) shares of any money market mutual fund that (a) has substantially all of its assets invested continuously in the types of investments referred to in clauses (i) and (ii) above, (b) has net assets of not less than [***] and (c) has the highest rating obtainable from either S&P or Moody’s.
“Change in Law” shall mean (i) the adoption or taking effect of any Law after the date of this Agreement, (ii) any change in Law or in the administration, interpretation,
application or implementation thereof by any Governmental Authority after the date of this Agreement, (iii) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority after the date of this Agreement or (iv) compliance by any Affected Party, by any lending office of such Affected Party or by such Affected Party’s holding company, if any, with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that notwithstanding anything herein to the contrary, (a) the Dodd-Frank Act, (b) Basel III and (c) all requests, rules, guidelines and directives under either of the Dodd-Frank Act or Basel III or issued in connection therewith shall be deemed to be a “Change in Law”, regardless of the date implemented, enacted, adopted or issued.
“Change of Control” shall occur at any time the Permitted Holders fail to collectively own, directly or indirectly, at least (i) 50.01% of the Equity Interests of the Borrower and of the Guarantor, and (ii) a majority of the aggregate ordinary voting power for the election of directors (or persons performing similar functions) of the Borrower and of the Guarantor.
“Closing Date” shall mean May 4, 2021.
“Collateral” shall have the meaning set forth in Section 2.17.
“Collection Account” shall have the meaning set forth in Section 8.1.
“Collection Period” shall mean, with respect to a Monthly Payment Date, the calendar month preceding the month in which such Monthly Payment Date occurs.
“Collections” shall mean, with respect to any Asset and with respect to a Collection Period, any Servicing Income (other than retained yield, Ancillary Income and the applicable Base Servicing Fee) that the Borrower as servicer is entitled to receive free and clear of all Agency rights and other restrictions on transfer under applicable Agency guidelines, pursuant to the Servicing Contracts during such Collection Period. For the avoidance of doubt, Collections shall not include reimbursements of Servicing Advance Receivables.
“Committed Advance” shall have the meaning set forth in Section 2.2(a).
“Commitment” shall mean the commitment of a Lender to fund Advances, in an amount as set forth on Exhibit E or in the applicable Assignment and Assumption, subject to any increase, reduction or other adjustment in the amount thereof pursuant to the terms and conditions hereof.
“Commitment Percentage” shall mean, a percentage equal to a fraction, the numerator of which is the amount of such Lender’s Commitment at such time and the denominator of which is the Aggregate Commitment Amount at such time. In the case of Section 2.16, when a Defaulting Lender shall exist, the Commitment Percentage shall be calculated without inclusion of such Defaulting Lender’s Commitment.
“Compliance Certificate” shall mean a Compliance Certificate substantially in the form of Exhibit A.
“Compounded SOFR” shall mean the rate determined daily by the Administrative Agent, to be the “USD-SOFR-Compound” rate as defined in the ISDA Definitions; provided, however, that for purposes of such definition (i) the term “Calculation Period” shall mean, with respect to any date on which a payment is due, the period beginning on and including five (5) Business Days prior to the previous payment date and ending on and
including the fifth (5th) Business Day before such payment date, and (ii) the term “Reset Date” shall mean such payment date.
“Confidential Information” shall have the meaning set forth in Section 10.16.
“Connection Income Taxes” shall mean Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. Controlling and Controlled have meanings correlative thereto.
“Corporate Debt” shall mean, as of any date of determination, the aggregate stated balance sheet amount of all Indebtedness of the Guarantor, the Borrower and its Subsidiaries (or, if higher, the par value of stated face amount of all such Indebtedness) determined on a consolidated basis in accordance with GAAP.
“Corporate Debt to Tangible Net Worth Ratio” shall mean the ratio as of the last day of each calendar month (commencing with the first full month ending after the Closing Date) of (a) Corporate Debt as of such date to (b) Adjusted Tangible Net Worth as of such date.
“Corresponding Tenor” with respect to a Benchmark Replacement, shall mean a tenor (including overnight) having approximately the same length (disregarding business day adjustment) as the Applicable Tenor for the applicable accrual period with respect to the then-current Benchmark.
“Cost of Funds” shall mean, with respect to any Interest Accrual Period, the amount of interest accrued during such Interest Accrual Period on the outstanding Advances at the Cost of Funds Rate.
“Cost of Funds Margin” shall mean (a) with respect to Advances in respect of Freddie Mac MSRs, the Freddie Mac Margin Rate, (b) with respect to Advances in respect of Fannie Mae MSRs, the Fannie Mae Margin Rate and (c) with respect to Advances in respect of Ginnie Mae MSRs, the Ginnie Mae Margin Rate.
“Cost of Funds Rate” shall mean, with respect to each Advance, the sum of (a) either the then applicable Benchmark or, during a Benchmark Unavailability Period, the Alternative Rate, and (b) the Cost of Funds Margin for such Advance.
“Covered Entity” shall mean any of the following:
(a) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
(b) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R.§ 47.3(b); or
(c) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R.§ 382.2(b).
“Covered Party” shall have the meaning assigned to such term in Section 10.22.
“Credit Enhancement Agreement” shall mean, collectively, any documents, instruments, guarantees or agreements entered into by the Borrower, any of its Subsidiaries, or any Securitization Entity for the purpose of providing credit support (that is reasonably customary as determined by the Borrower’s senior management) with respect to any Indebtedness or Securitization.
“Credit Manager” shall mean Weston Portfolio Group, LLC and any successor thereto in such capacity.
“Credit Manager Agreement” shall mean the Credit Manager Agreement, dated as of the Closing Date among Credit Manager, the Borrower and Administrative Agent.
“Credit Manager Fees” shall mean the fees due and owing to the Credit Manager as set forth in the Credit Manager Agreement or in any successor agreement thereto, which shall not in any event exceed [***] per annum.
“Dealer” shall mean any mid-market dealer in hedging, swap or similar derivatives contracts identified on Schedule III hereto, as may be amended from time to time by the Administrative Agent, the Borrower and the Majority Lenders.
“Defaulting Lender” shall mean any Lender, as determined by the Administrative Agent, that has (a) failed to fund any portion of its Advances within three (3) Business Days of the date required to be funded by it hereunder, (b) notified the Borrower, the Administrative Agent, or any Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under other agreements in which it commits to extend credit, (c) failed, within three (3) Business Days after request by the Administrative Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Advances (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such confirmation in writing by the Administrative Agent and the Borrower), (d) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three (3) Business Days of the date when due, unless the subject of a good faith dispute or (e)(i) become or is insolvent or has a parent company that has become or is insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority of the United States of America or instrumentality thereof so long as such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person. For the avoidance of doubt, without any implication to the contrary, no determination by a Lender not to fund an Advance in excess of such Lender’s Commitment (which may be made in the sole and absolute discretion of such Lender) may cause such Lender to constitute a Defaulting Lender.
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“Derivatives Contract” shall mean any rate swap transaction, basis swap, credit derivative transaction, forward rate transaction, commodity swap, commodity option, futures contract, forward commodity contract, mortgage-related forward pools contracts, including derivatives or “TBA’s”, 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. Notwithstanding anything herein to the contrary, neither Administrative Agent nor the Lenders shall have any rights in any Derivative Contract entered into between the Borrower and any Agency.
“Disposition” and “Disposed” shall mean, with respect to any Person, any sale or other whole or partial conveyance of all or any portion of such Person’s property, or any direct or indirect interest therein to a third party, including the granting of any purchase options, rights of first refusal, rights of first offer or similar rights in respect of any portion of such assets or the subjecting of any portion of such assets to restrictions on transfer.
“Distributable Amounts” shall mean, with respect to each Monthly Payment Date, (i) all costs, expenses, reimbursements and indemnification amounts required to be paid to the Administrative Agent and the Lenders pursuant to the terms of the Transaction Documents; (ii) the Credit Manager Fees with respect to such Monthly Payment Date and all costs, expenses, reimbursements and indemnification amounts of the Credit Manager; (iii) the Interest Distribution Amount with respect to such Monthly Payment Date and the Non-Usage Fee, if any, with respect to such Monthly Payment Date, and the Minimum Utilization Fee, if any, with respect to such Monthly Payment Date; (iv) to the extent a Borrowing Base Deficiency exists as of such Monthly Payment Date, the Borrowing Base Required Payment; (v) with respect to each Monthly Payment Date occurring after the Availability Period End Date, any Additional Principal Amortization Amounts due and payable on such Monthly Payment Date; and (vi) all amounts that are then due and payable pursuant to Section 2.11.
“Division Transaction” shall mean, with respect to any Person that is a limited liability company organized under the laws of the State of Delaware, that any such Person (a) divides into two or more Persons (whether or not the original Person or Subsidiary thereof survives such division) or (b) creates, or reorganizes into, one or more series, in each case, as contemplated under the laws of the State of Delaware, including Section 18-217 of the Delaware Limited Liability Company Act.
“Dodd-Frank Act” shall mean the Dodd-Frank Wall Street Reform and Consumer Protection Act.
“Dollar”, “Dollars”, “U.S. Dollars” and the symbol “$” shall mean the lawful currency of the United States.
“EEA Financial Institution” shall mean (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established
in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” shall mean any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” shall mean any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any credit institution or investment firm established in any EEA Member Country.
“Effective Advance Rate” shall mean, (a) with respect to the Eligible Assets of any Agency, the quotient of (i) the outstanding Advances with respect to the Eligible Assets of such Agency, divided by (ii) that portion of the Borrowing Base attributed to the value of Fannie Mae MSRs, Freddie Mac MSRs, or Ginnie Mae MSRs, as applicable and (b) with respect to the Eligible Assets of all Agencies, (i) the Aggregate Outstandings, divided by (ii) the Borrowing Base. For the sake of clarity, the portion of Fannie Mae MSR, Freddie Mac MSR or Ginnie Mae MSR included in the Borrowing Base shall not be reduced by the application of the Fannie Mae Advance Rate, Freddie Mac Advance Rate or Ginnie Mae Advance Rate, as applicable.
“Eligible Asset” shall mean, as of any date of determination, any Asset that satisfies each of the following criteria:
(a) for which the Borrower is acting in the capacity of servicer under a Servicing Contract, which Servicing Contract (i) is in full force and effect, and (ii) with respect to which the Borrower is not in default in any material respect thereunder;
(b) which complies with all Applicable Laws in all material respects;
(c) which is genuine and constitutes a legal, valid, binding and irrevocable payment obligation, enforceable in accordance with the terms of the related Servicing Contract, under which it has arisen, subject to no offsets, counterclaims or defenses;
(d) which provides for payment in Dollars;
(e) which was not originated in or subject to the Laws of a jurisdiction whose Laws would make such Asset, the related Servicing Contract or the financing thereof contemplated hereby unlawful, invalid or unenforceable; and is not subject to any legal limitation on transfer;
(f) which is owned solely by the Borrower, subject to a Servicing Contract, and is free and clear of all Liens other than Permitted MSR Collateral Liens and has not been sold, conveyed, pledged or assigned to any other lender, purchaser or Person;
(g) which is not an obligation of the United States of America, any State or any agency or instrumentality or political subdivision thereof (other than an Agency);
(h) in respect of which the information set forth in the Schedule of Eligible Assets and the related Servicing Contract is true and correct in all material respects;
(i) in respect of which, each of the representations and warranties set forth on Section 4.1(aa) are true and correct in all material respects;
(j) such Asset constitutes a “general intangible” as defined in the UCC and is not evidenced by an “instrument” or “security” as defined in the UCC as so in effect;
(k) the Borrower has all required licenses and registrations necessary to own the Asset and to service the Mortgage Loan (including to collect amounts owing with respect thereto) in the jurisdiction where the Mortgaged Property is located;
(l) other than pursuant to this Agreement, there exist no Liens, pledges, assignments, or financings of any kind secured by the MSRs (or any portion thereof) of the applicable Agency to which the respective Asset relates; provided, however, that nothing in this clause (l) shall cause any MSR to cease to be an Eligible Asset solely because Servicing Advance Receivables related to such MSR have been pledged in connection with Permitted Servicing Advance Facility Indebtedness;
(m) with respect to Fannie Mae MSRs, the Fannie Mae Acknowledgment Agreement has been executed by the parties, and the pledge of such Asset is consented to thereunder;
(n) with respect to Freddie Mac MSRs, the Freddie Mac Acknowledgment Agreement has been executed by the parties, and the pledge of such Asset is consented to thereunder; and
(o) with respect to Ginnie Mae MSRs, the Ginnie Mae Acknowledgment Agreement has been executed by the parties, and the pledge of such Asset is consented to thereunder.
“Environmental Claim” shall mean any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise), by any Governmental Authority or any other Person, arising (i) pursuant to or in connection with any actual or alleged violation of any Environmental Law; or (ii) in connection with any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment.
“Environmental Laws” shall mean any and all current or future federal or state (or any subdivision of either of them), statutes, ordinances, orders, rules, regulations, judgments, Governmental Authorizations, or any other requirements of Governmental Authorities relating to (i) environmental matters; (ii) the generation, use, storage, transportation or disposal of Hazardous Materials; or (iii) occupational safety and health, industrial hygiene, land use or the protection of human, plant or animal health or welfare, in any manner applicable to the Guarantor, the Borrower or any of their Subsidiaries or any Mortgaged Property.
“Equity Interests” shall mean any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA, as in effect at the Closing Date and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.
“ERISA Affiliate” shall mean each Person (as defined in Section 3(9) of ERISA), which together with the Borrower is a “single employer” within the meaning of Sections 414(b), (c), (m) or (o) of the Internal Revenue Code or Sections 4001(a)(14) or 4001(b)(1) of ERISA.
“ERISA Event” shall mean (i) that a Reportable Event has occurred with respect to any Single-Employer Plan; (ii) the institution of any steps by the Borrower, the Guarantor, or any ERISA Affiliate, the Pension Benefit Guaranty Corporation or any other Person to terminate any Single-Employer Plan or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, a Single-Employer Plan; (iii) the institution of any steps by the Borrower, the Guarantor, or any ERISA Affiliate to withdraw from any Multi-Employer Plan or written notification of the Borrower or any ERISA Affiliate concerning the imposition of withdrawal liability; (iv) a non-exempt “prohibited transaction” within the meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code in connection with any Single-Employer Plan or Multi-Employer Plan; (v) the cessation of operations at a facility of the Borrower or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (vi) with respect to a Single-Employer Plan, a failure to satisfy the minimum funding standard under Section 412 of the Internal Revenue Code or Section 302 of ERISA, whether or not waived; (vii) the conditions for imposition of a lien under Section 303(k) of ERISA shall have been met with respect to a Single-Employer Plan; (viii) a determination that a Single-Employer Plan is or is expected to be in “at-risk” status (within the meaning of Section 430(i)(4) of the Internal Revenue Code or Section 303(i)(4) of ERISA); (ix) the insolvency of a Multi-Employer Plan, written notification that a Multi-Employer Plan is in “endangered” or “critical” status (within the meaning of Section 432 of the Internal Revenue Code or Section 305 of ERISA), or any failure by the Borrower or any ERISA Affiliate to make any required payment or contribution to a Multi-Employer Plan; or (x) the taking of any action by, or the threatening of the taking of any action by, the IRS, the Department of Labor or the Pension Benefit Guaranty Corporation with respect to any of the foregoing.
“Escrow Account” shall mean any account established by the Borrower into which it deposits and retains therein all collections from mortgagors of the related mortgage loans for the payment of taxes, assessments, insurance premiums or comparable items for the account of such mortgagors.
“EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.
“Event of Default” shall have the meaning set forth in Section 6.1.
“Excluded Accounts” shall mean (i) all Related Principal and Interest Custodial Accounts (ii) Escrow Accounts and (iii) any segregated deposit accounts or securities account containing solely deposits that constitute pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation, in each case, to the extent and for so long as the contract or other agreement in which such Lien is granted validly prohibits the creation of any other Lien on such property.
“Excluded Collateral” shall mean (i) all Warehoused Mortgage Loans, all ancillary rights, including Agency Servicing Rights relating to such Warehoused Mortgage Loans, all collection accounts and rights to proceeds relating to such Warehoused Mortgage Loans, all hedge agreements relating to such Warehoused Mortgage Loans, and all purchase agreements relating to such Warehoused Mortgage Loans, in each case, that are subject to a Permitted Warehouse Financing with a warehousing party, during such time, but only for such
time, as such Warehoused Mortgage Loans are subject to such Permitted Warehouse Financing; (ii) all Servicing Advance Receivables securing or backing Permitted Servicing Advance Facility Indebtedness, all collection accounts and rights to proceeds relating solely to the securing or backing of Permitted Servicing Advance Facility Indebtedness, and all hedge agreements relating to Permitted Servicing Advance Facility Indebtedness entered into in the ordinary course of business; (iii) any of the Borrower’s or such Subsidiary’s right, title or interest in any lease, permit, license, license agreement, contract or agreement to which the Borrower or such Subsidiary is a party as of the Closing Date or any of its right, title or interest thereunder to the extent, but only to the extent, that such a grant would, under the express terms of such lease, permit, license, license agreement, contract or agreement on the Closing Date result in a breach of the terms of, or constitute a default under, such lease, permit, license, license agreement, contract or agreement (other than to the extent that (A) any such term has been waived, (B) the consent of the other party to such lease, permit, license, license agreement, contract or agreement has been obtained, or (C) any such term would be rendered ineffective pursuant to Sections 9-406, 9-408, 9-409 of the UCC or other applicable provisions of the UCC of any relevant jurisdiction or any other Applicable Law (including the Bankruptcy Code) or principles of equity); provided, that (x) immediately upon the ineffectiveness, lapse, termination or waiver of any such provision, the Collateral shall include, and the Borrower or the Guarantor shall be deemed to have granted a security interest in, all such right, title and interest as if such provision had never been in effect and (y) the foregoing exclusion shall in no way be construed so as to limit, impair or otherwise affect the Administrative Agent’s unconditional continuing security interest in and liens upon any rights or interests of the Borrower or the Guarantor in or to (1) the proceeds of, or any monies due or to become due under, any such lease, permit, license, license agreement, contract or agreement (including any Accounts, proceeds of Inventory or Equity Interests), and (2) the proceeds from the sale, license, lease, or other dispositions of any such lease, permit, license, license agreement, contract or agreement; (iv) any intent-to-use United States trademark applications for which an amendment to allege use or statement of use has not been filed under 15 U.S.C. § 1051(c) or 15 U.S.C. § 1051(d), respectively, or if filed, has not been deemed in conformance with 15 U.S.C. § 1051(a) or examined and accepted, respectively, by the United States Patent and Trademark Office, provided, that, upon such filing and acceptance, such intent-to-use applications shall be included in the definition of Collateral; (v) any Excluded Accounts; and (vi) any fee owned real property and all leasehold property interests (including REO Assets).
“Excluded Taxes” shall mean any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (i) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (a) imposed as a result of such Recipient being organized under the Laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (b) that are Other Connection Taxes, (ii) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in an Advance or Commitment pursuant to a Law in effect on the date on which (a) such Lender acquires such interest in the Advance or Commitment or (b) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.15, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (iii) Taxes attributable to such Recipient’s failure to comply with Section 2.15(g) and (iv) any withholding Taxes imposed under FATCA.
“Existing Credit Agreement” shall have the meaning given such term in the Recitals.
“Exit Fee” shall have the meaning set forth in the Administrative Agent Fee Letter.
“Fannie Mae” shall mean the Federal National Mortgage Association, its successors and permitted assigns.
“Fannie Mae Acknowledgment Agreement” shall mean the Second Amended and Restated Acknowledgment Agreement to be entered into by and among Fannie Mae, the Borrower and the Administrative Agent on or about the Closing Date, pursuant to which Fannie Mae acknowledges the pledge of the Fannie MSRs under this Agreement.
“Fannie Mae Advance Rate” shall have the meaning set forth in the Agency Fee Letter.
“Fannie Mae Advance Rate Cap” shall have the meaning set forth in the Agency Fee Letter.
“Fannie Mae Agency Guide” shall mean with respect to any Fannie Mae Mortgage Loan, the Fannie Mae Selling Guide and the Fannie Mae Servicing Guide, as amended from time to time, and any related announcements, directives and correspondence issued by Fannie Mae.
“Fannie Mae Lender Contract” shall mean the Mortgage Selling and Servicing Contract (as mentioned in the Fannie Mae Acknowledgment Agreement), the Fannie Mae Selling Guide (as defined as Selling Guide in the Fannie Mae Acknowledgment Agreement), the Fannie Mae Servicing Guide and all supplemental servicing instructions or directives provided by Fannie Mae, all applicable master agreements, recourse agreements, repurchase agreements, indemnification agreements, loss-sharing agreements, and any other agreements between Fannie Mae and the Borrower, which rights include the right of Fannie Mae to terminate the Fannie Mae Lender Contract with or without cause and the right to sell, or have transferred, the Fannie Mae MSRs.
“Fannie Mae Margin Rate” shall have the meaning set forth in the Agency Fee Letter.
“Fannie Mae Mortgage Loan” shall mean the mortgage loans underlying Fannie Mae MSRs, which shall be identified as “Fannie Mae Mortgage Loans” on the applicable Schedule of Assets.
“Fannie Mae MSRs” shall mean MSRs held by the Borrower with respect to Mortgage Loans owned, or that have been securitized in mortgage-backed Securitization transactions guaranteed by, Fannie Mae and pledged to the Administrative Agent, for the benefit of the Lenders, pursuant to this Agreement.
“Fannie Mae Requirements” shall mean the rights and interests of Fannie Mae in and to the Assets arising under the Servicing Contract, Fannie Mae Acknowledgment Agreement, the Fannie Mae Agency Guide, or any other agreement between the Borrower and Fannie Mae.
“Fannie Mae Servicing Guide” shall have the meaning of Servicing Guide as set forth in the Fannie Mae Acknowledgment Agreement.
“FATCA” shall mean Sections 1471 through 1474 of the Internal Revenue 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, any agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code, and any intergovernmental agreements entered into in connection with the implementation of such sections of the Internal Revenue Code, and any fiscal or regulatory legislation, rules or practices adopted pursuant to such intergovernmental agreements, treaty or convention among Governmental Authorities and implementing such sections of the Internal Revenue Code.
“Federal Reserve Bank of New York’s Website” shall mean the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.
“Fee Letter” shall mean the Agency Fee Letter and the Administrative Agent Fee Letter.
“FHA” shall mean The Federal Housing Administration.
“Financial Covenants” shall mean those financial covenants set forth in Section 5.1(a).
“Floor” shall mean [***].
“Freddie Mac” shall mean the Federal Home Loan Mortgage Corporation, its successors and permitted assigns.
“Freddie Mac Acknowledgment Agreement” shall mean the Amended and Restated Acknowledgment Agreement, as amended from time to time, entered into by and among Freddie Mac, the Borrower and the Administrative Agent.
“Freddie Mac Advance Rate” shall have the meaning set forth in the Agency Fee Letter.
“Freddie Mac Advance Rate Cap” shall have the meaning set forth in the Agency Fee Letter.
“Freddie Mac Agency Guide” shall mean with respect to any Freddie Mac Mortgage Loan, the Freddie Mac Single-Family Seller/Servicer Guide, as it may be amended from time to time.
“Freddie Mac MSR Collateral” shall mean that portion of the MSR Collateral related to the Freddie Mac MSRs.
“Freddie Mac MSRs” shall mean MSRs held by the Borrower with respect to Mortgage Loans owned by, or that have been securitized in mortgage-backed Securitization transactions guaranteed by, Freddie Mac and pledged to the Administrative Agent, for the benefit of the Lenders, pursuant to this Agreement and subject to the Freddie Mac Acknowledgment Agreement.
“Freddie Mac Margin Rate” shall have the meaning set forth in the Agency Fee Letter.
“Freddie Mac Mortgage Loan” shall mean the mortgage loans underlying Freddie Mac MSRs, which shall be identified as “Freddie Mac Mortgage Loans” on the applicable Schedule of Assets.
“Freddie Mac Purchase Documents” has the meaning given to the term “Purchase Documents” in the Freddie Mac Agency Guide.
“Freddie Mac Requirements” shall mean the rights and interests of Freddie Mac in and to the Assets arising under the Freddie Mac Servicing Contract or the Freddie Mac Acknowledgment Agreement, any VPC Agreement, the Freddie Mac Agency Guide, or any other agreement between the Borrower and Freddie Mac.
“Freddie Mac Servicing Contract” shall mean collectively, with respect to each Freddie Mac Mortgage Loan, (i) the unitary, indivisible master servicing agreement described in the Freddie Mac Agency Guide entered into between Freddie Mac and the Borrower, (ii) the Freddie Mac Purchase Documents, (iii) the Freddie Mac Agency Guide, (iv) any Bulletins (as defined in the Freddie Mac Agency Guide, (v) any agreement pursuant to which the Borrower provides a guaranty or any form of credit enhancement in connection with the sale of Freddie Mac Mortgage Loans to Freddie Mac (vi) the Servicer Success Scorecard (as defined in the Freddie Mac Agency Guide), (vii) any other document designated to be a Freddie Mac Purchase Document by Freddie Mac, (viii) the Guide Plus Additional Provisions (as defined in the Freddie Mac Agency Guide) and (ix) any other additional terms applicable to the sale of Freddie Mac Mortgage Loans, such as written waivers, amendments or supplements to the Freddie Mac Agency Guide that are made available to the Borrower by Freddie Mac through electronic means including sources designated by Freddie Mac for distribution of the Freddie Mac Agency Guide, as any or all of the items in (i) through (ix) inclusive may be amended, modified, restated, supplemented or replaced from time to time..
“Funding Base Deficiency” shall exist with respect to the Borrowing Base on any date on which the Aggregate Outstandings exceeds the lesser of (a) the Aggregate Commitment Amount plus the Uncommitted Advance Amount on such date and (b) the Borrowing Base.
“Futures Account” shall mean an account, if any, opened in the name of Borrower under an agreement governing futures and options on futures transactions between Borrower and a financial institution to be determined by the Borrower and for which an account control agreement shall be entered into by and among the Borrower, such financial institution and the Administrative Agent, pursuant to which the Administrative Agent shall be granted control (as defined in Section 9-106(b) of the UCC) and the ability to direct such financial institution with respect to permitted withdrawals from the Futures Account following an Event of Default hereunder.
“GAAP” shall mean generally accepted accounting principles as are in effect from time to time and applied on a consistent basis (except for changes in application in which the Borrower’s or Guarantor’s, as applicable, independent certified public accountants and the Administrative Agent reasonably agree) both as to classification of items and amounts.
“Ginnie Mae” shall mean the Government National Mortgage Association, its successors and permitted assigns.
“Ginnie Mae Acknowledgment Agreement” shall mean the Amended and Restated Acknowledgment Agreement dated May 20, 2021 by and among Ginnie Mae, the Borrower and the Administrative Agent.
“Ginnie Mae Advance Rate” shall have the meaning set forth in the Agency Fee Letter.
“Ginnie Mae Advance Rate Cap” shall have the meaning set forth in the Agency Fee Letter.
“Ginnie Mae Agency Guide” shall mean the Ginnie Mae Mortgage-Backed Securities Guide, Handbook 5500.3, Rev. 1, as amended from time to time, and any related announcements, directives and correspondence issued by Ginnie Mae.
“Ginnie Mae Borrowing Base” shall have the meaning set forth in the Agency Fee Letter.
“Ginnie Mae Concentration Limit” shall have the meaning set forth in the Agency Fee Letter.
“Ginnie Mae Contract” shall have the meaning set forth in Section 2.20.
“Ginnie Mae Margin Rate” shall have the meaning set forth in the Agency Fee Letter.
“Ginnie Mae Mortgage Loans” shall mean the mortgage loans underlying Ginnie Mae MSRs, which shall be identified as “Ginnie Mae Mortgage Loans” on the applicable Schedule of Assets.
“Ginnie Mae MSRs” shall mean MSRs held by the Borrower with respect to Mortgage Loans that have been securitized in mortgage-backed Securitization transactions guaranteed by Ginnie Mae and pledged to the Administrative Agent, for the benefit of the Lenders, pursuant to this Agreement and the Ginnie Mae Acknowledgment Agreement.
“Ginnie Mae Requirements” shall mean the rights and interests of Ginnie Mae under the Ginnie Mae Servicing Contract, the Acknowledgment Agreement, or any other agreement between the Borrower and Ginnie Mae.
“Ginnie Mae Servicing Contract” shall mean the Ginnie Mae Contract as defined in the Ginnie Mae Acknowledgment Agreement.
“GLB Act” has the meaning set forth in Section 10.16(b).
“Governmental Authority” shall mean any national, federal, state, local or other government or political subdivision or any agency, authority, bureau, central bank, commission, department or instrumentality of either, or any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
“Governmental Authorization” shall mean any permit, license, authorization, plan, directive, consent order or consent decree of or from any Governmental Authority.
“GS Bank” shall have the meaning set forth in the introductory paragraph hereof.
“Guarantee” shall mean, as to any Person, any obligation of such Person directly or indirectly guaranteeing any Indebtedness of any other Person or in any manner providing for the payment of any Indebtedness of any other Person or otherwise protecting the holder of such Indebtedness against loss (whether by virtue of partnership arrangements, by agreement to keep-
well, to purchase assets, goods, securities or services, or to take-or-pay or otherwise); provided that the term “Guarantee” shall not include (i) endorsements for collection or deposit in the ordinary course of business, or (ii) obligations to make servicing advances for delinquent taxes and insurance or other obligations in respect of a mortgaged property. The amount of any Guarantee of a Person shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith. The terms “Guarantee” and “Guaranteed” used as verbs shall have correlative meanings.
“Guaranteed Obligations” shall mean, (i) the Borrower’s obligation to repay the Advances, all accrued interest thereon, all required principal payments, and all other amounts payable by the Borrower to the Lenders pursuant to this Agreement, the Loan Note or any other Transaction Document; (ii) in the event of any proceeding for the collection or enforcement of the Borrower’s indebtedness, obligations or liabilities referred to in clause (i), the expenses of retaking, holding, collecting, preparing for sale, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by the Administrative Agent of its rights under the Transaction Documents, including without limitation, attorneys’ fees and disbursements and court costs; (iii) all of the Borrower’s indemnity obligations to the Indemnitees pursuant to the Transaction Documents; and (iv) to the extent not otherwise included in (i)-(iii) above, any other Obligations under the Transaction Documents.
“Guarantor” shall have the meaning set forth in the introductory paragraph hereof.
“Guaranty” shall mean the Guarantee of the Guaranteed Obligations pursuant to the terms set forth in Article IX hereof.
“Hazardous Materials” shall mean any substances or materials (a) which are or become defined as hazardous wastes, hazardous substances, pollutants, contaminants, chemical substances or mixtures or toxic substances under any Environmental Law, (b) which are toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human health or the environment and are or become regulated by any Governmental Authority, (c) the presence of which require investigation or remediation under any Environmental Law or common law, (d) the discharge or emission or release of which requires a permit or license under any Environmental Law or other Governmental Authorization, (e) which are deemed to constitute a nuisance or a trespass which pose a health or safety hazard to Persons or neighboring properties, (f) which consist of underground or aboveground storage tanks, whether empty, filled or partially filled with any substance or (g) which contain, without limitation, asbestos, polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.
“Hedge Agreement” shall mean any and all master securities forward transaction agreement(s) between Borrower and a financial institution to be determined by the Borrower, as such agreement(s) may be amended, restated or otherwise modified from time to time, or any ISDA agreement entered into by the Borrower and any other financial institution on or after the date of this Agreement that the Borrower and the Administrative Agent agree in writing constitutes a replacement thereto.
“HUD” shall mean the United States Department of Housing and Urban Development or any successor thereto.
“Indebtedness” shall mean, as to any Person at any time, as to any Person, (i) 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); (ii) 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; (iii) 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; (iv) obligations (contingent or otherwise) of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for account of such Person; (v) Capitalized Lease Obligations of such Person; (vi) obligations of such Person under repurchase agreements or like arrangements; (vii) indebtedness of others guaranteed by such Person; (viii) all obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person; (ix) indebtedness of general partnerships of which such Person is a general partner; and (x) any other indebtedness of such Person by a note, bond, debenture or similar instrument.
“Indemnified Taxes” shall mean (i) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Transaction Document and (ii) to the extent not otherwise described in clause (i), Other Taxes.
“Indemnitees” shall have the meaning set forth in Section 10.5.
“Insolvency Event” shall mean, with respect to any Person:
(i) the commencement of: (a) a voluntary case by such Person under the Bankruptcy Code or (b) the seeking of relief by such Person under other debtor relief Laws in any jurisdiction outside of the United States;
(ii) the commencement of an involuntary case against such Person under the Bankruptcy Code (or other debtor relief Laws) and the petition is not controverted or dismissed within [***] after commencement of the case;
(iii) a custodian (as defined in the Bankruptcy Code) (or equal term under any other debtor relief Law) is appointed for, or takes charge of, all or substantially all of the property of such Person;
(iv) such Person commences (including by way of applying for or consenting to the appointment of, or the taking of possession by, a rehabilitator, receiver, custodian, trustee, conservator or liquidator (or any equal term under any other debtor relief Laws) (collectively, a “conservator”) of such Person or all or any substantial portion of its property) any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency, liquidation, rehabilitation, conservatorship or similar law of any jurisdiction whether now or hereafter in effect relating to such Person;
(v) such Person is adjudicated by a court of competent jurisdiction to be insolvent or bankrupt;
(vi) any order of relief or other order approving any such case or proceeding referred to in clauses (i) or (ii) above is entered;
(vii) such Person suffers any appointment of any conservator or the like for it or any substantial part of its property that continues undischarged or unstayed for a period of [***]; or
(viii) such Person makes a compromise, arrangement or assignment for the benefit of creditors or generally does not pay its debts as such debts become due.
“Interest Accrual Period” shall mean for each Monthly Payment Date, the calendar month preceding the month in which such Monthly Payment Date occurs.
“Interest Distribution Amount” shall mean an amount equal to (A) the Cost of Funds Rate for the related Interest Accrual Period with respect to each Lender, as such amount is reported to the Borrower by the Administrative Agent, and (B) any unpaid Interest Distribution Amounts from prior Monthly Payment Dates plus, to the extent permitted by law, interest thereon at the Cost of Funds Rate for the related Interest Accrual Period.
“Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, or any successor statute, and the rules and regulations thereunder, as the same are from time to time in effect.
“Investment” shall mean (i) any direct or indirect purchase or other acquisition by the Borrower, the Guarantor, or any of their Subsidiaries of, or of a beneficial interest in, any of the Securities of any other Person (other than the Borrower or any Subsidiary); (ii) any direct or indirect loan, advance (other than mortgage loans in the ordinary course of business, warehouse loans secured by mortgage loans and related assets, advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contributions by the Borrower, the Guarantor, or any of their Subsidiaries to any other Person (other than the Borrower or any Subsidiary), including all indebtedness and accounts receivable from that other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business, (iii) all investments consisting of any exchange traded or over the counter derivative transaction, including any Derivatives Contract, whether entered into for hedging or speculative purposes, and (iv) the purchase or other acquisition (in one transaction or a series of transactions) of all or substantially all of the property and assets or business of another Person or assets constituting a business unit, line of business or division of any Person. The amount of any Investment of the type described in clauses (i), (ii) and (iv) shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment.
“ISDA Definitions” shall mean the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.
“IRS” shall mean the Internal Revenue Service of the United States of America.
“Law” shall mean any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, order, guideline, judgment, injunction, writ, decree or award of any Governmental Authority.
“Lenders” shall have the meaning set forth in the introductory paragraph hereof.
“Lien” shall mean any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security and any filed financing statement or other notice of any of the foregoing (whether or not a lien or other encumbrance is created or exists at the time of the filing).
“Loan Note” shall mean each Loan Note of the Borrower in the form of Exhibit C attached hereto, payable to a Lender.
“Majority Lenders” shall mean, as of any date of determination, Lenders (other than Defaulting Lenders) having Applicable Percentages of more than 50%.
“Margin Stock” shall have the meaning set forth in Regulation U.
“Material Adverse Change” shall mean the occurrence of an event or a change in circumstances that had or is reasonably likely to have a Material Adverse Effect.
“Material Adverse Effect” shall mean, any event or circumstance having a material adverse effect on any of the following: (i) the business, property, assets, operations or financial condition of the Borrower or the Guarantor, taken as a whole, (ii) the ability of the Borrower or the Guarantor to perform its respective obligations under the Transaction Documents, (iii) the validity or enforceability of this Agreement or any other Transaction Document to which the Borrower or the Guarantor is a party, or (iv) the existence, perfection, priority or enforceability of the Administrative Agent’s security interest in a material portion of the Collateral.
“Material Debt Facility” shall have the meaning set forth in Section 6.1(j).
“Maturity Date” shall mean the earlier of (a) the Monthly Payment Date that occurs on the twelfth (12th) month following the Availability Period End Date and (b) the date the Obligations are accelerated pursuant to the terms of this Agreement.
“Maximum Fannie/Freddie DQ Rate” shall mean [***].
“Maximum Ginnie DQ Rate” shall mean [***].
“Minimum Haircut Trigger Event” shall exist at any time that (i) the sum of (1) the product of the most recently determined Administrative Agent Fannie Mae Market Value Percentage and the aggregate unpaid principal balance of the Mortgage Loans related to the Fannie Mae MSRs, (2) the product of the most recently determined Administrative Agent Freddie Mac Market Value Percentage and the aggregate unpaid principal balance of the Mortgage Loans related to the Freddie Mac MSRs, and (3) the product of the most recently determined Administrative Agent Ginnie Mae Market Value Percentage and the aggregate unpaid principal balance of the Mortgage Loans related to the Ginnie Mae MSRs; less (ii) the Aggregate Outstandings, does not exceed (iii) [***] of the aggregate unpaid principal balance of the Mortgage Loans related to the Fannie Mae MSRs, Freddie Mac MSRs, and Ginnie Mae MSRs (as reflected in the most recently delivered Monthly Report), calculated as set forth on Schedule V hereto.
“Minimum Utilization Fee” shall have the meaning set forth in the Agency Fee Letter.
“Minimum Utilization Fee Payment Date” shall mean each of the following Monthly Payment Dates: (a) during the Availability Period, (i) the twelfth Monthly Payment Date after the Third Amendment Closing Date; and (ii) each Monthly Payment Date during the Availability Period that is the twelfth Monthly Payment Date after the previous Minimum Utilization Fee Payment Date; and (b) to the extent the Availability Period ends in a month that is not a Monthly Payment Date described in clause (a), the Monthly Payment Date occurring in the calendar month in which the Availability Period End Date occurs.
“Monthly Payment Date” shall mean the 20th day of each calendar month or, if such 20th day is not a Business Day, the next succeeding Business Day.
“Monthly Report” shall have the meaning set forth in Section 5.1(v).
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“Mortgage Loan” shall mean the mortgage loans underlying each Asset, which shall be listed on a Schedule of Assets.
“Mortgaged Property” shall mean the real property (including all improvements, buildings, fixtures and building equipment thereon and all additions, alterations and replacements made at any time with respect to the foregoing) and all other collateral securing repayment of the related Mortgage Loan.
“MSR Collateral” shall have the meaning set forth in Section 2.17.
“MSRs” shall mean mortgage servicing rights, excluding any rights to Servicing Advance Receivables, of the Borrower with respect to Mortgage Loans owned, or that have been securitized in mortgage-backed Securitization transactions guaranteed by, any Agency, provided that with respect to Freddie Mac MSRs, “MSRs” means the indivisible, conditional, non-delegable right and obligation of Servicer to service the Mortgage Loans for and on behalf of Freddie Mac.
“Multi-Employer Plan” shall mean a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which the Borrower or any of its ERISA Affiliates has contributed, or has been obligated to contribute.
“Nationally Recognized Accounting Firm” shall mean (A) any of PricewaterhouseCoopers LLP, Ernst & Young LLP, KPMG LLC, Deloitte LLP, BDO USA LLC and any successors to any such firm and (B) any other public accounting firm designated by the Borrower and approved by the Administrative Agent, such approval not to be unreasonably withheld or delayed.
“NHA” shall mean the National Housing Act.
“Non-Usage Fee” shall have the meaning set forth in Section 2.5.
“Non-Usage Fee Percentage” shall have the meaning set forth in the Agency Fee Letter.
“Notice of Borrowing” shall have the meaning set forth in Section 2.4(a).
“Obligations” shall mean and include, with respect to the Borrower, all loans, advances, debts, liabilities, obligations, covenants and duties owing to the Administrative Agent,
any Lender or any other Person by the Borrower of any kind or nature, present or future, arising under this Agreement, the Loan Notes or any of the other Transaction Documents, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising. The term includes the principal amount of all Advances, together with interest, charges, expenses, fees and expenses chargeable to the Borrower pursuant to this Agreement or any other Transaction Document.
“OFAC” shall have the meaning set forth in Section 4.1(w).
“Optional Prepayment” shall have the meaning set forth in Section 2.10.
“Optional Prepayment Amount” shall have the meaning set forth in Section 2.10.
“Other Connection Taxes” shall mean, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Transaction Document, or sold or assigned an interest in any Asset or Transaction Document).
“Other Taxes” shall mean all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Transaction Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment.
“Participant” shall have the meaning set forth in Section 10.8.
“Participant Register” shall have the meaning set forth in Section 10.8.
“Patriot Act” shall have the meaning set forth in Section 10.19.
“Permitted Collateral Liens” shall mean: (i) the security interest granted hereunder in favor of the Administrative Agent; (ii) interests of any Agency in the Collateral which are pursuant and/or subject to the Agency Guides, Servicing Contracts or the Acknowledgment Agreements; (iii) banker’s Liens in the nature of rights of setoff arising in the ordinary course of business of the Borrower or the Guarantor, as applicable; (iv) Liens for Taxes (x) not yet due and payable or (y) that are being contested in good faith by appropriate actions diligently conducted and for which adequate reserves have been provided in accordance with GAAP; (v) Liens securing judgments not constituting an Event of Default under Section 6.1(f); (vi) Liens on Excluded Collateral of the type described in clause (i) of such definition securing any Permitted Warehouse Financing; (vii) Liens on Excluded Collateral of the type described in clause (ii) of such definition relating to any Permitted Servicing Advance Facility Indebtedness; (viii) Liens described on Schedule 5.2(a); provided that any such Liens shall only secure the Indebtedness that it secured on the Closing Date and an permitted refinancing thereof; (ix) purchase money Liens on equipment acquired or held by the Borrower or a Subsidiary in the ordinary course of its business to secure Permitted Purchase Money Indebtedness so long as such Lien only (a) attaches to such property and (b) secures the Indebtedness that was incurred to acquire such property or any permitted refinancing in respect thereof; (x) deposits and pledges of cash securing (a) obligations incurred in respect of workers’ compensation, unemployment insurance or other forms of governmental insurance or benefits, (b) the performance of bids,
tenders, leases, contracts (other than for the payment of money) and statutory obligations or (c) obligations on surety or appeal bonds, but only to the extent such deposits or pledges are made or otherwise arise in the ordinary course of business and secure obligations not past due; (xi) Liens of landlords and mortgagees of landlords (a) arising by statute or under any lease or related contractual obligation entered into in the ordinary course of business, (b) on fixtures and movable tangible property located on the real property leased or subleased from such landlord, (c) for amounts not yet due or that are being contested in good faith by appropriate proceedings diligently conducted and (d) for which adequate reserves or other appropriate provisions are maintained on the books of such Person in accordance with GAAP; (xii) the title and interest of a lessor or sublessor in and to property leased or subleased (other than through a Capitalized Lease Obligation in the ordinary course of business), in each case extending only to such property; (xiii) Liens that are customary contractual rights of setoff relating to pooled deposit or sweep accounts of any of the Borrower, the Guarantor, or any of their respective Subsidiaries to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business; (xiv) following execution of Acknowledgment Agreements with all Agencies, other Liens securing Indebtedness or other obligations in an aggregate principal amount not to exceed [***], which (a) are not on assets included in the Borrowing Base, and (b) are subordinated to the Liens securing the Obligations created pursuant to the terms of this Agreement on terms reasonably acceptable to the Administrative Agent; (xv) easements, rights-of-way, restrictions (including zoning restrictions), encroachments, protrusions, matters which would be disclosed by an accurate survey or inspection of any real property and other, similar encumbrances and minor title defects affecting real property that do not in the aggregate materially interfere with the ordinary conduct of the business of the Borrower, the Guarantor, or any of their respective Subsidiaries; (xvi) statutory or common law Liens of warehousemen, mechanics, materialmen, repairmen, construction contractors or other like Liens arising in the ordinary course of business securing obligations that are not overdue by more than 90 days or that are being contested in good faith by appropriate proceedings, and in respect of which, if applicable, the Borrower, the Guarantor, or any of their respective Subsidiaries shall have set aside on its books reserves in accordance with GAAP; and (xvii) leases, licenses, subleases or sublicenses granted to others in the ordinary course of business in an aggregate amount at any time not to exceed [***]; provided that any such leases, licenses, subleases or sublicenses do not (x) interfere in any material respect with the business of the Borrower, the Guarantor, or any of their respective Subsidiaries or (y) secure any Indebtedness.
“Permitted Disposition” shall mean (i) subject to Section 2.10, sales of Agency Servicing Rights (including sales of delinquent Agency Servicing Rights); (ii) Dispositions of Mortgage Loans and other assets in the ordinary course of business on market terms; provided that no less than [***] the consideration received for such assets shall be paid in cash; (iii) subject to Section 2.10 (to the extent relating to any Collateral), Dispositions of Collateral to the extent required by any Agency if the failure to comply with such requirement could result in the loss of eligibility to service Mortgage Loans for the related Agency; (iv) any involuntary loss, damage or destruction of property; (v) any involuntary condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, or confiscation or requisition of use of property; (vi) Dispositions of obsolete or worn-out equipment in the ordinary course of business; (vii) Dispositions in connection with a Permitted Warehouse Financing or Permitted Servicing Advance Facility Indebtedness; (viii) Dispositions pursuant to the Asset Management Strategy and (ix) other Dispositions of assets as long as the value of the assets Disposed does not exceed [***] in any fiscal year.
“Permitted Holders” shall mean Stone Point Capital LLC and/or its Affiliates.
“Permitted Indebtedness” shall mean (i) any Indebtedness owing to the Administrative Agent or any Lender under this Agreement and the other Transaction Documents,
(ii) existing Indebtedness and any permitted refinancing of such Indebtedness; provided that such Indebtedness shall be listed on Schedule 4.1(q) if such Indebtedness is borrowed money, or the aggregate principal amount of such Indebtedness exceeds [***], (iii) Permitted Purchase Money Indebtedness and any permitted refinancing in respect of such Indebtedness, (iv) Indebtedness in connection with any Permitted Warehouse Financing, (v) Permitted Servicing Advance Facility Indebtedness, (vi) Indebtedness under Hedge Agreements that are incurred for the bona fide purpose of hedging the interest rate, commodity, or foreign currency risks associated with the Borrower’s or a Subsidiary’s operations and not for speculative purposes, (vii) Indebtedness in the form of Capitalized Lease Obligations and Equipment and/or loans to finance capital expenditures, (viii) cash management obligations and Indebtedness incurred by the Borrower or any Subsidiary in respect of netting services, overdraft protections, commercial credit cards and treasury management services, automated clearing-house arrangements, employee credit card programs, controlled disbursement, ACH transactions, return items, interstate deposit network services, dealer incentive, in each case entered into in the ordinary course of business in connection with cash management, (ix) Indebtedness between the Borrower and the Guarantor, (x) intercompany Indebtedness among Persons not a party to this Agreement, (xi) following execution of Acknowledgment Agreements with all Agencies, intercompany Indebtedness between the Borrower, the Guarantor, or their respective Subsidiaries and any Person not a party to this Agreement in an aggregate outstanding amount not to exceed [***]as long as such Indebtedness cannot be repaid prior to payments due under this Agreement upon the occurrence and continuation of an Event of Default (and such Indebtedness is subordinated to the Liens securing the Obligations created pursuant to the terms of this Agreement on terms reasonably acceptable to the Administrative Agent) and (xii) following execution of Acknowledgment Agreements with all Agencies, unsecured Indebtedness in an aggregate principal amount not to exceed [***], as long as such unsecured Indebtedness cannot be repaid prior to payments due under this Agreement upon the occurrence and continuation of an Event of Default.
“Permitted MSR Collateral Liens” shall mean: (i) the security interest granted hereunder in favor of the Administrative Agent; (ii) interests of any Agency in the Collateral which are pursuant and/or subject to the applicable Servicing Contract, applicable Acknowledgment Agreement or applicable Agency Requirements; (iii) banker’s Liens in the nature of rights of setoff arising in the ordinary course of business of the Borrower or the Guarantor, as applicable; (iv) Liens for Taxes not yet due and payable; (v) Liens securing judgments not constituting an Event of Default under Section 6.1(f) that are, expressly or by operation of law, subordinate to the Administrative Agent’s Lien; and (vi) Liens securing Permitted Servicing Advance Facility Indebtedness.
“Permitted Purchase Money Indebtedness” shall mean, as of any date of determination, Indebtedness (other than the Obligations, but including Capitalized Lease Obligations) incurred to finance the acquisition of any fixed assets secured by a Lien permitted under clause (ix) of the definition of “Permitted Collateral Liens”; provided, that (a) such Indebtedness is incurred within 20 days after such acquisition, (b) such Indebtedness when incurred shall not exceed the purchase price of the asset financed and (c) the aggregate principal amount of all such Indebtedness shall not exceed [***] at any time outstanding.
“Permitted Servicing Advance Facility Indebtedness” shall mean any Indebtedness of the Borrower incurred under a Servicing Advance Facility.
“Permitted Warehouse Financing” shall mean any warehouse, purchase, repurchase, participation or other similar financing transaction (including any new or existing early buyout line) whereby the warehousing party extends a facility to the Borrower or any Subsidiary to finance the funding or acquisition of mortgage loans, on an interim basis, pending the repurchase of such mortgage loans by the Borrower or such Subsidiary or the subsequent sale
and delivery of such mortgage loans, or interests therein, to a third party investor or through a mortgage backed security, which facility is secured by such mortgage loans, or interest therein, or through purchase of such mortgage loans, or interests therein, from the Borrower or such Subsidiary by such warehousing party, but only for such time as such mortgage loan remains financed under such Permitted Warehouse Financing, and which financing is made on prevailing market terms, including with respect to advance rates, financial covenants, and interest rates.
“Person” shall mean any individual, corporation (including a business trust), partnership, limited liability company, joint-stock company, trust, unincorporated organization or association, joint venture, government or political subdivision or agency thereof, or any other entity.
“Pool” shall mean a group of Mortgage Loans, which are the security for a mortgage-backed security issued or guaranteed by an Agency, or otherwise owned by an Agency.
“Portfolio” shall mean, with respect to any Agency, all of the Mortgage Loans owned by such Agency and serviced by the Borrower pursuant to the terms of the related Servicing Contract.
“Portfolio Delinquency Rate” means, as of any date of determination, the ratio of (i) the unpaid principal balance of all residential mortgage loans which are serviced by the Borrower for any Agency that have monthly payments that are 60 days or more past due (calculated in accordance with the relevant Agency delinquency calculation methodology) to (ii) the unpaid principal balance of all residential mortgage loans which are serviced by the Borrower for any Agency, in each case, as of the last calendar day of the immediately preceding month.
“Portfolio Hedges” shall mean (i) transactions entered into pursuant to a Hedge Agreement, if any; (ii) transactions entered into in the Futures Account, if any; and (iii) such other transactions as Administrative Agent and Borrower may agree constitute Portfolio Hedges; provided, however, that the term “Portfolio Hedges” shall not include any of the foregoing to the extent such is subject to netting or set-off provisions pursuant to transactions referenced as Excluded Collateral.
“Potential Event of Default” shall mean any occurrence or event that, with the giving of notice, the passage of time or both, would constitute an Event of Default.
“Prepayment Premium” shall have the meaning set forth in the Agency Fee Letter.
“Proceeding” shall mean any claim, litigation, investigation or proceeding.
“Proceeds” shall mean “proceeds” as defined in Section 9-102(a)(64) of the UCC.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
“QFC Credit Support” shall have the meaning assigned to such term in Section 10.22.
“Recipient” shall mean the Administrative Agent, the Lenders or any other recipient of any payment to be made by or on account of any obligation of the Borrower or the Guarantor under this Agreement or any other Transaction Document.
“Records” shall mean all instruments, agreements and other books, records, and reports and data generated by other media for the storage of information maintained by the Borrower, or any other person or entity with respect to the Assets.
“Redemption Date” shall have the meaning set forth in Section 10.8.
“Reference Time” with respect to any setting of the then-current Benchmark shall mean the time determined by the Administrative Agent in accordance with the Benchmark Replacement Conforming Changes.
“Register” shall have the meaning set forth in Section 10.8.
“Related Parties” shall mean, with respect to any Person, such Person’s Affiliates and the directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.
“Related Principal and Interest Custodial Accounts” means all principal and interest custodial accounts (other than the Collection Account) maintained in the ordinary course of business by the Borrower as servicer that (I)(a) relate solely to any Mortgage Loan that is subject to a Permitted Warehouse Financing, (b) are accounts into which the Borrower is required to remit principal and interest collections on Mortgage Loans in accordance with the applicable Agency Guide and Servicing Contract maintained in accordance with an applicable Servicing Contract, or (c) are accounts that are maintained in connection with the servicing of third party mortgage loans, and (II) do not have deposited therein, with respect to any Assets, any servicing fees or subservicing fees (other than retained yield, Ancillary Income and, after the occurrence of an Event of Default, the applicable Base Servicing Fee) that the Borrower as servicer is entitled to receive free and clear of all Ginnie Mae rights and other restrictions on transfer under applicable Ginnie Mae guidelines, pursuant to the Servicing Contracts.
“Related Security” shall mean with respect to any Asset, (a) all security interests or Liens and property subject thereto from time to time, if any, purporting to secure payment of such Asset, whether pursuant to the Servicing Contract related to such Asset or otherwise, together with all financing statements covering any collateral securing such Asset; (b) all guarantees, indemnities, letters of credit, insurance or other agreements or arrangements of any kind from time to time supporting or securing payment of such Asset whether pursuant to the Servicing Contract related to such Asset or otherwise; and (c) any and all Proceeds of the foregoing.
“Relevant Governmental Body” shall mean the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto.
“REO Assets” shall mean any real property owned by any Person and acquired as a result of the foreclosure or other enforcement of a lien on such asset securing a Mortgage Loan.
“Reportable Event” shall mean a reportable event as defined in Section 4043 of ERISA and the regulations issued under such Section, with respect to a Single-Employer Plan, excluding, however, such events as to which the Pension Benefit Guaranty Corporation by
regulation or by public notice waived the requirement of Section 4043(a) of ERISA that it be notified within thirty (30) days of the occurrence of such event.
“Resolution Authority” shall mean an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” shall mean, with respect to any corporation, limited liability company or partnership, the chief executive officer, chief financial officer, any executive vice president or any senior vice president (the duties of which vice president include the administration of this Agreement, the Transaction Documents or the transactions contemplated hereby or thereby), and the treasurer.
“Schedule of Assets” shall mean the Schedule of Eligible Assets and the Schedule of Ineligible Assets.
“Schedule of Eligible Assets” shall mean the schedule of MSR Collateral that meets the criteria of an Eligible Assets and which includes identifying information relating to such MSR Collateral as agreed to between the Borrower and the Administrative Agent, which Schedule may be updated from time to time in accordance with the terms of this Agreement.
“Schedule of Ineligible Assets” shall mean the schedule of MSR Collateral that does not meet the criteria of an Eligible Assets, which Schedule may be updated from time to time in accordance with the terms of this Agreement.
“Secured Parties” shall mean the Administrative Agent and each Lender.
“Securities” shall mean any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.
“Securitization” shall mean a public or private transfer, sale or financing of (i) Servicer Advances or MSRs, (ii) mortgage loans, (iii) installment contracts, (iv) deferred servicing fees; (v) other loans and related assets, and/or (vi) any other assets capable of being securitized, (clauses (i) – (vi) above, collectively, the “Securitization Assets”) by which the Borrower, the Guarantor, or any of their Subsidiaries directly or indirectly securitizes a pool of specified Securitization Assets including, without limitation, any such transaction involving the sale of specified Servicer Advances or mortgage loans to a Securitization Entity.
“Securitization Assets” shall have meaning specified in the definition of “Securitization.”
“Securitization Entity” shall mean (i) any Person other than the Borrower or the Guarantor (whether or not a Subsidiary of the Borrower or the Guarantor) established for the purpose of issuing asset-backed or mortgaged-backed or mortgage pass-through securities of any kind (including collateralized mortgage obligations and net interest margin securities), (ii) any special purpose Subsidiary established for the purpose of selling, depositing or contributing Securitization Assets into a Person described in clause (i) or holding securities in any related Securitization Entity, regardless of whether such person is an issuer of securities; provided that such Person is not an obligor with respect to any Indebtedness of the Borrower, the Guarantor, or
any Subsidiary and (iii) any special purpose Subsidiary of the Borrower or the Guarantor formed exclusively for the purpose of satisfying the requirements of Credit Enhancement Agreements and regardless of whether such Subsidiary is an issuer of securities; provided that such Person is not an obligor with respect to any Indebtedness of the Borrower, the Guarantor, or any of their Subsidiaries other than under Credit Enhancement Agreements.
“Servicer Advance” shall mean advances made or required to be made by the Borrower or any of its Subsidiaries in its capacity as servicer under a Servicing Contract to fund principal, interest, escrow, foreclosure, insurance, tax or other payments or advances when the obligor on the underlying Mortgage Loan is delinquent in making payments on such receivable; to enforce remedies, manage and liquidate REO Assets; or that the Borrower or any of its Subsidiaries otherwise advances in its capacity as servicer under such Servicing Contract.
“Servicer Termination Event” shall mean any default, event of default or similar occurrence under the terms of a Servicing Contract, pursuant to which the Borrower may be terminated in its capacity as servicer in accordance with and pursuant to the terms of such Servicing Contract.
“Servicing Advance Facility” shall mean any funding arrangement with a lender, lenders or an indenture trustee, acting on behalf of noteholders, secured by the right to be reimbursed for Servicer Advances made by the Borrower or a special purpose subsidiary of the Borrower as servicer under one or more Servicing Contracts under which financing advances are made to the Borrower based on such advance reimbursement rights (whether or not covered by an Acknowledgment Agreement).
“Servicing Advance Receivable” shall mean the contractual right with respect to each Mortgage Loan (a) to reimbursement pursuant to the terms of a Servicing Contract and the applicable Agency Guide, for a Servicer Advance made by or on behalf of the Borrower as servicer (or any predecessor servicer) with respect to Mortgage Loans in a Pool, which Servicer Advance has not previously been reimbursed, and including all rights of the Borrower as servicer (or any predecessor servicer) to enforce payment of such obligation under the related Servicing Contract, and (b) to amounts to be paid as consideration for any purchase of the contractual right to reimbursement described under clause (a).
“Servicing Contract” shall mean each of the Fannie Mae Lender Contract, the Freddie Mac Servicing Contract, and the Ginnie Mae Servicing Contract, as applicable.
“Servicing Fee” shall mean, with respect to any Mortgage Loan, the aggregate monthly fee payable to the Borrower in servicing such Mortgage Loan pursuant to the related Servicing Contract, not including any Ancillary Income or Servicing Advance Receivables.
“Servicing Income” shall mean, with respect to any Mortgage Loan, all Servicing Fees and Ancillary Income payable to the Borrower as servicer (as applicable) pursuant to the applicable Servicing Contract. For the avoidance of doubt, Servicing Income shall not include reimbursements of Servicing Advance Receivables.
“Shared Net Servicing Revenue” shall have the meaning given such term in the Freddie Mac Acknowledgment Agreement.
“Single-Employer Plan” shall mean any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multi-Employer Plan, that is subject to Title IV of ERISA or Section 412 of the Internal Revenue Code and is sponsored or maintained by the Borrower or any ERISA Affiliate or for which the Borrower or any ERISA
Affiliate may have or have had liability within five (5) plan years preceding the date of this Agreement by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA.
“SOFR Adjustment” shall mean 0.26161%.
“SOFR Rate” shall mean, the sum of: (a) Compounded SOFR, and (b) the SOFR Adjustment.
“Specified Contribution” shall have the meaning assigned to such term in Section 6.3.
“Stone Point” shall mean Trident VI, L.P., Trident VI Parallel Fund L.P., Trident VI DE Parallel Fund, L.P. or Trident VI Professionals Fund, L.P.
“Subsidiary” shall mean, with respect to any Person at any time, (i) any corporation or trust of which 50% or more (by number of shares or number of votes) of the outstanding Capital Stock or shares of beneficial interest normally entitled to vote for the election of one or more directors, managers or trustees (regardless of any contingency which does or may suspend or dilute the voting rights) is at such time owned directly or indirectly by such Person or one or more of such Person’s subsidiaries, or any partnership of which such Person or any of such Person’s subsidiaries is a general partner or of which 50% or more of the partnership interests is at the time directly or indirectly owned by such Person or one or more of such Person’s subsidiaries and (ii) any corporation, trust, partnership or other entity which is Controlled or capable of being Controlled by such Person or one or more of such Person’s subsidiaries.
“Supported QFC” shall have the meaning assigned to such term in Section 10.22.
“Surplus Proceeds” shall have the meaning given such term in the Freddie Mac Acknowledgment Agreement.
“Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, and including any interest, additions to tax or penalties applicable thereto.
“Termination Fee” shall have the meaning given such term in the Freddie Mac Acknowledgment Agreement.
“Third Amendment Closing Date” shall mean April 29, 2022.
“Transactions” shall mean, collectively, the transactions to occur on or prior to the Closing Date and thereafter on each Borrowing Date pursuant to the Transaction Documents, including (a) the execution, delivery and performance of the Transaction Documents and the Advances hereunder and (b) the payment of all fees and expenses due and owing in connection with the foregoing.
“Transaction Documents” shall mean this Agreement, the Loan Notes, the Fee Letters, the Account Control Agreement, the Acknowledgment Agreements and any other agreements, instruments, certificates or documents delivered or contemplated to be delivered hereunder or thereunder or in connection herewith or therewith, as the same may be
supplemented or amended from time to time hereafter in accordance herewith or therewith, and “Transaction Document” shall mean any of the Transaction Documents.
“Trigger Event” shall mean the occurrence and continuation of any of the following:
(i) The average of the three (3) most recent monthly Portfolio Delinquency Rates with respect to the Borrower’s servicing portfolio relating to Fannie Mae and Freddie Mac is greater than the Maximum Fannie/Freddie DQ Rate;
(ii) The average of the three (3) most recent monthly Portfolio Delinquency Rates with respect to the Borrower’s servicing portfolio relating to Ginnie Mae is greater than the Maximum Ginnie DQ Rate; or
(iii) Two year “compare ratio” assigned to the Borrower by FHA under its “Neighborhood Watch” program exceeds one hundred ninety-five percent (195%);
provided that the Trigger Event shall be deemed to be cured if (a) in the case of (i) and (ii) above, the foregoing delinquency rates returning and remaining below the specified Maximum Fannie/Freddie DQ Rate or Maximum Ginnie DQ Rate, as applicable for a period of [***] and (b) in the case of (iii) above during any period when clause (iii) is applicable, immediately upon the foregoing “compare ratio” decreasing below [***]; provided further that in no event will such Trigger Event be deemed to have been satisfied at any time when an Event of Default shall have occurred and be continuing.
“UCC” shall mean the Uniform Commercial Code as from time to time in effect in any applicable jurisdiction.
“UK Financial Institution” shall mean any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” shall mean the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unadjusted Benchmark Replacement” shall mean the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“Uncommitted Advances” shall mean any Advances in excess of the Aggregate Commitment Amount.
“Uncommitted Advance Amount” shall mean, as of any date, the amount of outstanding Uncommitted Advances.
“United States” shall mean the United States of America.
“Unused Portion” shall mean, as of 5:00 P.M. (New York City time) on any day, the amount, if any, by which the amount of Aggregate Outstandings on such day is less than the Aggregate Commitment Amount on such day.
“Upfront Fee” shall have the meaning set forth in the Administrative Agent Fee Letter.
“U.S. Government Securities Business Day” shall mean any day except for a Saturday, a Sunday or a day on which the Securities Industry and Financial Markets Association, or any successor thereto, recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“U.S. Person” shall mean any Person who is a U.S. person within the meaning of Section 7701(a)(30) of the Internal Revenue Code.
“U.S. Special Resolution Regime” shall have the meaning assigned to such term in Section 10.19.
“U.S. Tax Compliance Certificate” shall have the meaning set forth in Section 2.15(g)(ii)(B)(3).
“VA” shall mean the U.S. Department of Veterans Affairs.
“Valuation Agent” shall mean the valuation service providers identified on Schedule III hereto, as may be amended from time to time by the Administrative Agent, the Borrower and the Majority Lenders.
“Valuation Agent Asset Value” shall mean, as of any date of determination, the sum of (i) the Valuation Agent Fannie Mae Asset Value, (ii) the Valuation Agent Freddie Mac Asset Value, and (iii) the Valuation Agent Ginnie Mae Asset Value.
“Valuation Agent Fannie Mae Asset Value” shall mean, as of any date of determination, the product of (i) the Fannie Mae Advance Rate, (ii) the Valuation Agent Fannie Mae Market Value Percentage, and (iii) the aggregate unpaid principal balance of the Mortgage Loans related to the Fannie Mae MSRs.
“Valuation Agent Fannie Mae Market Value Percentage” shall mean, with respect to any Fannie Mae MSR as of any date of determination, the percentage to be applied to the unpaid principal balance of the applicable Mortgage Loans, to arrive at the fair market value of such Fannie Mae MSR, as most recently determined by a Valuation Agent in accordance with Section 2.6, provided that, in no event shall the Valuation Agent Fannie Mae Market Value Percentage be greater than (i) an amount equal to the market value thereof implying a discount rate which is the sum of the 5 Year Swap Rate and [***] (if using a static model), or (ii) the market value thereof implying a zero option-adjusted spread.
“Valuation Agent Freddie Mac Asset Value” shall mean, as of any date of determination, the product of (i) the Freddie Mac Advance Rate, (ii) the Valuation Agent Freddie Mac Market Value Percentage, and (iii) the aggregate unpaid principal balance of the Mortgage Loans related to the Freddie Mac MSRs.
“Valuation Agent Freddie Mac Market Value Percentage” shall mean, with respect to any Freddie Mac MSR as of any date of determination, the percentage to be applied to the unpaid principal balance of the applicable Mortgage Loans, to arrive at the fair market value
of such Freddie Mac MSR, as most recently determined by a Valuation Agent in accordance with Section 2.6, provided that, in no event shall the Valuation Agent Freddie Mac Market Value Percentage be greater than (i) an amount equal to the market value thereof implying a discount rate which is the sum of the 5 Year Swap Rate and [***] (if using a static model), or (ii) the market value thereof implying a zero option-adjusted spread.
“Valuation Agent Ginnie Mae Asset Value” shall mean, as of any date of determination, the product of (i) the Ginnie Mae Advance Rate, (ii) the Valuation Agent Ginnie Mae Market Value Percentage, and (iii) the aggregate unpaid principal balance of the Mortgage Loans related to the Ginnie Mae MSRs.
“Valuation Agent Ginnie Mae Market Value Percentage” shall mean, with respect to any Ginnie Mae MSR as of any date of determination, the percentage to be applied to the unpaid principal balance of the applicable Mortgage Loans, to arrive at the fair market value of such Ginnie Mae MSR, as most recently determined by a Valuation Agent in accordance with Section 2.6, provided that, in no event shall the Valuation Agent Ginnie Mae Market Value Percentage be greater than (i) an amount equal to the market value thereof implying a discount rate which is the sum of the 5 Year Swap Rate and [***] (if using a static model), or (ii) the market value thereof implying a zero option-adjusted spread.
“Valuation Agent Market Value Percentage” means the Valuation Agent Fannie Mae Market Value Percentage, the Valuation Agent Freddie Mac Market Value Percentage, or the Valuation Agent Ginnie Mae Market Value Percentage, as applicable.
“VPC Agreement” shall mean any bulk or flow purchase Voluntary Partial Cancellation of Servicing Contract Rights Agreement by and between Freddie Mac and the Borrower presently in effect or executed in the future, whereby the Borrower relinquishes Freddie Mac MSRs to Freddie Mac, as amended, modified, restated or supplemented from time to time.
“VPC Servicing Transfer Date” shall have the meaning given to the term “Servicing Transfer Date” in a VPC Agreement.
“Warehoused Mortgage Loans” shall mean Mortgage Loans which have been pledged to or purchased by a warehousing party or in which the warehousing party has acquired a participation interest pursuant to a Permitted Warehouse Financing.
“Write-Down and Conversion Powers” shall mean, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
Section 1.2 Computation of Time Periods. In this Agreement, 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 means “to but excluding” and the word “through” means “through and including.”
Section 1.3 Construction. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (A) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, amended and restated, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth therein), (B) any reference herein to any Person shall be construed to include such Person’s successors and permitted assigns, (C) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (D) all references herein to Sections, Schedules and Exhibits shall be construed to refer to Sections of, and Schedules and Exhibits to, this Agreement, (E) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all real property, tangible and intangible assets and properties, including cash, securities, accounts and contract rights, and interests in any of the foregoing, (F) any reference to a statute, rule or regulation is to that statute, rule or regulation as now enacted or as the same may from time to time be amended, re-enacted or expressly replaced, (G) “or” is not exclusive, and (H) capitalized terms used herein and not defined, but which are defined in the Agency Fee Letter or the Administrative Agent Fee Letter shall have the meaning specified in such Fee Letter.
Section 1.4 Accounting Terms. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the audited financial statements, except as otherwise specifically prescribed herein; provided that if the Borrower notifies the Administrative Agent that the Borrower or the Guarantor wishes to amend any Financial Covenant to eliminate the effect of any change in GAAP on the operation of such covenant, then the Borrower’s or Guarantor’s compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower or Guarantor, as applicable, and the Administrative Agent.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
Section 2.1 Establishment of the Credit Facility. Subject to and upon the terms and conditions set forth in this Agreement and the other Transaction Documents, the Administrative Agent and the Lenders agree to establish the credit facility set forth in this Agreement for the benefit of the Borrower.
Section 2.2 The Advances.
(a) Upon the terms and subject to the conditions hereinafter set forth, the Lenders, severally but not jointly, shall from time to time during the Availability Period, make loans (each an “Advance”) to the Borrower on a revolving basis in an aggregate amount outstanding up to but not exceeding (i) the amount of such Lender’s Commitment (each such Advance, a “Committed Advance”) or (ii) such amount as maybe agreed to in the sole discretion of each Lender as provided in clause (c) below; provided, that no such Advance shall
cause (x) a Borrowing Base Deficiency or a Funding Base Deficiency or (y) the Aggregate Outstandings to exceed the Aggregate Facility Amount;
(b) Following the Closing Date and the initial Advance, no Advance shall cause [***] or more of the Aggregate Commitment Amount to be drawn in any rolling thirty (30) day period, unless otherwise agreed by the Administrative Agent. Within the limits of each Lender’s Commitment, to the extent the aggregate outstanding principal balance of any Advance is prepaid, such amount may be reborrowed under Section 2.2(a).
(c) To the extent any Notice of Borrowing requests Advances, the making of which would cause the Aggregate Outstandings to be in excess of the Aggregate Commitment Amount on the relevant Borrowing Date, upon the terms and subject to the conditions hereinafter set forth, each Lender may, in its sole and absolute discretion, from time to time during the Availability Period, with respect to the amount of such requested Advances that would cause the Aggregate Outstandings to be in excess of the Aggregate Commitment Amount on the relevant Borrowing Date, make such Advance to the Borrower that is secured by the Collateral: provided, however, that no such Advance shall cause (i) the Aggregate Outstandings to exceed the sum of the Aggregate Facility Amount or (ii) a Borrowing Base Deficiency or a Funding Base Deficiency. The Borrower hereby acknowledges and agrees that, notwithstanding any provision of this Agreement, or any other Transaction Document, no Lender has any obligation to make any Advances in excess of the Aggregate Commitment Amount or such Lender’s Commitment and this Agreement does not create, and shall not be construed to create, any contractual or other commitment by any Lender to make any Advance in excess of the Aggregate Commitment Amount or such Lender’s Commitment.
Section 2.3 Use of Proceeds. Except as otherwise provided in Section 2.18, Section 2.19, and Section 2.20 herein, proceeds of Advances shall only be used by the Borrower to (A) purchase, in the ordinary course of business, Agency eligible MSRs and related assets, (B) pay certain fees and expenses incurred in connection with the establishment of the credit facility set forth in this Agreement, (C) subject to Section 2.19, make cash distributions from time to time pursuant to Section 5.2(c) in an amount not exceeding the excess of the Borrowing Base over the Aggregate Outstandings and (D) for general corporate purposes.
Section 2.4 Making the Advances. (a) Except as otherwise provided herein, the Borrower may request the Lenders to make Advances to the Borrower no more frequently than [***] by the delivery to the Administrative Agent, not later than [***] (New York City time) on any Business Day of a written notice of such request substantially in the form of Exhibit B attached hereto (each such notice, a “Notice of Borrowing”), together with a duly completed Borrowing Base Certificate, signed by a Responsible Officer and including a Schedule of Eligible Assets and Schedule of Ineligible Assets. Any Notice of Borrowing or Borrowing Base Certificate received by the Administrative Agent after the time specified in the immediately preceding sentence shall be deemed to have been received by the Administrative Agent on the next Business Day, and to the extent that results in the proposed Borrowing Date being earlier than three (3) Business Days after the date of delivery of such Notice of Borrowing, then the date specified in such Notice of Borrowing as the proposed Borrowing Date of an Advance shall be deemed to be the Business Day immediately succeeding the proposed Borrowing Date of such Advance originally specified in such Notice of Borrowing. The proposed Borrowing Date specified in a Notice of Borrowing shall be no earlier than three (3) Business Days after the date of delivery of such Notice of Borrowing and may be up to a maximum of thirty (30) days after the date of delivery of such Notice of Borrowing. Unless otherwise provided herein, each Notice of Borrowing shall be irrevocable and shall specify (i) the aggregate principal amount of the Advance requested, and (ii) the Borrowing Date (which shall be a Business Day).
(b) The aggregate principal amount of each Advance shall not be less than [***].
(c) Upon receipt by the Administrative Agent of a Notice of Borrowing and a Borrowing Base Certificate from the Borrower, the Administrative Agent shall promptly (on the date of its deemed receipt of the Notice of Borrowing and the related Borrowing Base Certificate) deliver to each Lender a copy of such Notice of Borrowing and a written notice specifying each Lender’s Commitment Percentage of the amount requested by the Borrower pursuant to the applicable Notice of Borrowing. Thereafter, each Lender shall make Advances in an aggregate amount equal to its Commitment Percentage of the amount requested by the Borrower pursuant to the applicable Notice of Borrowing; provided that to the extent the Notice of Borrowing requests Advances, the making of which would cause the aggregate amount of Advances to be in excess of the Aggregate Commitment Amount on the relevant Borrowing Date, each Lender may, in its sole and absolute discretion, with respect to the portion of such requested Advance that would constitute an Uncommitted Advance Amount on the relevant Borrowing Date, make such portion of the Advance in an amount equal to its Commitment Percentage, provided further, that if any Lender elects, in its sole and absolute discretion, not to provide all or any portion of a requested Advance that would constitute an Uncommitted Advance Amount, the other Lenders (on a pro rata basis or such other basis as may be agreed by the Lenders) may agree to provide all or any portion of such Advance. The Lenders shall make such Advances to the Administrative Agent’s Account by no later than [***] (New York City time) on the Borrowing Date specified or deemed specified in such Notice of Borrowing. The Administrative Agent shall promptly make such Advance available to the Borrower in U.S. Dollars to the Borrower’s Account. For avoidance of doubt, nothing herein shall be deemed to oblige any Lender to fund any Advance in excess of the Aggregate Commitment Amount or such Lender’s Commitment.
Section 2.5 Fees.
(a) Non-Usage Fee. On each Monthly Payment Date during the Availability Period, the Borrower agrees to pay to the Administrative Agent, for the ratable benefit of the Lenders and as consideration for each Lender’s Commitment hereunder, a non-usage fee in Dollars (the “Non-Usage Fee”) in an amount equal to the (1) the applicable Non-Usage Fee Percentage as described in the Agency Fee Letter, if any, multiplied by (2) the daily average Unused Portion of the Aggregate Commitment Amount in the immediately preceding calendar month. Accrued Non-Usage Fees shall be due and payable in arrears on each Monthly Payment Date, and on the last day of the Availability Period. Computations of the Non-Usage Fee shall be made by the Administrative Agent on the basis of a year of 360 days and for the actual number of days elapsed, and, with respect to each Lender, pro rata based on such Lender’s Commitment.
(b) Minimum Utilization Fee. On each Minimum Utilization Fee Payment Date, the Borrower agrees to pay to the Administrative Agent, for the ratable benefit of the Lenders and as consideration for each Lender’s Commitment hereunder, the Minimum Utilization Fee. Accrued Minimum Utilization Fees shall be due and payable in arrears on each Minimum Utilization Fee Payment Date. Computations of the Minimum Utilization Fee shall be made by the Administrative Agent.
Section 2.6 Borrowing Base.
(a) The Administrative Agent may, in its sole and absolute discretion, and shall, at the request of the Majority Lenders, on any date, calculate the Borrowing Base and shall provide written notice thereof to the Borrower. To the extent any such calculation results in a
Borrowing Base Deficiency, the Administrative Agent shall deliver a notice to the Borrower and each Lender (a “Borrowing Base Deficiency Notice”), setting forth the calculation thereof (which shall be conclusive absent manifest error), and the Borrowing Base Required Payment to be made by the Borrower as a result of such calculation (which amount shall be paid in accordance with Section 2.9). At the Administrative Agent’s discretion, the Administrative Agent may obtain valuation reports with respect to the Administrative Agent Asset Value from a Valuation Agent, at any time and from time to time on a non-binding basis; provided that the Borrower shall not be responsible for payment of any costs, expenses, fees or other amounts in connection with such valuation report except in connection with a Borrowing Base Dispute pursuant to Section 2.6(b).
(b) Notwithstanding the foregoing or anything to the contrary contained herein, the Borrower shall have the right to dispute the Administrative Agent’s calculation of the Administrative Agent Asset Value by notifying the Administrative Agent and the Lenders within three (3) Business Days after the Borrower receives a Borrowing Base Deficiency Notice (a “Borrowing Base Dispute”). If the Borrower initiates a Borrowing Base Dispute, then the Administrative Agent, on one hand, and the Borrower, on the other hand, shall each promptly direct separate Valuation Agents, to prepare a valuation report with respect to such Administrative Agent Asset Value. The average of the midpoint values indicated in the two valuation reports submitted by the Valuation Agents shall become the conclusive Valuation Agent Market Value Percentage of the related MSRs that constitute Eligible Assets, binding upon all parties hereto, absent manifest error.
(c) Any costs, expenses, fees and other amounts due and owing to any Valuation Agent or Dealer in connection with the engagement of such Valuation Agent or Dealer in connection with a Borrowing Base Dispute pursuant to Section 2.6(b) shall be an Obligation of the Borrower and shall become due and payable on the immediately succeeding Monthly Payment Date in accordance with Section 2.7.
Section 2.7 Repayment of the Advances. (a) The outstanding principal balance of the Advances and the other Obligations owing under this Agreement, together with all accrued but unpaid interest thereon, shall be due and payable on the Maturity Date.
(b) On each Monthly Payment Date, except following the occurrence and during the continuation of an Event of Default, the Borrower shall cause the payment in full of all Distributable Amounts to the Administrative Agent for payment to the applicable Person; provided that the Borrower shall pay the Credit Manager Fees directly to the Credit Manager on or prior to each Monthly Payment Date as provided in the Credit Manager Agreement.
(c) On each Monthly Payment Date following the occurrence and during the continuation of an Event of Default, amounts on deposit in the Collection Account, including Collections deposited therein during the related Collection Period shall, at the direction of the Administrative Agent, be disbursed by the Account Bank from the Collection Account and applied on such Monthly Payment Date in the following order of priority:
(i) first, to the Borrower, any Base Servicing Fee inadvertently deposited into the Collection Account by the Borrower;
(ii) second, ratably (a) to the Administrative Agent, all costs, expenses, reimbursements and indemnification amounts owed to the Administrative Agent pursuant to the terms hereof, and (b) to the Credit Manager, the Credit Manager Fees with respect to such Monthly Payment Date and all costs, expenses, reimbursements and
indemnification amounts owed to the Credit Manager pursuant to the terms of the Credit Manager Agreement;
(iii) third, to the Administrative Agent, on behalf of the Lenders, the Interest Distribution Amount with respect to such Monthly Payment Date;
(iv) fourth, to the Administrative Agent, on behalf of the Lenders, the payment of the Non-Usage Fee and any Minimum Utilization Fee with respect to such Monthly Payment Date;
(v) fifth, to the Administrative Agent, on behalf of the Lenders, pro rata, based on the Advances held by such Lender, all remaining amounts to be applied to the reduction of such Advances to zero on such date;
(vi) sixth, to the Administrative Agent, on behalf of the applicable party, all amounts that are then due and payable pursuant to Section 2.11;
(vii) seventh, to the Administrative Agent, on behalf of the applicable party, all fees, expenses, indemnitees and other amounts that are due and payable by the Borrower and incurred in connection with this Agreement and required to be paid or reimbursed hereunder, the financing, management, operation or maintenance of the Collateral or the Transaction Documents, including to consultants and experts retained by the Borrower (including attorneys and accountants) and verification agents and Dealers retained pursuant to the terms hereof;
(viii) eighth, to the Administrative Agent, on behalf of any applicable party, the ratable payment of all other Obligations that are past due or payable on such date; and
(ix) ninth, all remaining amounts to the Borrower’s Account on such date.
Notwithstanding anything to the contrary in this Agreement or any of the other Transaction Documents, all terms and provisions of this Agreement and the other Transaction Documents are and shall be subject to the terms and provisions of each Acknowledgment Agreement. To the extent that any conflict necessarily exists or shall be adjudged to exist between the terms and provisions of this Agreement and those of the applicable Acknowledgment Agreement, solely with respect to the relationship and agreements between Borrower and/or Administrative Agent, on the one hand, and the applicable Agency, on the other hand, the terms and provisions of the applicable Acknowledgment Agreement shall govern and control.
(d) Notwithstanding the foregoing, following the occurrence and during the continuation of an Event of Default, in the event that amounts available for distribution from the Collection Account pursuant to Section 2.7(c) are insufficient to pay in full all Obligations then due and owing on any day, then the Borrower shall cause the payment in full of the applicable deficiency to the Administrative Agent for payment to the applicable parties hereto.
Section 2.8 Application of Prepayment of Advances. Each repayment of Advances pursuant to Section 2.7 and each prepayment of Advances pursuant to Section 2.9 or 2.10 shall be applied to prepay the Advances outstanding on a pro rata basis until paid in full.
Section 2.9 Mandatory Prepayments of Advances; Borrowing Base Deficiency.
(a) If a Borrowing Base Deficiency exists on any date, the Borrower shall pay to the Administrative Agent, for the account of the Lenders, the Borrowing Base Required Payment, together with accrued but unpaid interest on the amount required to be so prepaid to the date of such prepayment. All such amounts shall become due and payable (i) no later than 5:00 p.m. (New York City time) on the Business Day following the Borrower’s receipt of a Borrowing Base Deficiency Notice, or (ii) if Stone Point provides the Lenders a guarantee of payment for the amounts due hereunder, in such form as is acceptable to the Lenders in their sole discretion, then such amounts shall be due and payable no later than 5:00 p.m. (New York City time) on such date that is [***] following the Borrower’s receipt of a Borrowing Base Deficiency Notice. For the avoidance of doubt, the [***] period during which the Borrower may dispute the Administrative Agent’s determination of the Administrative Agent Asset Value set forth in Section 2.6 shall not operate to extend the cure periods referenced in the preceding sentence.
(b) In lieu of making any prepayment in accordance with clause (i) above to eliminate a Borrowing Base Deficiency, if such Borrowing Base Deficiency occurs during the Availability Period the Borrower may identify as Collateral additional Eligible Assets in an amount equal to the Borrowing Base Required Payment. Upon such identification, such MSRs shall be Collateral hereunder without any further action by the Administrative Agent or the Lenders; provided that, immediately prior to and immediately after giving effect to such contribution, (i) no Event of Default exists, and (ii) each of the representations, warranties, covenants and agreements made or deemed to be made by the Borrower under or in connection with this Agreement and the Transaction Documents is true and correct in all material respects as of such date.
Section 2.10 Optional Prepayments; Removal of Collateral.
(a) Optional Prepayments. At any time, the Borrower may, at its option, prepay all or any portion of the Advances outstanding (an “Optional Prepayment”) on any date (the “Redemption Date”) upon prior written notice delivered to the Administrative Agent not later than 12:00 p.m. (New York City time) [***] prior to the date of such payment; provided that the Borrower shall be permitted to deliver such notice no more frequently than two (2) times during any week. Each such notice shall be in the form attached hereto as Exhibit G and shall specify (i) the aggregate amount of the prepayment to be made on the Advances outstanding (such amount, if applicable, the “Optional Prepayment Amount”), (ii) the Redemption Date, and (iii) if applicable, the Collateral to be released on such Redemption Date and a duly completed Borrowing Base Certificate containing information accurate as of such date. Each Optional Prepayment shall be in a minimum principal amount equal to [***] and in integral multiples of [***] in excess thereof. Any prepayment of the Advances outstanding shall be accompanied by a payment of all accrued and unpaid interest on the amount prepaid, together with any additional amounts required pursuant to Section 2.11, any Exit Fees, any applicable Prepayment Premiums and all outstanding indemnity Obligations of the Borrower, then due and owing under this Agreement through such Redemption Date; provided that the Prepayment Premium shall only be payable on the dates as set forth in the definition thereof.
(b) Removal of Collateral. Notwithstanding language herein to the contrary, after giving effect to any release of Collateral (whether in connection with an Optional Prepayment pursuant to Section 2.10(a) above or pursuant to any other provision of this Agreement), the following conditions must be satisfied:
(i) no selection procedures are used with respect to identification of Assets to be released or retained that are materially adverse to the Secured Parties;
(ii) no Borrowing Base Deficiency, Potential Event of Default or Event of Default shall exist either prior to, or after giving effect to the prepayment of the applicable portion of the Advances outstanding and/or the release of the related Collateral (unless, in the case of a Borrowing Base Deficiency or Funding Base Deficiency, (x) the amount of such deficiency is eliminated as a result of such prepayment and release or (y) the release is in connection with a sale to an unaffiliated third-party purchaser and the following conditions are satisfied (i) the purchaser has agreed to pay the purchase price for the released Collateral to the Administrative Agent as a prepayment of the Advances, and (ii) after giving effect to such prepayment, the weighted average of the Effective Advance Rates for the Agencies is the same or lower as it had been prior to the release of the related Collateral); and
(iii) the representations and warranties set forth in Article IV are true and correct as of such Redemption Date (except to the extent such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall have been true and correct as of such earlier date) after giving effect to the prepayment of the applicable portion of the Advances outstanding and release of the related Collateral.
(c) Notwithstanding anything in this Agreement to the contrary, any release of Freddie Mac MSRs shall be subject in all respects to the terms and provisions of the Freddie Mac Acknowledgment Agreement, the Freddie Mac Servicing Contract and any VPC Agreement.
Section 2.11 Determination of Interest Rate.
(a) Interest Rate. Interest on the outstanding principal balance of the Advances shall accrue at the Cost of Funds Rate. Any change in the rate of interest hereunder due to a change in the Cost of Funds Rate shall become effective as of the opening of business on the first day on which such change in the Cost of Funds Rate shall become effective. Each determination by the Administrative Agent of the Cost of Funds Rate shall be conclusive and binding for all purposes, absent manifest error. The Cost of Funds Rate applicable to an Interest Accrual Period shall be determined by the Administrative Agent as set forth herein.
(b) Increased Costs. If any Change in Law, (i) shall subject any Lender or the Administrative Agent (each of which, an “Affected Party”) to any Taxes (other than (x) Indemnified Taxes, (y) Excluded Taxes and (z) Connection Income Taxes) on its loans, loan principal, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto or (ii) shall impose, modify or deem applicable any reserve requirement (including any reserve requirement imposed by the Board of Governors of the Federal Reserve System), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Affected Party or (iii) shall impose any other condition affecting the rights of any Lender and the Administrative Agent hereunder, and in each case the result of which is to increase the cost to any Affected Party under this Agreement or to reduce the amount of any sum received or receivable by an Affected Party under this Agreement below that which such Affected Party would have received but for such occurrence, then within 30 days following the receipt of written demand by such Affected Party (provided that such Affected Party shall provide the Borrower with notice within a reasonable period of time following such Affected Party’s discovery of such increased costs or reductions and shall include calculations of such compensation in reasonable detail), the Borrower shall pay directly to such Affected Party such additional amount or amounts as will compensate such Affected Party for such additional or increased cost incurred or such reduction suffered to the extent such additional or increased costs or reduction are incurred or suffered in connection with any obligation to make Advances
hereunder, any of the rights of such Lender or the Administrative Agent hereunder, or any payment made hereunder.
(c) Capital Adequacy. If any Change in Law regarding capital adequacy or liquidity by any Governmental Authority, central bank or comparable agency charged by Applicable Law with the interpretation or administration thereof, or compliance by such Lender or its parent corporation with any request or directive regarding capital adequacy or liquidity (whether or not having the force of law) of any such authority, central bank, or comparable agency, in each case made subsequent to the date hereof, has or would have effect of reducing the rate of return on the capital of any Affected Party as a consequence of its obligations hereunder or arising in connection herewith to a level below that which any such Affected Party could have achieved but for such introduction, change, compliance or change (taking into consideration the policies of such Affected Party with respect to capital adequacy or liquidity) by an amount deemed by such Affected Party to be material, then within 30 days following the receipt of written demand by such Affected Party (which written demand shall be accompanied by a statement setting forth the basis for such demand in reasonable detail), the Borrower shall pay directly to such Affected Party such additional amount or amounts as will compensate such Affected Party for such reduction.
If as a result of any event or circumstance similar to those described in Sections 2.11(b) or 2.11(c), any Affected Party is required to compensate a bank or other financial institution providing liquidity support, credit enhancement or other similar support to such Affected Party in connection with this Agreement or the funding or maintenance of Advances hereunder, then within 30 days following the receipt of written demand by such Affected Party (which written demand shall be accompanied by a statement setting forth the basis for such demand in reasonable detail), the Borrower shall pay to such Affected Party such additional amount or amounts as may be necessary to reimburse such Affected Party for any amounts actually paid by it.
In determining any amount provided for in this Section 2.11, the Affected Party may use any reasonable averaging and attribution methods. Any Affected Party making a claim or demand under this Section 2.11 shall submit to the Borrower a certificate as to such additional or increased cost or reduction, which certificate shall be conclusive absent manifest error.
(d) Effect of Benchmark Transition Event.
(i) Benchmark Replacement. Notwithstanding anything to the contrary in this Agreement or in any other Transaction Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any determination of the Benchmark on any date, the Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder or under any Transaction Document in respect of such determination on such date and all determinations on all subsequent dates. If the Benchmark Replacement is determined in accordance with clause (1) or (2) of the definition of “Benchmark Replacement,” in connection with a Benchmark Transition Event, such Benchmark Replacement will become effective as of the Reference Time on the applicable Benchmark Replacement Date without any amendment to, or further action or consent of any other party to, this Agreement. If the Benchmark Replacement is determined in accordance with clause (3) of the definition of “Benchmark Replacement,” such Benchmark Replacement will become effective at 5:00 p.m. on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the parties without any amendment to this Agreement or further action or consent of any other party to this Agreement.
(ii) Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Transaction Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement.
(iii) Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event and its related Benchmark Replacement Date, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes and (iv) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent pursuant to this Section 2.11(d), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its sole discretion and without consent from any other party hereto.
(e) Indemnification. The Borrower agrees to indemnify each Lender and to hold each Lender harmless from any loss or expense which such Lender sustains or incurs as a consequence of (i) any default by the Borrower in payment of the principal of or interest on an Advance, including any such loss or expense arising from interest or fees payable by a Lender to lenders of funds obtained by it in order to maintain its Advances based on the applicable Benchmark hereunder or (ii) any failure to borrow any Advance (other than an Advance bearing interest at the Alternative Rate) on the date specified in any Notice of Borrowing (including as a result of the Borrower’s failure to satisfy any conditions precedent to such borrowing); provided, however, the Borrower shall not indemnify any applicable Lender from any loss or expense arising from such Lender’s willful misconduct or gross negligence. This provision shall survive payment of the Advances and the satisfaction of all other Obligations of the Borrower and termination of this Agreement.
(f) Illegality. Notwithstanding any other provision of this Agreement, in the event that any Lender shall have reasonably determined in good faith and is advised by counsel that any Change in Law shall make it unlawful for such Lender to fund or maintain any Advance by compliance by such Lender in good faith with any Law, then such Lender shall promptly notify the Administrative Agent and the Borrower, following which (i) such Lender’s obligation to fund any Advance shall be suspended until such time as such Lender may again fund and maintain its Advances hereunder, (ii) if a Notice of Borrowing has been submitted pursuant to Section 2.4(a) but the affected Advance has not been funded, the applicable Borrower may revoke such Notice of Borrowing by giving written notice to the Administrative Agent thereof on the same day that the Borrower was notified by the Lender pursuant to this Section 2.11(f) and (iii) if such Law shall so mandate, such Lender’s outstanding Advances shall be prepaid by the Borrower, together with accrued and unpaid interest thereon and all other amounts payable by the Borrower to such Lender under this Agreement (in each case, without the imposition of any penalty, breakage costs, or exit fees), on the last day of the Interest Accrual Period with respect to such Advances (or before such date as shall be mandated by such Law), it being acknowledged that any amounts prepaid pursuant to clause (iii) above may be paid with an Advance or Advances made with an interest rate calculated by reference to the Alternative Rate.
Section 2.12 Payments and Computations. (a) The Borrower (through the Administrative Agent pursuant to Section 2.7) shall make each payment and prepayment
hereunder and under the Loan Notes in respect of principal, interest, expenses, indemnities, fees or other Obligations due from the Borrower to the Administrative Agent or any Lender not later than [***] (New York City time) on the day when due in U.S. Dollars to the Administrative Agent at its address referred to in Section 10.3 or to the Administrative Agent’s Account in immediately available, same-day funds. The Administrative Agent will promptly thereafter cause like funds to be distributed (i) if such payment by the Borrower is in respect of principal, interest, commitment fees or any other Obligation then payable hereunder and under the other Transaction Documents to more than one Lender, then to such Lenders ratably in accordance with the amounts of such respective Obligations then payable to such Lenders and (ii) if such payment by the Borrower is in respect of any Obligation then payable hereunder to one Lender, then to such Lender, in each case to be applied in accordance with Section 2.7. All computations of interest based on the Alternative Rate shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable. Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.
(b) All payments to be made in respect of fees due hereunder to the Administrative Agent or any Lender from the Borrower shall be made pursuant to Section 2.7, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Borrower, and without setoff, counterclaim or other deduction of any nature (other than with respect to Taxes pursuant to Section 2.15), and an action therefor shall immediately accrue.
Section 2.13 Payment on Non-Business Days. Whenever any payment hereunder or under the Loan Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest.
Section 2.14 Extension of Availability Period. (a) The Borrower may, by notice to the Administrative Agent following the two year anniversary of the Closing Date, request the Administrative Agent to extend the Availability Period End Date.
(b) The Administrative Agent, with the written consent of each Lender (other than any Defaulting Lender), shall advise the Borrower whether the Lenders agree to any requested extension of the Availability Period End Date within thirty (30) days after the Borrower has given notice to the Administrative Agent that it requests an extension of the Availability Period End Date; provided, that if the Lenders do not agree to any requested extension, the Borrower may renew its request for an extension at any time or from time to time prior to the end of the Availability Period End Date then in effect; provided further, that the Administrative Agent’s failure to respond within such period shall constitute the Administrative Agent’s denial of the requested extension.
(c) Any such request to extend the Availability Period End Date shall be effective only upon the written agreement of the Administrative Agent, the Lenders, the Borrower, and the Guarantor. Upon entering into such written agreement, the date referenced in the definition of “Availability Period End Date” shall be automatically extended for the amount of time agreed to by the Administrative Agent, the Lenders, the Borrower, and the Guarantor. This Section shall supersede any provisions in Section 10.2 to the contrary.
Section 2.15 Taxes.
(a) Defined Terms. For purposes of this Section 2.15 the term “applicable Law” includes FATCA.
(b) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower under any Transaction Document shall be made without deduction or withholding for any Taxes, except as required by applicable Law. If any applicable Law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholding agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
(c) Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.
(d) Indemnification by the Borrower. The Borrower shall indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Recipient (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Recipient, shall be conclusive absent manifest error.
(e) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.8 relating to the maintenance of the Participant Register, and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Transaction Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Transaction Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this Section 2.15(e).
(f) Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section 2.15, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(g) Status of Recipients.
(i) Any Recipient that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Transaction Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Recipient, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Recipient is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Sections 2.15(g)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Recipient’s reasonable judgment such completion, execution or submission would subject such Recipient to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Recipient.
(ii) Without limiting the generality of the foregoing,
(A) any Recipient that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Recipient becomes a Recipient under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of IRS Form W-9 certifying that such Recipient is exempt from U.S. federal backup withholding tax;
(B) any Recipient that is not a U.S. Person shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the Borrower or Administrative Agent) on or prior to the date on which such Recipient becomes a Recipient under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:
(1) in the case of a Recipient claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Transaction Document, executed copies of IRS Form W-8BEN or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Transaction Document, IRS Form W-8BEN or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(2) executed copies of IRS Form W-8ECI;
(3) in the case of a Recipient claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Internal Revenue Code, (x) a certificate (in a form reasonably acceptable to the Borrower) to the effect that such Recipient is not a “bank” within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Internal Revenue Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the
Internal Revenue Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or W-8BEN-E, as applicable; or
(4) to the extent a Recipient is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, a U.S. Tax Compliance Certificate, IRS Form W-9 or other certification documents from each beneficial owner, as applicable; provided that if the Recipient is a partnership and one or more direct or indirect partners of such Recipient are claiming the portfolio interest exemption, such Recipient may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner;
(C) any Recipient which is not a U.S. Person shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Recipient becomes a Recipient under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable Law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and
(D) if a payment made to a Recipient under any Transaction Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Recipient were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Recipient shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by Law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Recipient has complied with such Recipient’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (d), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
Each Recipient agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
(h) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.15 (including by the payment of additional amounts pursuant to this Section 2.15), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Section 2.15(i) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this
Section 2.15(i), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 2.15(i) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This Section 2.15(i) shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
(i) Survival. Each party’s obligations under this Section 2.15 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Transaction Document.
Section 2.16 Defaulting Lenders. (a) Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:
(i) The Non-Usage Fee and the Minimum Utilization Fee shall cease to accrue on the Commitment of such Defaulting Lender pursuant to Section 2.5; and
(ii) the Commitments and Advances of such Defaulting Lender shall not be included in determining whether all Lenders or the Majority Lenders, as applicable, have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 10.2); provided that any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender which affects such Defaulting Lender differently than other affected Lenders shall require the consent of such Defaulting Lender.
(b) If the Borrower and the Administrative Agent agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent shall so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that Lender shall purchase at par such of the Advances of the other Lenders as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Advances in accordance with its Commitment, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender having been a Defaulting Lender.
Section 2.17 Security Interest. (a) Subject to the terms of the Acknowledgment Agreements (as applicable) and the subordination described in Section 2.18, Section 2.19 and Section 2.20, the Borrower hereby grants, pledges and assigns to the Administrative Agent (on behalf of and for the ratable benefit of each Secured Party) as security for the payment and performance by the Borrower of the Obligations, a security interest in all of the Borrower’s right, title and interest in, to and under, in any case, whether now held or hereafter acquired (i) all Fannie Mae MSRs; (ii) all Freddie Mac MSRs; (iii) all Ginnie Mae MSRs; (iv) the Borrower’s rights (but not its obligations) under the Transaction Documents including without limitation, any rights to receive payments thereunder or any rights to collateral thereunder whether now held or hereafter acquired, now existing or hereafter created; (v) all collateral however defined or
described under the Transaction Documents to the extent not otherwise included above; (vi) all Related Security; (vii) all Records relating to and all proceeds of the foregoing (collectively, (i)-(vii), the “MSR Collateral”), and (viii) all Additional Collateral (collectively, the “Borrower Collateral”). Notwithstanding anything herein to the contrary, the term “Borrower Collateral” shall not include, and the grant, pledge and assignment of a security interest contained in this Section 2.17 shall not include a security interest in any Excluded Collateral.
(b) Additionally, the Guarantor hereby grants, pledges and assigns to the Administrative Agent (on behalf of and for the ratable benefit of each Secured Party) as security for the payment and performance by the Borrower of the Obligations and the Guarantor of the Guaranteed Obligations, a security interest in all of the Guarantor’s right, title and interest in, to and under, in any case, whether now owned or hereafter acquired, all Additional Guarantor Collateral (together with the Borrower Collateral, the “Collateral”). For the avoidance of doubt, each grant, pledge, or assignment of the Collateral hereunder shall, subject to the rights of Freddie Mac under the Freddie Mac Acknowledgment Agreement, include all of the Borrower’s and Guarantor’s rights, but not its obligations, with respect to such Collateral.
(c) The parties acknowledge that the Agencies have certain rights under the Acknowledgment Agreements and the Servicing Contracts (as applicable), including the right to cause the Borrower to transfer servicing to a transferee servicer under certain circumstances as more particularly set forth therein and to terminate the Borrower, with or without cause. The transferee servicer shall have all the rights and remedies against the Borrower and the Collateral as set forth herein and under the UCC.
(d) Each of the Borrower and the Guarantor will promptly, at its respective expense, execute and deliver such instruments, financing and continuation statements and documents and take such other actions as the Administrative Agent may reasonably request from time to time in order to perfect, protect, evidence, exercise and enforce the Administrative Agent’s and each Lender’s interests, rights and remedies under and with respect to the Transaction Documents, the Advances and the Collateral. To the extent the Borrower or the Guarantor has filed or caused the filing of any document as provided above, the Borrower or the Guarantor, as applicable, shall deliver to the Administrative Agent 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.
(e) If the Borrower fails to perform any of its Obligations, then the Administrative Agent may (but shall not be required to) perform or cause to be performed such Obligation, and the costs and expenses incurred by the Administrative Agent in connection therewith shall be payable by the Borrower. Without limiting the generality of the foregoing, if the Borrower fails to perform any of its Obligations, the Borrower authorizes the Administrative Agent, at the option of the Administrative Agent and the expense of the Borrower, at any time and from time to time, to take all actions and pay all amounts that the Administrative Agent reasonably deems necessary or appropriate to protect, enforce, preserve, insure, service, administer, manage, perform, maintain, safeguard, collect or realize on the Collateral, including the right to liquidate the Collateral, and the Administrative Agent’s Liens and interests therein or thereon and to give effect to the intent of the Transaction Documents. No Potential Event of Default or Event of Default shall be cured by the payment or performance of any Obligation by the Administrative Agent on behalf of the Borrower. The Administrative Agent 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 the Borrower
in appropriate proceedings and against which adequate reserves are being maintained in accordance with GAAP.
(f) Upon termination of this Agreement and payment in full of all Obligations (other than contingent obligations not then due), Administrative Agent shall release its security interests in the Collateral and promptly file termination statements with respect to each financing statement filed pursuant to this Section 2.17 and take such other action as may reasonably be requested by the Borrower or Guarantor to evidence such release. If evidence of filing such termination statements has not been delivered to the Borrower or Guarantor, as applicable, within ten (10) days of termination of this Agreement and payment in full of all Obligations (other than contingent obligations not then due), the Administrative Agent hereby authorizes the Borrower or the Guarantor, as applicable, to file such termination statements.
Section 2.18 Limited Pledge of Fannie Mae Servicing. Notwithstanding anything to the contrary contained herein or in any of the other Transaction Documents, the pledge of the Borrower’s right, title and interest in the Fannie Mae MSRs under the Fannie Mae Lender Contract identified on each Schedule of Assets shall only secure the Borrower’s indebtedness and obligations to the Administrative Agent and each Lender incurred for (i) the purposes of securing (a) a warehouse line of credit and used for one of the purposes set forth in clauses (b) or (c), (b) a loan whose proceeds have been or will be used to acquire or retain through its origination activities rights in the Fannie Mae Lender Contract in accordance with the provisions of the Fannie Mae Selling Guide and the Fannie Mae Servicing Guide by the Borrower, (c) a loan whose proceeds have been or will be used to purchase from another mortgage banking company the contract right to service Mortgage Loans, or to purchase assets of, or stock issued by, such company, or (ii) any other purpose which Fannie Mae, in its sole and absolute discretion, considers to be consistent with the purposes of the Fannie Mae Acknowledgment Agreement to be executed among the Borrower, the Administrative Agent and Fannie Mae; provided, that the foregoing provisions of this paragraph shall be deemed automatically supplemented or amended if and to the extent Fannie Mae supplements or amends the corresponding requirement, whether in its rules, regulations, guides, Fannie Mae Lender Contract, Fannie Mae Acknowledgment Agreement or published announcements or otherwise waives or grants exceptions from such requirement, and in each instance, with the same substantive force and effect; and provided further that the security interest created hereby is and shall be subject to the following condition and such provision below shall be included in each financing statement filed in respect hereof (defined terms used below shall have the meaning set forth in the Fannie Mae Acknowledgment Agreement):
“The Security Interest described in this financing statement is subordinate to all rights of Fannie Mae under (i) the terms of an Acknowledgment Agreement, with respect to the Security Interest among Fannie Mae, Home Point Financial Corporation (the “Debtor”) and Goldman Sachs Bank USA, as Administrative Agent for Lenders and (ii) the Mortgage Selling and Servicing Contract, the Fannie Mae Selling Guide, the Fannie Mae Servicing Guide and all supplemental servicing instructions or directives provided by Fannie Mae, all applicable master agreements, recourse agreements, repurchase agreements, indemnification agreements, loss-sharing agreements, and any other agreements between Fannie Mae and the Debtor, and all as amended, restated or supplemented from time to time (collectively, the “Fannie Mae Lender Contract”), which rights include the right of Fannie Mae to terminate the Fannie Mae Lender Contract with or without cause and the right to sell, or have transferred, the Servicing Rights.”
Section 2.19 Limited Pledge of Freddie Mac Servicing. Notwithstanding anything to the contrary contained herein or in any of the other Transaction Documents, the pledge of the Borrower’s right, title and interest in the Freddie Mac MSRs under the Freddie Mac Servicing Contract identified on each Schedule of Assets shall only secure the Borrower’s indebtedness and obligations to the Administrative Agent and each Lender incurred for the following limited purposes: (i) to fund the Borrower’s purchase of additional servicing portfolios; (ii) to effect the Borrower’s purchase of a mortgage banking company; (iii) to fund the Borrower’s working capital consistent with its residential mortgage business operations or (iv) any other purpose which Freddie Mac, in its sole and absolute discretion, considers to be consistent with the purposes of the Freddie Mac Acknowledgment Agreement; provided, that the foregoing provisions of this paragraph shall be deemed automatically supplemented or amended if and to the extent Freddie Mac supplements or amends the corresponding requirement, whether in its rules, regulations, guides, Freddie Mac Servicing Contract, the Freddie Mac Acknowledgment Agreement or published announcements or otherwise waives or grants exceptions from such requirement, and in each instance, with the same substantive force and effect; and provided further that the security interest created hereby shall, following execution of the Freddie Mac Acknowledgment Agreement, be subject to the following condition and such provision below shall be included in each financing statement filed in respect hereof after execution of the Freddie Mac Acknowledgment Agreement (defined terms used below shall have the meaning set forth in the Freddie Mac Acknowledgment Agreement):
“Notwithstanding anything to the contrary herein, the security interest publicized or perfected by this financing statement is subject and subordinate in each and every respect (a) to all rights, powers and prerogatives of the Federal Home Loan Mortgage Corporation (“Freddie Mac”) under and in connection with the Purchase Documents, as that term is defined in the Freddie Mac Single-Family Seller/Servicer Guide, which rights include, without limitation, the right of Freddie Mac to disqualify (in whole or in part) the debtor named herein as an approved Freddie Mac Seller/Servicer, with or without cause, and the right to terminate (in whole or in part) the unitary, indivisible master servicing contract and to transfer and sell all or any portion of said servicing contract rights, as provided in the Purchase Documents; and (b) to all claims of Freddie Mac arising out of or relating to any and all breaches, defaults and outstanding obligations of the debtor to Freddie Mac.”
Section 2.20 Limited Pledge of Ginnie Mae Servicing. The Administrative Agent and each additional Lender acknowledge and agree that (x) the Borrower is entitled to servicing income with respect to a given mortgage pool only so long as Borrower is a Ginnie Mae approved issuer; (y) upon the Borrower’s loss of such approved issuer status, the Administrative Agent and each additional Lender’s rights to any servicing income related to a given mortgage pool also terminate; and (z) the pledge of the Borrower’s rights to servicing income conveys no rights (such as a right to become a substitute servicer or issuer) that are not otherwise specifically provided for in the Ginnie Mae Contract, provided that this sentence shall automatically be deemed amended or modified if and to the extent Ginnie Mae amends the Ginnie Mae Contract, the applicable Acknowledgment Agreement, if any, or published announcements and provided further that the security interest created hereby is subject to the following provision to be included in each financing statement filed in respect hereof:
Notwithstanding anything to the contrary set forth herein:
(a) The property subject to the security interest reflected in this instrument includes all of the right, title and interest of Home Point Financial Corporation (“Debtor”) in certain mortgages and/or participation interests related to such mortgages (“Pooled Mortgages”), and pooled under the mortgage-backed securities program of the Government National Mortgage Association (“Ginnie Mae”), pursuant to section 306(g) of the National Housing Act, 12 U.S.C. § 1721(g);
(b) To the extent that the security interest reflected in this instrument relates in any way to the Pooled Mortgages, such security interest is subject and subordinate to all rights, powers and prerogatives of Ginnie Mae, whether now existing or hereafter arising, under and in connection with: (i) 12 U.S.C. § 1721(g) and any implementing regulations; (ii) the terms and conditions of that certain Acknowledgment Agreement, dated as of July 11, 2019, with respect to the Security Interest, by and among Ginnie Mae, Debtor and Goldman Sachs Bank USA, as administrative agent; (iii) applicable Guaranty Agreements and contractual agreements between Ginnie Mae and the Debtor; and (iv) the Ginnie Mae Mortgage-Backed Securities Guide, Handbook 5500.3 Rev. 1, and other applicable guides (items (i), (iii) and (iv), collectively, the “Ginnie Mae Contract”);
(c) Such rights, powers and prerogatives of Ginnie Mae include, but are not limited to, Ginnie Mae’s right, by issuing a letter of extinguishment to Debtor, to effect and complete the extinguishment of all redemption, equitable, legal or other right, title or interest of the Debtor in the Pooled Mortgages, in which event the security interest as it relates in any way to the Pooled Mortgages shall instantly and automatically be extinguished as well; and
(d) For purposes of clarification, “subject and subordinate” in clause (2) above means, among other things, that any cash held by Goldman Sachs Bank USA as collateral and any cash proceeds received by Goldman Sachs Bank USA in respect of any sale or other disposition of, collection from, or other realization upon, all or any part of the collateral may only be applied by Goldman Sachs Bank USA to the extent that such proceeds have been received by, or for the account of, the Debtor free and clear of all Ginnie Mae rights and other restrictions on transfer under applicable Ginnie Mae guidelines; provided that this clause (4) shall not be interpreted as establishing rights in favor of Ginnie Mae except to the extent that such rights are reflected in, or arise under, the Ginnie Mae Contract.
Section 2.21 Commitment Increase. Following execution of Acknowledgment Agreements with all Agencies, the Borrower may request an increase to the Aggregate Commitment Amount, provided that any such request shall be subject to the following conditions: (a) any such increase of the Aggregate Commitment Amount will be effective only upon the written agreement of the Administrative Agent, the applicable Lenders that will commit to the increase, the Borrower, and the Guarantor, and (b) the Administrative Agent shall have the right to elect to take all or any portion of the amount of such requested increase notwithstanding its percentage of the Aggregate Commitment Amount at the time of such request. The Administrative Agent will respond to any such request, on behalf of the applicable Lenders, within fifteen (15) Business Days; provided, that the Administrative Agent’s failure to respond within such period shall be deemed to be a rejection of the requested increase. In the event that an increase requested in accordance with the terms of this Section 2.21 shall be rejected, or deemed rejected, then an additional Lender identified by the Borrower may be made party to this Agreement; provided, however, that (i) GS Bank shall retain majority voting rights hereunder, and (ii) the addition of such Lender must be consented to in writing by the Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed).
Section 2.22 Base Servicing Fee Increases. Upon written notice to the Borrower by any Agency of the need to improve or maintain adequate performance of servicing activities or to
comply with the applicable Agency Requirements, the Borrower shall deliver such notice to the Administrative Agent within five (5) Business Days of receipt. Such notice from the Borrower shall include a request to increase the Base Servicing Fee Rate. The Base Servicing Fee Rate shall be adjusted to address the necessary additional costs required to comply with such notice from the applicable Agency. The Base Servicing Fee Rate shall become effective on the next Monthly Payment Date, but no less than thirty (30) days after delivery of such notice from Borrower to the Administrative Agent and no more than sixty (60) days from the date of delivery of such notice from such Agency. Upon request therefor by the Administrative Agent, the Borrower shall deliver to the Administrative Agent a written notice setting forth in reasonable detail the basis for any such proposed increase.
Section 2.23 Increase in Commitment Amounts.
(a) Request for Increase. The Borrower may from time to time request to effect an increase in the Aggregate Commitment Amount (each such increase, an “Incremental Commitment”) by obtaining additional Commitments from one or more Lenders that have, in their sole and absolute discretion agreed to such increase; provided that (i) after giving effect to any such Incremental Commitment, the Aggregate Commitment Amount shall not exceed the Aggregate Facility Amount; (ii) any request for an Incremental Commitment shall be in a minimum amount of [***] or a higher integral multiple of [***]; and (iii) after giving effect to such Incremental Commitment and the Advances in connection therewith, no Potential Event of Default, Event of Default or Borrowing Base Deficiency shall exist.
(b) Increase Effective Date and Allocations. Any increase in the Aggregate Commitment Amount pursuant to this Section 2.23 shall become effective one (1) Business Day after the date on which the Administrative Agent has received notice from the applicable Lender(s) of their agreement to increase their Commitment or on such other date as is agreed among the Borrower, the Administrative Agent and the increasing Lender(s). The Administrative Agent shall promptly notify the Lenders of any increase in the Aggregate Commitment Amount pursuant to this Section 2.23.
No Lender shall be obligated to increase the amount of its Commitment.
ARTICLE III
CONDITIONS OF LENDING AND CLOSING
Section 3.1 Conditions Precedent to Closing. The effectiveness of this Agreement and the obligations of the parties hereto are subject to the condition precedent that the Lenders shall have received or waived receipt of the following on or prior to the Closing Date (unless otherwise noted):
(a) Transaction Documents and other Closing Documents. Each of the Transaction Documents (other than the Freddie Mac Acknowledgment Agreement and the Ginnie Mae Acknowledgment Agreement) shall be executed on or before the Closing Date, shall be in full force and effect and all consents, waivers and approvals necessary for the consummation of the transactions contemplated thereby shall have been obtained and shall be in full force and effect, and the Administrative Agent shall have received a duly executed counterpart thereof; provided that, to the extent the Borrower has used commercially reasonable efforts to obtain the Account Control Agreement prior to the Closing Date and is unable to do so without undue burden or expense, the Account Control Agreement may be delivered no later than thirty (30) days (or such later date as may be reasonably agreed by the Administrative Agent) after the Closing Date.
(b) Receipt of Loan Notes. The Administrative Agent shall have received a duly executed Loan Note for each Lender that has requested the same.
(c) Know Your Customer Information. The Administrative Agent shall have received (i) all documentation and other information required by regulatory authorities under applicable “Know Your Customer” and anti-money laundering rules and regulations, including the Patriot Act and (ii) to the extent any Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, any Lender that has requested, in a written notice to the Borrower at least five days prior to the Closing Date (or such shorter period as may be agreed by the Administrative Agent), a Beneficial Ownership Certification in relation to such Borrower shall have received such Beneficial Ownership Certification (provided that, upon the execution and delivery by such Lender of its signature page to this Agreement, the condition set forth in this clause (ii) shall be deemed to be satisfied).
(d) Payment of Fees. On or prior to the Closing Date, the Borrower shall have paid all fees, including the Upfront Fee, previously agreed in writing to be paid on or prior to the Closing Date.
(e) Enforceability of Loan Note. Each Loan Note shall be entitled to the benefit of the security provided herein and shall constitute the legal, valid and binding agreement of the Borrower, enforceable against the Borrower in accordance with its terms (except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally or general principals of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law)).
(f) Evidence of Insurance. The Administrative Agent shall have received certification evidencing coverage under the insurance policies referred to in Section 5.1(t) and evidence that the Borrower and the Guarantor have added Administrative Agent as an additional loss payee under the insurance policies referred to in Section 5.1(t).
(g) Security Interest. Evidence that all other actions necessary or, in the opinion of Administrative Agent, desirable to perfect and protect Administrative Agent’s interest in the Assets have been taken, including, without limitation, duly authorized and filed Uniform Commercial Code financing statements on Form UCC-1.
(h) Organizational Documents. A certificate of the corporate secretary of the Borrower and of the Guarantor in form and substance acceptable to Administrative Agent, attaching certified copies of the Borrower’s and the Guarantor’s charter, bylaws and corporate resolutions approving the Transaction Documents and Transactions thereunder (either specifically or by general resolution), and all documents evidencing other necessary corporate action or governmental approvals as may be required in connection with the Transaction Documents.
(i) Good Standing Certificate. A certified copy of a good standing certificate or equivalent from the jurisdiction of organization of the Borrower and the Guarantor, dated no earlier than the date ten (10) Business Days prior to the Closing Date.
(j) Incumbency Certificate. An incumbency certificate of the corporate secretary of the Borrower and of the Guarantor, certifying the names, true signatures and titles of the representatives duly authorized to request transactions hereunder and to execute the Transaction Documents.
(k) Due Diligence Review. The Administrative Agent shall have completed, to its satisfaction, its due diligence review of the Borrower, the Guarantor, the Assets, the Agencies and such other matters as the Administrative Agent and the Lenders shall have determined in the exercise of their reasonable discretion are necessary and proper for the execution, delivery and performance under this Agreement and the other Transaction Documents.
(l) Legal Opinions. The Administrative Agent shall have received usual and customary legal opinions in form and substance satisfactory to Administrative Agent and its counsel (including, but not limited to, those regarding corporate matters, enforceability and security interest perfection).
Section 3.2 Conditions Precedent to All Advances. The obligation of each Lender to make or participate in each Advance (including the initial Advances hereunder) shall be subject, at the time thereof, to the satisfaction of the following conditions:
(a) Representations and Warranties. All of the representations and warranties of the Borrower and of the Guarantor contained in this Agreement and the other Transaction Documents shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality, in which case such representations and warranties shall be true and correct in all respects) with the same effect as though such representations and warranties had been made on and as of the date of such Advance, except to the extent that such representations and warranties expressly relate to an earlier specified date or period, in which case such representations and warranties shall have been true and correct in all material respects (except for those representations and warranties that are qualified by materiality, in which case such representations and warranties shall be true and correct in all respects) as of the date when made or for the respective period, as the case may be.
(b) No Event of Default; No Potential Event of Default. No Potential Event of Default or Event of Default has occurred and is continuing or would occur or be continuing immediately after giving effect to such Advance.
(c) No Borrowing Base Deficiency or Funding Base Deficiency. No Borrowing Base Deficiency or Funding Base Deficiency shall exist immediately prior and after giving effect to such Transaction.
(d) Availability Period. The Availability Period shall not have terminated, nor shall it have terminated immediately after giving effect to such Advance.
(e) Notice of Borrowing. In accordance with Section 2.4, the Administrative Agent shall have received a properly completed Notice of Borrowing and a Borrowing Base Certificate, including a Schedule of Eligible Assets and Schedule of Ineligible Assets from the Borrower.
(f) Requirements of Law. None of the Administrative Agent or any Lender shall have determined that the introduction of any Applicable Law or a Change in Law or in the interpretation or administration of any Applicable Law applicable to the Administrative Agent or such Lender has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for the Administrative Agent or such Lender to make any Advance.
(g) No Material Adverse Change. Since the Closing Date, there has been no Material Adverse Change.
(h) Fees. The Administrative Agent and each Lender shall have received payment in full of all fees and expenses which are due and payable hereunder to the Administrative Agent or such Lender on or before such date.
(i) Maximum Draw. After the Closing Date and the initial Advance, no more than [***] of the Aggregate Commitment Amount may be drawn in any rolling thirty (30) day period, unless otherwise agreed by the Administrative Agent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Borrower and the Guarantor. Each of the Borrower and the Guarantor represents and warrants to the Administrative Agent and each Lender as of the Closing Date, as of each Borrowing Date, as of each Monthly Payment Date or any other date on which the representations and warranties are required to be made hereunder, as follows:
(a) Organization; Corporate Powers. Each of the Borrower and the Guarantor (i) is a duly organized and validly existing corporation, in good standing under the laws of the State of New Jersey and the State of Delaware, as applicable, (ii) has the corporate power and authority to own its property and assets and to transact the business in which it is engaged and presently proposes to engage, and (iii) is duly qualified, in good standing and is authorized to do business in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, except in jurisdictions where the failure to be so qualified or in good standing has not had, and would not be reasonably expected to have, a Material Adverse Effect.
(b) Authority and Enforceability. Each of the Borrower and the Guarantor has the corporate or other organizational power and authority to execute, deliver and carry out the terms and provisions of the Transaction Documents to which it is party and has taken all necessary company or other organizational action to authorize the execution, delivery and performance of the Transaction Documents to which it is party. Each of the Borrower and the Guarantor has duly executed and delivered each Transaction Document to which it is party and each Transaction Document to which it is party constitutes the legal, valid and binding agreement and obligation of it enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).
(c) Equity Interests and Ownership. Schedule 4.1(c) correctly sets forth the ownership interest of the Borrower, the Guarantor, and each of their Subsidiaries in their respective Subsidiaries as of the Closing Date. Except as set forth on Schedule 4.1(c), as of the Closing Date, there is no existing option, warrant, call, right, commitment or other agreement to which the Borrower or the Guarantor is a party requiring, and there is no membership interest or other Equity Interests of the Borrower or the Guarantor outstanding which upon conversion, exchange or exercise would require, the issuance by the Borrower or the Guarantor of any additional membership interests or other Equity Interests of the Borrower or the Guarantor or other Securities convertible into or exchangeable or exercisable for or evidencing the right to subscribe for or purchase, a membership interest or other Equity Interests of the Borrower or the Guarantor, and no Securities or obligations evidencing any such rights are authorized, issued or outstanding.
(d) No Conflict. The execution, delivery and performance by each of the Borrower and the Guarantor of the Transaction Documents to which it is a party and the consummation of the transactions contemplated by the Transaction Documents do not and shall not (a) violate (i) any Applicable Law which violation would reasonably be expected to have a Material Adverse Effect, (ii) any of the organizational documents of the Borrower or the Guarantor, (iii) any order, judgment, injunction or decree of any court or other agency of government binding on the Borrower or the Guarantor, or (iv) any indenture, loan agreement, warehouse line of credit, repurchase agreement, mortgage, deed of trust, servicing contract or any other material contractual obligation of the Borrower or the Guarantor except to the extent such violation would not reasonably be expected to have a Material Adverse Effect; (b) result in or require the creation or imposition of any Lien upon any of the properties or assets of the Borrower or the Guarantor (other than any Liens created under any of the Transaction Documents in favor of the Administrative Agent on behalf of the Secured Parties); or (c) require any approval of stockholders, members or partners or any approval or consent of any Person under any material contractual obligation of the Borrower or the Guarantor, except for such approvals or consents which have been obtained on or before the Closing Date.
(e) Government Approvals. Except any which have been obtained, no order, consent, authorization, approval, license, or validation of, or filing recording, registration with, or exemption by, any Governmental Authority is required to authorize or is required as a condition to: (i) the execution, delivery and performance by the Borrower or the Guarantor of any Transaction Document to which it is a party or any of its obligations thereunder or (ii) the legality, validity, binding effect or enforceability of any Transaction Document to which the Borrower or the Guarantor is a party.
(f) Solvency. Each of the Borrower and the Guarantor is solvent and will not be rendered insolvent as a result of entering into any Transaction and, after giving effect to each Transaction, will not be left with an unreasonably small amount of capital with which to engage in its business. Neither Borrower nor the Guarantor intend to incur, nor believe that it has incurred, debts beyond its ability to pay such debts as they mature and is not contemplating, and is not aware of any Person threatening, the commencement of insolvency, bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official in respect of such entity or any of its assets. Neither the Borrower nor the Guarantor is selling and/or pledging any Assets with any intent to hinder, delay or defraud any of its creditors.
(g) True and Complete Disclosure.
(i) All information, reports, exhibits, schedules, financial statements or certificates of the Borrower, the Guarantor, or any Affiliate thereof furnished or to be furnished to the Administrative Agent in connection with the initial or any ongoing due diligence of the Borrower, the Guarantor, or any Affiliate thereof, or the negotiation, preparation, or delivery of the Transaction Documents, are true and complete in all material respects. The written information (other than financial projections, forward looking statements, and information of a general economic or industry specific nature) that has been made available to the Administrative Agent or any Lender by or on behalf of the Borrower, the Guarantor, or any Affiliate thereof in connection with the Transactions hereunder, when taken as a whole, does not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in the light of the circumstances under which such statements are made; provided that with respect to projected financial information, the Borrower represents on behalf of itself and each Subsidiary, only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time, it being understood that such projections as to future events are not to be viewed as facts and that actual financials during the period or periods covered by any such projections may differ from the projected results.
(ii) As of the Closing Date, to the best knowledge of the Borrower, the information included in the Beneficial Ownership Certification provided on or prior to the Closing Date to any Lender in connection with this Agreement is true and correct in all respects.
(h) Financial Statements. The financial statements of the Borrower and of the Guarantor delivered to the Administrative Agent on or prior to the Closing Date fairly present in all material respects on a consolidated basis the assets, liabilities and financial position of the Borrower and the Guarantor as at the dates of such financial statements, and the results of the operations and changes of financial position for the periods then ended (other than customary year-end adjustments for unaudited financial statements). For the avoidance of doubt, the financial statements described in the preceding sentence (the receipt of which is hereby acknowledged by the Administrative Agent) consist of copies of each of the Borrower’s and Guarantor’s balance sheets for the fiscal years of Borrower and Guarantor ended December 31, 2019 and December 31, 2020 and the related statements of income, cash flows, and shareholders’ equity for Borrower and Guarantor for such fiscal years, with the opinion thereon of Borrower’s and Guarantor’s independent accountants. All such financial statements are complete and correct and fairly present, in all material respects, the financial condition of the Borrower and the Guarantor and the results of their respective operations as at such dates and for such fiscal periods, all in accordance with GAAP applied on a consistent basis. Since the date of the most recent financial statements referenced above for each of the Borrower and the Guarantor, there has been no Material Adverse Change in the consolidated business, operations or financial condition of the Borrower or the Guarantor from that set forth in such financial statements nor is the Borrower or the Guarantor aware of any state of facts which (with notice or the lapse of time) would or could result in any such Material Adverse Change. The Borrower and the Guarantor each have, on the date of the statements delivered pursuant to this clause (h) no material liabilities, direct or indirect, fixed or contingent, matured or unmatured, known or unknown, or material liabilities for taxes, long-term leases or unusual forward or long-term commitments not disclosed by, or reserved against in, said balance sheet and related statements, and at the present time there are no material unrealized or anticipated losses from any loans, advances or other commitments of the Borrower or the Guarantor except as heretofore disclosed to the Administrative Agent in writing.
(i) Litigation. There is no action, proceeding or investigation pending involving the Borrower or the Guarantor or, to the best of its knowledge, threatened against the Borrower or the Guarantor before any Governmental Authority or Agency (A) asserting the invalidity of this Agreement, any Transaction Document or any transaction contemplated hereunder, (B) seeking to prevent the consummation of any of the transactions contemplated by this Agreement, any Transaction Document or any transaction contemplated hereunder, (C) making a claim individually or in the aggregate that would reasonably be expected to result in a Material Adverse Effect if adversely determined, (D) which requires filing with the SEC in accordance with the Exchange Act or any rules thereunder or (E) which might materially and adversely affect the validity of the Assets, the Servicing Contracts or the performance by it of its obligations under, or the validity or enforceability of, this Agreement, any Transaction Document or any Transaction contemplated hereunder.
(j) Use of Proceeds. Each Advance will be used to (A) purchase, in the ordinary course of business, Agency eligible MSRs and related assets, (B) pay certain fees and
expenses incurred in connection with the establishment of the credit facility set forth in this Agreement, (C) subject to the provisions of Section 2.19, make cash distributions from time to time pursuant to Section 5.2(c) in an amount not exceeding the excess of the Borrowing Base over the outstanding principal amount of the Advances and (D) for general corporate purposes. The Borrower will only use the proceeds of any Advance as permitted under Section 2.3. No part of the proceeds of any Advance will be used directly or indirectly to purchase or carry Margin Stock, or to extend credit to others for the purpose of purchasing or carrying any Margin Stock, in violation of any of the provisions of Regulations T, U or X of the Board of Governors of the Federal Reserve System. Neither the Borrower nor the Guarantor is engaged in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. At no time would more than 25% of the value of the assets of the Borrower or the Guarantor that are subject to any “arrangement” (as such term is used in Section 221.2(g) of such Regulation U) hereunder be represented by Margin Stock. The Borrower shall not, to its actual knowledge, use the proceeds of any Transaction to purchase any asset or securities from, or otherwise transfer the proceeds of the Transaction to, an “affiliate” of any Lender, as such term is defined in 12 C.F.R. Part 223.
(k) Accounts. The account number of the Borrower’s Account is specified on Schedule I attached hereto, as updated pursuant to Section 8.1. Borrower will keep the Collection Account and the Borrower’s Account segregated and such accounts will not be commingled.
(l) ERISA. Except as would not reasonably be expected to result in a Material Adverse Effect, no ERISA Event has occurred or is reasonably expected to occur. Neither the Borrower nor the Guarantor is (i) an employee benefit plan as defined in Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code or a “governmental plan” within the meaning of Section 3(32) of ERISA, (ii) subject to state statutes regulating investments and fiduciary obligations with respect to governmental plans or (iii) holding assets that constitute “plan assets” within the meaning of 29 C.F.R. Section 2510.3-101, as modified in application by Section 3(42) of ERISA.
(m) The Servicing Contracts. The Borrower has delivered to the Administrative Agent a copy of (x) each of the Servicing Contracts and (y) all amendments, restatements, supplements or other modifications thereto that could reasonably be expected to adversely affect the Collateral or the Administrative Agent’s interest therein or result in a Material Adverse Effect, and the Borrower hereby certifies that the copies delivered to the Administrative Agent by the Borrower are true, correct and complete. Each such document to which the Borrower is a party has been duly executed and delivered by the Borrower and is in full force and effect, and no default or event of default (howsoever defined) has occurred and is continuing thereunder, except where the occurrence and continuance of such default or event of default would not reasonably be expected to result in a Material Adverse Effect.
(n) Forms of Servicing Contracts. Each of the Servicing Contracts have been executed on the respective Agency’s standard forms, which incorporates the related Agency Guide with no amendment to such Servicing Contract that would grant the related Agency additional or more favorable rights to terminate the servicer from those rights specified in the related Agency Guide.
(o) Taxes. Each of the Borrower, the Guarantor, and their respective Subsidiaries have duly and timely filed or caused to be duly and timely filed all material federal, state, provincial, territorial, foreign and other tax returns and reports required to be filed under applicable law, and has timely paid all material federal, state, provincial, territorial, foreign and other Taxes levied or imposed upon it or its properties, income or assets otherwise due and
payable, except those which are being contested in good faith by appropriate actions diligently conducted and for which adequate reserves have been provided in accordance with GAAP. No material tax lien or similar adverse claim has been filed, and no claim is being asserted, with respect to any material amount of such Tax.
(p) Agreements. None of the Borrower, the Guarantor, nor any Subsidiary of the Borrower is a party to any agreement, instrument, or indenture or subject to any restriction materially and adversely affecting its business, operations, assets or financial condition, except as disclosed in the financial statements described in Section 4.1(h). None of the Borrower, the Guarantor, nor any Subsidiary of the Borrower is in breach or default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement, instrument, or indenture which default could have a Material Adverse Effect on the Borrower or the Guarantor. There are no breaches or defaults under the Transaction Documents to which it is a party or the Servicing Contracts. No holder of any indebtedness of the Borrower, the Guarantor, or any of their Subsidiaries has given notice of any asserted default thereunder.
(q) Other Indebtedness. All Indebtedness (other than Indebtedness evidenced by this Agreement) of Borrower and of the Guarantor existing on the Closing Date is as described in Schedule 4.1(q).
(r) No Material Adverse Effect. Since December 31, 2020, there has been no event or circumstance, either individually or in the aggregate, that has had or would reasonably be expected to have a Material Adverse Effect.
(s) Investment Company Act. Neither the Borrower nor the Guarantor is required to register as an “investment company” within the meaning of the 1940 Act. Borrower and Guarantor are relying on Section 3(c)(5)(c) or Section 3(c)(6) as the exemption from the definition of “investment company” of the 1940 Act.
(t) Covered Fund. Neither the Borrower nor the Guarantor is a “covered fund” under Section 13 of the Bank Holding Company Act of 1956, as amended.
(u) Properties; Security Interest. Each of the Borrower and Guarantor has good title to, valid leasehold interests in, or valid licenses to use, all of its properties and assets necessary in the ordinary conduct of its business, including all of the Collateral, and (i) the MSR Collateral is free and clear of Liens other than Permitted MSR Collateral Liens, and (ii) all other Collateral is free and clear of Liens other than Permitted Collateral Liens. Once executed and delivered, this Agreement creates, as security for the Obligations, a valid and enforceable and (coupled with the Account Control Agreement and the taking of all actions required hereunder and thereunder) perfected security interest in and Lien on all of the Collateral, in favor of the Administrative Agent, for the benefit of the Secured Parties, superior to and prior to the rights of all third persons and subject to no other Liens, except that the Collateral may be subject to the Agency Requirements.
(v) Environmental Matters. None of the Borrower, the Guarantor, nor any of their respective facilities or operations are subject to any outstanding written order, consent decree or settlement agreement with any Person relating to any Environmental Law, any Environmental Claim, or any Hazardous Materials activity that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. Neither the Borrower nor the Guarantor has received any letter or request for information under Section 104 of the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9604) or any comparable state law. To each of the Borrower’s and the Guarantor’s knowledge, there are and have been no conditions, occurrences, or Hazardous Materials activities which would
reasonably be expected to form the basis of an Environmental Claim against the Borrower or the Guarantor that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. None of the Borrower, the Guarantor, or to their knowledge, any of their respective predecessors, have filed any notice under any Environmental Law indicating past or present treatment of Hazardous Materials at any Mortgaged Property, and none of the Borrower’s or Guarantor’s operations involves the generation, transportation, treatment, storage or disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any state equivalent. Compliance with all current or reasonably foreseeable future requirements pursuant to or under Environmental Laws could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. To each of the Borrower’s and Guarantor’s knowledge, no event or condition has occurred or is occurring with respect to the Borrower or the Guarantor relating to any Environmental Law, any release of Hazardous Materials or any Hazardous Materials activity which individually or in the aggregate has had, or would reasonably be expected to have, a Material Adverse Effect. No Lien imposed pursuant to any Environmental Law has attached to any Collateral or MSRs and, to the knowledge of the Borrower and the Guarantor, no conditions exist that would reasonably be expected to result in the imposition of such a Lien on any Collateral or MSRs.
(w) OFAC and PATRIOT Act. None of the Borrower, the Guarantor, nor any of their officers, directors or employees appears on the Specially Designated Nationals and Blocked Persons List published by the Office of Foreign Assets Control (“OFAC”) or is otherwise a person with which any U.S. person is prohibited from dealing under the laws of the United States, unless authorized by OFAC. Neither the Borrower nor the Guarantor conducts business or complete transactions with the governments of, or persons within, any country under economic sanctions administered and enforced by OFAC. Neither the Borrower nor the Guarantor will directly or indirectly use the proceeds from this Agreement, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person to fund any activities of or business with any person that, at the time of such funding, is the subject of economic sanctions administered or enforced by OFAC, or is in any country or territory that, at the time of such funding or facilitation, is the subject of economic sanctions administered or enforced by OFAC. Neither the Borrower nor the Guarantor is in violation of Executive Order No. 13224 or the PATRIOT Act.
(x) Foreign Corrupt Practices Act. None of the Borrower, the Guarantor, or any director, officer, agent or employee of the Borrower or Guarantor, has used any of the proceeds of any Advance (i) for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity, (ii) to make any direct or indirect unlawful payment to any government official or employee from corporate funds, (iii) to violate any provision of the U.S. Foreign Corrupt Practices Act of 1977 or similar law of a jurisdiction in which the Borrower or Guarantor conducts its business and to which they are lawfully subject or (iv) to make any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment.
(y) Servicing Contracts. Each Servicing Contract is in full force and effect, and Borrower has not been terminated as the servicer under any Servicing Contract.
(z) Risk Management Policy. The Borrower has duly adopted, in accordance with its internal risk policies, a risk management policy, which is in full force and effect. A copy of such risk management policy has been previously delivered to Administrative Agent (for distribution to Lenders), and certified by a Responsible Officer of the Borrower as being a true and correct copy in full force and effect.
(aa) Agency Approvals; Servicing Facilities. The Borrower has adequate financial standing, servicing facilities, procedures and experienced personnel necessary for the
sound servicing of mortgage loans of the same types as may from time to time constitute Mortgage Loans and in accordance with Accepted Servicing Practices. The Borrower is approved by each of Fannie Mae and Freddie Mac as an approved seller/servicer, approved by Ginnie Mae as an approved issuer, and, to the extent necessary, approved by the Secretary of HUD pursuant to Sections 203 and 211 of the National Housing Act, as amended. In each such case, the Borrower is in good standing, with no event having occurred, including a change in insurance coverage which would either make the Borrower unable to comply with the eligibility requirements for maintaining all such applicable approvals or require notification to any Agency or to HUD, FHA or VA. Should the Borrower for any reason cease to possess all such applicable approvals, or should notification to any Agency or to HUD, FHA or VA be required, the Borrower shall immediately notify Administrative Agent immediately in writing.
(bb) Representations Concerning the Collateral. (1) Neither the Borrower nor the Guarantor has assigned, pledged, conveyed, or encumbered any Collateral hereunder to any other Person (except to the extent any such pledge has been released prior to the grant of any security interest thereon hereunder), and immediately prior to the pledge of any such Collateral, the Borrower or the Guarantor, as applicable, was the sole owner of such Collateral and had good and marketable title thereto, free and clear of all Liens other than a first priority Lien in favor of the Administrative Agent.
(i) All information concerning all Collateral set forth on each Schedule of Assets were, are or will be (as applicable) pledged to the Administrative Agent, for the benefit of the Lenders will be complete and correct in all material respects as of the date of such Schedule of Assets.
(ii) Upon the filing of financing statements on Form UCC-1 naming the Administrative Agent as “Secured Party” and the Borrower or the Guarantor (as applicable) as “Debtor”, and describing the Collateral, in the appropriate jurisdictions, the Administrative Agent, for the benefit of the Lenders, will have a duly perfected first priority security interest under the UCC in all right, title, and interest of the Borrower and the Guarantor in, to and under, subject, in all cases, to the Agency Requirements, the Collateral to the extent a security interest therein can be perfected by a UCC filing.
(iii) All filings and other actions necessary to perfect the security interest in the Collateral created under this Agreement under the UCC have been duly made or taken and are in full force and effect. Subject to the Agency Requirements, the Borrower and the Guarantor are the legal and beneficial owners of the Collateral hereunder free and clear of any Lien, other than as permitted by and any rights retained by the Agencies pursuant to the Agency Requirements.
(iv) Subject only to the Agency Requirements, the Borrower and the Guarantor have the full right, power and authority to pledge the Collateral.
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants. Each of the Borrower and the Guarantor covenants and agrees that, until each Loan Note and all other Obligations (other than contingent obligations not then due) hereunder have been paid in full and the Commitments have been terminated:
(a) Financial Covenants.
(i) Minimum Liquidity. Each of the Borrower and its Subsidiaries and the Guarantor shall ensure that, as of the last day of each calendar month ending after the Closing Date, it has Cash and Cash Equivalents at such time in an amount not less than [***].
(ii) Minimum Adjusted Tangible Net Worth.
(A) The Borrower and its Subsidiaries shall maintain, as of the last day of each calendar month ending after the Closing Date, Adjusted Tangible Net Worth not less than [***].
(B) The Guarantor shall maintain, as of the last day of each calendar month ending after the Closing Date, Adjusted Tangible Net Worth not less than [***].
(iii) Corporate Debt to Tangible Net Worth.
(A) Each of the Borrower and its Subsidiaries shall maintain, as of the last day of each calendar month ending after the Closing Date, a Corporate Debt to Tangible Net Worth Ratio not to exceed [***].
(B) The Guarantor shall maintain, as of the last day of each calendar month ending after the Closing Date, a Corporate Debt to Tangible Net Worth Ratio not to exceed [***].
(b) Reporting Requirements. The Borrower and the Guarantor will furnish to the Administrative Agent for delivery to each Lender:
(i) within (A) 120 days after the close of each fiscal year of the Borrower and the Guarantor, the unqualified audited consolidated balance sheet of the Borrower and of the Guarantor and their consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of income, of stockholders’ equity (which shall be on a consolidated basis and there shall be no consolidating statements of stockholders’ equity required hereunder) and of cash flows for such fiscal year (which shall be on a consolidated basis and there shall be no consolidating statements of cash flows required hereunder), in each case, setting forth comparative figures for the preceding fiscal year, prepared in accordance with GAAP prepared by a Nationally Recognized Accounting Firm and (B) forty-five (45) days after the end of each of its fiscal quarters other than the fiscal quarter ending December 31 of each fiscal year, the unaudited consolidated balance sheets and income statements for such fiscal quarter on a year-to-date basis for the Borrower and the Guarantor and their consolidated subsidiaries;
(ii) promptly, copies of any annual financial projections prepared by or on behalf of the Borrower or Guarantor and approved by the board of directors of the Borrower or Guarantor, as applicable; and
(iii) at the time of delivery of the financial statements described pursuant to clause (i), the Borrower and Guarantor shall deliver to the Administrative Agent and each Lender a Compliance Certificate that (w) attaches an updated Schedule of Eligible Assets as of the preceding fiscal quarter or date of such Advance, (x) certifies as to whether a Potential Event of Default or Event of Default has occurred and is continuing, (x) certifies that the representations and warranties set forth in Section 4.1 are true and correct in all material respects on and as of the date of such certification and (y) sets forth reasonably detailed calculations demonstrating compliance with Section 5.1(a); provided
that, with the consent of the Administrative Agent not to be unreasonably withheld the Borrower may, but shall not be obligated to, deliver to the Administrative Agent updated versions of the Schedule of Assets on a more frequent basis if it chooses to do so.
(c) Acknowledgment Agreements. The Borrower shall make commercially reasonable efforts to enter into the Acknowledgment Agreements with each Agency as soon as possible. Such Acknowledgment Agreements shall be in form and substance reasonably satisfactory to the Lender.
(d) Servicing Contract and Acknowledgment Agreement Amendments. Within five (5) Business Days after a Responsible Officer of the Borrower or the Guarantor becomes aware of an amendment to any Servicing Contract or any Acknowledgment Agreements that could reasonably be expected to materially and adversely affect the Collateral or the Administrative Agent’s interest therein or result in a Material Adverse Effect, to the extent permitted by the applicable Agency, the Borrower shall deliver to the Administrative Agent for delivery to each Lender copies of any such amendments; provided that the Borrower shall cooperate with any requests by the Administrative Agent to deliver copies of each amendment, restatement, supplement or other modification to any Servicing Contract or Acknowledgment Agreement that the Administrative Agent shall reasonably request, to the extent permitted by the applicable Agency.
(e) Change in Responsible Officer. Promptly, but in any event within ten (10) days after there is any change in any of the chief executive officer, chief financial officer, or the head of servicing operations of the Borrower or the Guarantor, the Borrower or the Guarantor, as applicable, shall notify the Administrative Agent thereof.
(f) Notice of Default. Promptly (but in any event within [***] upon a Responsible Officer of the Borrower or of the Guarantor obtaining knowledge (i) of any condition or event that constitutes an Event of Default or that notice has been given to the Borrower or the Guarantor with respect thereto; (ii) of any condition or event that constitutes an “event of default” under any Indebtedness or that notice has been given to any party thereunder with respect thereto; (iii) of the occurrence of any ERISA Event that, either individually or together with any other ERISA Events, could reasonably be expected have a Material Adverse Effect or (iv) of the occurrence of any event or change that has results in or could reasonably be expected to result in a Material Adverse Effect, a certificate of a Responsible Officer specifying the nature and period of existence of such condition, event or change, or specifying the notice given and action taken by any such Person and the nature of such claimed Event of Default, Potential Event of Default, default, event or condition, and what action the Borrower and/or the Guarantor has taken, is taking and proposes to take with respect thereto.
(g) Maintenance of List Assets. Borrower shall at all times maintain a current list (which may be stored in electronic form) of all Assets.
(h) Records. Borrower shall collect and maintain or cause to be collected and maintained all Records relating to the Assets in accordance with industry custom and practice for assets similar to the Assets, including those maintained pursuant to Section 5.1(i), and all such Records shall be in the Borrower’s (or its custodian’s) possession unless otherwise consented to in writing by the Administrative Agent. The Borrower will not allow any such papers, records or files that are an original or an only copy to leave the Borrower’s possession, except for individual items removed in connection with servicing a specific Mortgage Loan, in which event Borrower will obtain or cause to be obtained a bailee letter from a financially responsible person for any such paper, record or file. The Borrower will maintain all such Records in good and complete
condition in accordance with industry practices for assets similar to the Assets and preserve them against loss.
(i) For so long as the Administrative Agent has an interest in or lien on any Collateral, Borrower will hold or cause to be held all related Records in trust for the Administrative Agent. The Borrower shall notify, or cause to be notified, every other party holding any such Records of the interests and liens in favor of Administrative Agent granted hereby.
(ii) Upon reasonable advance notice from the Administrative Agent, Borrower shall (x) make any and all such Records available to the Administrative Agent 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 the Administrative Agent or its authorized agents to discuss the affairs, finances and accounts of the Borrower with its chief operating officer, chief financial officer and the independent certified public accountants of the Borrower.
(i) Books. Borrower and Guarantor shall keep or cause to be kept in reasonable detail books and records of account of its assets and business.
(j) UCC Matters; Protection and Perfection of Security Interests. Each of the Borrower and the Guarantor agree promptly to notify the Administrative Agent in writing of any change (i) in its legal name, (ii) in its identity or type of organization or corporate structure or (iii) in the jurisdiction of its organization, in each case, within ten (10) days of such change. The Borrower and the Guarantor agree that from time to time, at the Borrower’s cost and expense, to promptly execute and deliver all further instruments and documents, and take all further action reasonably required by the Administrative Agent (a) to perfect, protect or more fully evidence the Administrative Agent’s security interest in the Assets acquired by the Borrower or (b) to enable the Administrative Agent to exercise or enforce any of its rights hereunder, under any other Transaction Document. Without limiting the Borrower’s obligation to do so, the Borrower and the Guarantor hereby irrevocably authorize the filing of such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as the Administrative Agent may reasonably require. Each of the Borrower and the Guarantor hereby authorizes the Administrative Agent to file one or more financing or continuation statements, and amendments thereto and assignments thereof, naming the Borrower or the Guarantor as debtor, relative to all or any of the Collateral now existing or hereafter arising without the signature of the Borrower or the Guarantor where permitted by law. A carbon, photographic or other reproduction of this Agreement, or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement.
(k) Access to Certain Documentation and Information Regarding the Assets. The Borrower and Guarantor shall permit the Administrative Agent or its duly authorized representatives or independent contractors, upon reasonable advance notice to the Borrower or Guarantor, as applicable, and subject to all applicable Agency procedures and restrictions, (i) access to documentation that the Borrower or Guarantor may possess regarding the Eligible Assets, (ii) to visit the Borrower or Guarantor, and to discuss its affairs, finances and accounts (as they relate to their respective obligations under this Agreement and the other Transaction Documents) with the Borrower, the Guarantor, their respective officers, and independent accountants (subject to such accountants’ customary policies and procedures) and (iii) to examine the books of account and records of the Borrower and the Guarantor, as they relate to the Assets, to make copies thereof or extracts therefrom, all at such reasonable times and during regular business hours of the Borrower or the Guarantor (as applicable). The Administrative Agent may perform the functions set forth above no more than once per year for each of the
Borrower and Guarantor, or at any time following a Potential Event of Default or an Event of Default, at the Administrative Agent’s determination, and under any circumstance, at the cost and expense of the Borrower. Such representatives or independent contractors shall use commercially reasonable efforts to avoid interruption of the normal business operations of the Borrower and Guarantor. Notwithstanding anything to the contrary in this Section 5.1(k), (A) the Borrower and Guarantor, will not be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter that (x) constitutes non-financial trade secrets or nonfinancial proprietary information, (y) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by law or any binding confidentiality agreement or (z) is subject to attorney-client or similar privilege or constitutes attorney work product and (B) so long as an Event of Default has not occurred, the Borrower and the Guarantor shall have the opportunity to participate in any discussions with the Borrower’s and the Guarantor’s independent accountants.
(l) Existence and Rights; Compliance with Laws; Agency Approvals. Each of the Borrower and the Guarantor shall (i) preserve and keep in full force and effect its corporate existence, and any material rights, permits, patents, franchises, licenses, approvals and qualifications required for it to conduct its business activities, and (ii) maintain adequate financial standing, servicing facilities, procedures, and experienced personnel necessary for the sound servicing of mortgage loans of the same types as may from time to time constitute Mortgage Loans and in accordance, in all material respects, with Accepted Servicing Practices and the terms of the Servicing Contracts. Each of the Borrower and the Guarantor shall comply with all Applicable Laws except to the extent that the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect. The Borrower shall maintain its status with each Agency as an approved seller/servicer, and shall be in good standing with each Agency in accordance with Applicable Law and all rules, policies, procedures and standards of such Agency (collectively, “Agency Approvals”). The Borrower shall service all Assets in accordance with the Agency Guides in all material respects. Should the Borrower, (A) receive written notice of any default or notice of termination of servicing for cause under a Servicing Contract, or (B) for any reason, cease to possess all such applicable Agency Approvals, or should notification to the relevant Agency or to HUD, FHA or VA as described in Section 4.1(aa) be required, the Borrower shall so notify Administrative Agent in writing within three (3) Business Days. Notwithstanding the preceding sentence, the Borrower shall take all necessary action to maintain all of its applicable Agency Approvals at all times during the term of this Agreement.
(m) Taxes. Each of the Guarantor, the Borrower and its Subsidiaries shall duly and timely file or cause to be duly and timely filed, all material federal, state, provincial, territorial, foreign and other income Tax returns and all other material tax returns required to be filed under Applicable Law, and shall pay when due all Taxes imposed upon it or any of its respective properties or which it is required to withhold and pay over, and provide evidence of such payment to the Administrative Agent if requested; provided that neither the Borrower nor the Guarantor shall be required to pay any such Tax that is being contested in good faith by proper actions diligently conducted if (i) it has maintained adequate reserves with respect thereto in accordance with GAAP and (ii) in the case of a Tax that has or may become a Lien that is not a Lien permitted hereunder against any of the Collateral, such proceedings conclusively operate to stay the sale of any portion of the Collateral to satisfy such Tax.
(n) Maintenance of Properties. Each of the Borrower and the Guarantor shall ensure that its material properties and equipment used or useful in its business in whosoever’s possession they may be, are kept in reasonably good repair, working order and condition, normal wear and tear and casualty excepted, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.
(o) Servicing Portfolio. Borrower shall not permit the Portfolio Delinquency Rate with respect to any three-month period for its Fannie Mae or Freddie Mac servicing portfolios to exceed [***]. Borrower shall not permit the Portfolio Delinquency Rate with respect to any three-month period for its Ginnie Mae servicing portfolios to exceed [***]
(p) Trigger Event Asset Sale. The Borrower shall, within one (1) Business Day notify the Administrative Agent in the event that it has voluntarily relinquished or delivered notice of its intent to sell or transfer Servicing Contract rights constituting more than [***] of the aggregate Servicing Contract rights of the Borrower with respect to any Agency, in any event without the Administrative Agent’s prior express written consent.
(q) Modification of the Servicing Contracts. Unless required by an Agency or to the extent necessary to maintain Agency Approvals pursuant to Section 5.1(l), the Borrower shall not consent with respect to the Servicing Contract related to any Asset to amend, modify, waive any provision of or otherwise change any Servicing Contract or enter into any new Servicing Contract related to any Asset, except any such amendments, modifications, waivers or changes or any such new agreements or arrangements that could not reasonably be expected, individually or in the aggregate, to materially and adversely affect the Collateral or the Administrative Agent’s interest therein or result in a Material Adverse Effect.
(r) No Subservicing. Borrower shall not permit any of the Assets to be subject to any servicing contract or subservicing arrangement, other than as permitted by a Servicing Contract and subject to the prior written consent of Administrative Agent.
(s) Quality Control. Borrower shall maintain an internal quality control program that verifies, on a regular basis, the existence and accuracy of all legal documents, credit documents, property appraisals, and underwriting decisions related to MSRs and Servicing Advance Receivables. Such program shall be capable of evaluating and monitoring the overall quality of the Borrower’s servicing activities. Such program shall guard against (i) dishonest, fraudulent, or negligent acts; and (ii) errors and omissions by officers, employees, or other authorized persons.
(t) Insurance. The Borrower and the Guarantor shall maintain or cause to be maintained, at its own expense, insurance coverage as is customary, reasonable and prudent in light of the size and nature of the Borrower’s and Guarantor’s business as of any date after the Closing Date. Each of the Borrower and the Guarantor shall be deemed to have complied with this provision if one of its Affiliates has such policy coverage and, by the terms of any such policies, the coverage afforded thereunder extends to the Borrower or the Guarantor, as applicable. Upon the request of the Administrative Agent at any time subsequent to the Closing Date, the Borrower and the Guarantor shall cause to be delivered to the Administrative Agent, a certification evidencing the Borrower’s and the Guarantor’s coverage under any such policies.
(u) [***]
(v) Monthly Report. No later than the thirtieth (30th) day of each calendar month or, if such thirtieth (30th) day is not a Business Day, the next succeeding Business Day, Borrower shall deliver to the Administrative Agent (and at the request of Ginnie Mae, to Ginnie Mae) a report substantially in the form set forth on Exhibit F attached hereto (the “Monthly Report”) which shall contain:
(i) a detailed accounting of Collections for the immediately preceding Collection Period, as applicable;
(ii) the number of Mortgage Loans contained in each Portfolio subject to this Agreement as of the last date of the calendar month preceding the delivery of such Monthly Report;
(iii) the unpaid principal balance of all Portfolios serviced by the Borrower;
(iv) the payments made with respect to each Portfolio and, upon request from the Administrative Agent, the Mortgage Loans contained therein, shown as a change in their unpaid principal balance;
(v) the payoff with respect to the existing Portfolios serviced by the Borrower and, upon request from the Administrative Agent, the Mortgage Loans contained therein, shown as a change in their unpaid principal balance;
(vi) the number of Mortgage Loans contained in each Portfolio that have been added or paid off, including their paid off principal balance;
(vii) a detailed calculation of the Financial Covenants, and accompanying Compliance Certificate;
(viii) copies of all internal and external valuations of the Borrower’s Fannie Mae MSRs, Freddie Mac MSRs, and Ginnie Mae MSRs since delivery of the prior Monthly Report; for the avoidance of doubt, this includes the results of all third-party valuation reports prepared by or on behalf of the Borrower upon which any internal valuations of the Borrower’s Fannie Mae MSRs, Freddie Mac MSRs, and Ginnie Mae MSRs were made;
(ix) compliance with the Events of Default hereunder as of the last day of the immediately preceding month; and
(x) if an Event of Default exists, a copy of the most recently received monthly account statement relating to the Collection Account.
With respect to Section 5.1(v)(vii), Section 5.1(v)(viii) such financial calculation shall be based on the Borrower’s most recently available unaudited monthly financial statements, which shall be as of the end of the last day of the second immediately preceding month. Notwithstanding the foregoing, the Monthly Report provided to an Agency shall be based upon, and shall include information only with respect to Mortgage Loans included in the applicable Portfolio subject to the Servicing Contract with such Agency, except that the portions of such report referred to in clauses (ii) and (iv) above shall apply to all Mortgage Loans included in any portfolio.
Section 5.2 Negative Covenants. Each of the Borrower and the Guarantor covenants and agrees that, until each Loan Note and all other Obligations (other than contingent obligations not then due) hereunder have been paid in full and the Commitments have been terminated, the Borrower and the Guarantor will not:
(a) Sales, Liens, Etc. Except as permitted hereunder, sell, assign (by operation of law or otherwise) or otherwise Dispose of, or create or suffer to exist any Lien upon or with respect to, the Collateral; provided that notwithstanding anything to the contrary herein, this Section 5.2(a) shall not prohibit (i) (x) any Lien on MSR Collateral that constitutes a Permitted MSR Collateral Lien, or (y) any Lien on any other Collateral that constitutes a
Permitted Collateral Lien, (ii) any sale, assignment or disposition that is not expressly restricted pursuant to the terms hereof, or (iii) any Permitted Disposition.
(b) Additional Indebtedness. Neither the Borrower nor the Guarantor shall enter into any Indebtedness other than Permitted Indebtedness.
(c) Dividends, Etc. Make, directly or indirectly, declare or pay any dividends or make any other payment or distribution (in cash, property, or obligations) on account of the Borrower’s or the Guarantor’s Equity Interests, or redeem, purchase, retire, or otherwise acquire any of its Equity Interests, or set apart any money for a sinking or other analogous fund for any dividend or other distribution on its Equity Interests or for any redemption, purchase, retirement, or other acquisition of any of its Equity Interests, or undertake any new obligation (contingent or otherwise) to do any of the foregoing if any Potential Event of Default or Event of Default exists or will exist after giving effect thereto.
(d) Prohibition of Fundamental Changes. (i) Merge or consolidate or amalgamate, or liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or dissolution) unless (x) such merger, consolidation or amalgamation does not result in a Change of Control or (y) the Borrower or the Guarantor (as applicable) is the sole surviving entity of such merger, consolidation or amalgamation, (ii) enter into (or agree to enter into) any Division Transaction or (iii) sell all or substantially all of its assets.
(e) Material Change in Business. Make any material change in the nature of its business as carried on at the Closing Date and business activities that are reasonably related, ancillary or complementary thereto or reasonable developments or extensions thereof or in connection with the Asset Management Strategy.
(f) Change in Organizational Documents. Amend, modify or otherwise change any of its organizational documents in any material respect, except any such amendments, modifications or changes or any such new agreements or arrangements that could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect; provided that, the Borrower and the Guarantor shall deliver written notice to the Administrative Agent within thirty (30) days of any material amendment to its organizational documents.
(g) Transactions with Affiliates. Enter into, or be a party to, any transaction with any of its Affiliates, except (i) the transactions contemplated by the Transaction Documents, (ii) any other transactions (including the lease of office space or computer equipment or software by the Borrower or the Guarantor from an Affiliate and the sharing of employees and employee resources and benefits) (a) in the ordinary course of business or as otherwise permitted hereunder, (b) pursuant to the reasonable requirements and purposes of the Borrower’s business or the Guarantor’s business, as applicable, (c) upon fair and reasonable terms (and, to the extent material, pursuant to written agreements) that are consistent with market terms for any such transaction and (d) permitted by Sections 5.2(a), (c), (d) or (e), (iii) employment and severance arrangements and health, disability and similar insurance or benefit plans between the Borrower or the Guarantor and their respective directors, officers, employees in the ordinary course of business, (iv) transactions pursuant to the Asset Management Strategy and (v) the payment of customary fees and reasonable out of pocket costs to, and indemnities provided on behalf of, directors, managers, consultants, officers and employees of the Borrower or the Guarantor to the extent attributable to the ownership or operation of the Borrower or the Guarantor.
(h) Sale and Lease-Backs. Enter into any arrangement, directly or indirectly, with any Person whereby the Borrower or the Guarantor shall sell or transfer any property used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease
such property or other property that it intends to use for substantially the same purpose or purposes as the property being sold or transferred if any Potential Event of Default or Event of Default exists or will exist after giving effect thereto (including that no Borrowing Base Deficiency or Funding Base Deficiency shall have occurred and be continuing at such time).
(i) Amendments to Transaction Documents. Amend, modify, supplement or otherwise change, waive or grant any consent in respect of any of the terms or provisions of any Transaction Document other than amendments, modifications, supplements or other changes made in accordance with the terms of the applicable Transaction Document.
(j) Fiscal Year. Change its fiscal year-end from December 31 or change its method of determining fiscal quarters.
(k) Collection Account. (i) Close the Collection Account, (ii) permit (x) any property that is not Collateral to be deposited in the Collection Account or (y) any Collateral (other than the Base Servicing Fee) to be deposited into an account other than the Collection Account, free and clear of all Ginnie Mae rights and other restrictions on transfer under applicable Ginnie Mae guidelines, or (iii) following (x) delivery of an Activation Notice by the Administrative Agent, or (y) the occurrence and during the continuation of an Event of Default, withdraw funds from the Collection Account for any purpose without the Administrative Agent’s consent.
(l) Assignment. Except as expressly permitted herein and in the Transaction Documents, sell, assign, transfer or otherwise dispose of, or grant any option with respect to, or pledge, hypothecate or grant a security interest in or lien on or otherwise encumber (except as otherwise permitted by this Agreement and the other Transaction Documents), any of the Assets or any interest therein, provided, that the Borrower may encumber, sell, transfer or otherwise dispose of any MSRs or other Assets which have been released from the Collateral. Notwithstanding the foregoing, but subject to Section 2.10, (A) (i) the Borrower shall have the right to sell, assign or otherwise transfer to any Person any and all Mortgage Loans on a “servicing-released” basis, (ii) the servicing rights related thereto shall not be MSRs, and (iii) the servicing and other rights related thereto shall in no event be included as Collateral or in a Portfolio or be subject to the Liens of the Administrative Agent, and (B) the Borrower shall have the right to sell, assign or otherwise transfer to any Person the servicing rights related to any and all Mortgage Loans (and the servicing rights thereto shall not be MSRs and shall in no event be included as Collateral or be subject to the Liens of the Administrative Agent), to the extent such transaction is a voluntary partial cancellation of the applicable Servicing Contract pertaining to delinquent Mortgage Loans (including but not limited to in accordance with the terms and provisions of any VPC Agreement).
(m) Investments. None of the Borrower, the Guarantor, or their respective Subsidiaries shall enter into any new Investments in the event that a Borrowing Base Deficiency has occurred and is continuing or would occur after giving effect to any new Investment.
ARTICLE VI
EVENTS OF DEFAULT
Section 6.1 Events of Default. The occurrence of any of the following specified events shall constitute an event of default under this Agreement (each, an “Event of Default”):
(a) Non-Payment. The Borrower or the Guarantor shall fail to (i) make any payment required pursuant to Section 2.9(a) beyond the applicable dates on which such payment
is due (after giving effect to any grace or cure period set forth in Section 2.9), (ii) make any required payment of principal when due hereunder and such failure remains unremedied for a period of [***] after the earlier of (a) written notice of such failure shall have been given to the Borrower or the Guarantor by the Administrative Agent or any Lender or (b) the date upon which a Responsible Officer of the Borrower or the Guarantor obtained knowledge of such failure, (iii) make any required payment of any interest or Non-Usage Fee or Minimum Utilization Fee when due and such failure remains unremedied for a period [***] after the earlier of (a) written notice of such failure shall have been given to the Borrower or the Guarantor by the Administrative Agent or any Lender or (b) the date upon which a Responsible Officer of the Borrower or the Guarantor obtained knowledge of such failure, or (iv) make any required payment of any other fee or other amount payable hereunder or under any other Transaction Document when due and such failure remains unremedied for a period of [***] after the earlier of (a) written notice of such failure shall have been given to the Borrower or the Guarantor by the Administrative Agent or any Lender or (b) the date upon which a Responsible Officer of the Borrower or the Guarantor obtained knowledge of such failure.
(b) Representations. Any representation or warranty made or deemed made by any of the Borrower or Guarantor herein or in any other Transaction Document (after giving effect to any qualification as to materiality set forth therein, if any) shall prove to have been false and misleading when made or any Monthly Report or Compliance Certificate delivered hereunder shall prove to have been false and misleading in any material respect when made (other than the representations and warranties set forth in Section 4.1(bb) which shall be considered solely for the purpose of determining the Administrative Agent Asset Value of the Eligible Assets, unless the Borrower or the Guarantor shall have made any such representations and warranties with knowledge that they were materially false or misleading at the time made).
(c) Covenants. (i) The Borrower or the Guarantor shall fail to perform or observe the Financial Covenants (subject to Section 6.3) or any negative covenant under Section 5.2, (ii) the Borrower or the Guarantor shall fail to perform or observe the covenants set forth in Sections 5.1(b), (d)-(f), (j), (l) (solely with respect to any notice requirements therein), (p), or (v), and such failure shall continue unremedied for [***] after the earlier of (A) a written notice of such failure shall have been given to the Borrower or the Guarantor by the Administrative Agent or any Lender or (B) the date upon which a Responsible Officer of the Borrower or Guarantor obtained knowledge of such failure (and giving effect to any grace or other cure periods set forth therein), or (iii) except as set forth in clauses (i) and (ii) hereof, the Borrower or the Guarantor shall fail to perform or observe any other term, covenant or agreement contained in this Agreement or in any other Transaction Document, and, such failure shall continue unremedied for [***] after the earlier of (A) a written notice of such failure shall have been given to the Borrower or the Guarantor by the Administrative Agent or any Lender or (B) the date upon which a Responsible Officer of the Borrower or Guarantor obtained knowledge of such failure.
(d) Insolvency Event. An Insolvency Event shall have occurred with respect to the Borrower or the Guarantor.
(e) Security Interest. The Administrative Agent, for the benefit of the Lenders, ceases to have a first priority perfected security interest in any portion of the Collateral.
(f) Judgments. There shall remain in force, undischarged (or provisions shall not be made for such discharge), unsatisfied, unbonded and unstayed for more than [***], or, if a stay of execution is procured, thirty (30) days from the date such stay is lifted, any final non-appealable monetary judgment against the Borrower or the Guarantor in excess of [***] over and above the amount of insurance coverage available from a financially sound insurer that has not denied coverage.
(g) 1940 Act. The Borrower or the Guarantor becomes, or becomes Controlled by, an entity required to register as an “investment company” under the 1940 Act.
(h) Tax Event. The Borrower or the Guarantor shall become taxable as an entity other than as it is presently taxable.
(i) Change of Control. The occurrence of a Change of Control.
(j) Cross Default. (i)The Borrower, the Guarantor, or any of their direct or indirect Subsidiaries shall default under, or fail to perform as required under, or shall otherwise breach (after expiration of all applicable grace periods) the terms of any instrument, agreement or contract involving outstanding unpaid obligations of [***] or more owing by any such Person to the Lender or any of the Lender’s Affiliates (including, for the avoidance of doubt, with respect to the Portfolio Hedges and any other derivatives contracts to which such Person is a party); (ii) the failure of the Borrower or the Guarantor to make any payment when due (after expiration of all applicable grace periods) on any Indebtedness of the Borrower or the Guarantor having an aggregate principal amount outstanding of [***] or more (each, a “Material Debt Facility”) or (iii) the occurrence of any other “event of default” under any Material Debt Facility which is continuing and has not been waived by the holders of such Indebtedness.
(k) Transaction Documents. At any time after the execution and delivery thereof, (i) this Agreement or any Transaction Document ceases to be in full force and effect (other than by reason of a release of Collateral in accordance with the terms hereof or thereof or the satisfaction in full of the Obligations in accordance with the terms hereof) or shall be declared null and void, in each case for any reason other than the failure of the Administrative Agent or any Secured Party to take any action within its control or (ii) the Borrower or Guarantor shall contest the validity or enforceability of any Transaction Document in writing or deny in writing that it has any further liability under any Transaction Document to which it is a party or shall contest the validity or perfection of any Lien in any Collateral purported to be covered by this Agreement or any other Transaction Document;
(l) Government Action. Any Governmental Authority or any person, agency or entity acting or purporting to act under governmental authority shall have taken any action to condemn, seize or appropriate, or to assume custody or control of, all or any substantial part of the property of the Borrower, the Guarantor, or any Affiliate thereof, or shall have taken any action to displace the management of the Borrower, the Guarantor, or any Affiliate thereof or to curtail its authority in the conduct of the business of the Borrower, the Guarantor, or any Affiliate thereof, or takes any action in the nature of enforcement to remove, limit or restrict the approval of Borrower, the Guarantor, or Affiliate thereof as an issuer, buyer or a seller/servicer of Mortgage Loans or securities backed thereby.
(m) Material Adverse Effect; Material Impairment. Any Material Adverse Effect shall occur, in each case as determined by Administrative Agent in its sole discretion, or any other condition shall exist which, in Administrative Agent’s sole discretion, constitutes a material impairment of Borrower’s or the Guarantor’s ability to perform its obligations under this Agreement or any other Transaction Document.
(n) Approved Mortgagee; Approved Servicer.
(i) Borrower ceases to be:
(A) a HUD approved mortgagee pursuant to Section 203 of the NHA or
(B) a Freddie Mac approved servicer, a Fannie Mae approved servicer, a Ginnie Mae approved issuer, an FHA approved mortgagee, or a VA approved lender;
(ii) HUD, FHA, VA, Fannie Mae, Freddie Mac, or Ginnie Mae, as applicable, suspends, rescinds, halts, eliminates, withdraws, annuls, repeals, voids or terminates the status of Borrower as either (1) a HUD approved mortgagee pursuant to Section 203 of the NHA or an FHA approved mortgagee pursuant to the NHA, (2) a VA approved lender, (3) a Freddie Mac approved servicer, (4) a Fannie Mae approved servicer, or (5) a Ginnie Mae approved issuer.
(iii) Borrower receives a written notice that HUD, FHA or VA intends to take such action set forth in clauses (i) or (ii) above and such notice has not been revoked or withdrawn within fourteen (14) days.
(iv) As distinct from and in addition to any loss of approval or actions taken by HUD, FHA, VA, Fannie Mae, Freddie Mac, or Ginnie Mae, as applicable, described in (i)-(iii), the occurrence of a Servicer Termination Event that has not been cured by the thirtieth (30th) day following the occurrence of such Servicer Termination Event.
(o) Fraud; Violation of Requirements. (i) Borrower or Guarantor engages or has engaged in fraud or other reckless or intentional wrongdoing in connection herewith or any other Transaction Document, or any document submitted pursuant thereto or otherwise in connection with any mortgage-backed securitization, or in connection with any federal mortgage insurance or loan guaranty program, or other federal program related to any of the Mortgage Loans; or (ii) Borrower has used any payments, collections, recoveries or other funds pertaining in any way to the Mortgage Loans in violation of the requirements of a Servicing Contract.
(p) Change to the Servicing Contracts. Any change to or default under a Servicing Contract that would result in a Material Adverse Effect on Borrower or the Guarantor.
Section 6.2 Remedies. (a) If any Event of Default shall then be continuing, the Administrative Agent may, in its discretion or shall, upon the written request of the Majority Lenders, by written notice to the Borrower, the Guarantor, and the Lenders, take any or all of the following actions, without prejudice to the rights of the Administrative Agent or any Lender to enforce its claims against the Borrower or the Guarantor in any manner permitted under applicable law:
(i) declare the Commitments terminated, whereupon the Commitment of each Lender shall forthwith terminate immediately without any other notice of any kind; or
(ii) declare the principal of and any accrued interest in respect of all Advances and all other Obligations owing hereunder and thereunder to be, whereupon the same shall become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower and Guarantor;
provided further, that (1) upon the occurrence of any Event of Default described in Section 6.1(d), automatically, and (2) upon the occurrence of any other Event of Default, at the request of (or with the consent of) the Majority Lenders, upon notice to the Borrower by the Administrative Agent, (A) each of the following shall immediately become due and payable, in each case without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by the Borrower: (I) the unpaid principal amount of and accrued interest on the Advances, and (II) all other Obligations; and (B) the Administrative Agent may enforce any and all Liens and security interests created pursuant to this Agreement and any other
Transaction Document, subject to the Fannie Mae Requirements and the Freddie Mac Requirements.
(b) Without limiting the foregoing, upon any acceleration of the Obligations pursuant to this Section 6.2, the Administrative Agent, in addition to all other rights and remedies under this Agreement or otherwise, shall have all other rights and remedies provided under the UCC of each applicable jurisdiction and other Applicable Laws, which rights shall be cumulative. The Borrower and the Guarantor agree, upon the occurrence of an Event of Default and notice from the Administrative Agent, to assemble, at their expense, all of the Collateral that is in their possession (whether by return, repossession, or otherwise) at a place designated by the Administrative Agent. All out-of-pocket costs incurred by the Administrative Agent in the collection of all Obligations, and the enforcement of its rights hereunder, including attorneys’ fees and legal expenses, shall be paid by the Borrower and guaranteed by the Guarantor. Without limiting the foregoing, upon the occurrence of an Event of Default and the acceleration of the Advances pursuant to this Section 6.2, the Administrative Agent may, to the fullest extent permitted by Applicable Law, without notice, advertisement, hearing or process of law of any kind, (i) enter upon any premises where any of the Collateral which is in the possession of the Borrower or the Guarantor (whether by return, repossession, or otherwise) may be located and take possession of and remove such Collateral, (ii) sell any or all of such Collateral, free of all rights and claims of the Borrower or the Guarantor therein and thereto, at any public or private sale, and (iii) bid for and purchase any or all of such Collateral at any such sale. Any such sale shall be conducted in a commercially reasonable manner and in accordance with Applicable Law. The Borrower and Guarantor hereby expressly waive, to the fullest extent permitted by Applicable Law, any and all notices, advertisements, hearings or process of law in connection with the exercise by the Administrative Agent of any of its rights and remedies upon the occurrence of an Event of Default. The Administrative Agent and each Lender shall have the right (but not the obligation) to bid for and purchase any or all Collateral at any public or private sale. The Borrower and the Guarantor hereby agree that in any sale of any of the Collateral, the Administrative Agent is hereby authorized to comply with any limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to avoid any violation of Applicable Law (including, without limitation, compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that such prospective bidders and purchasers have certain qualifications, and restrict such prospective bidders and purchasers to Persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral), or in order to obtain any required approval of the sale or of the purchaser by any Governmental Authority, and the Borrower and Guarantor further agree that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner. The Administrative Agent shall not be liable for any sale, private or public, conducted in accordance with this Section 6.2(b).
(c) The exercise of remedies under this Section 6.2 shall be subject to the terms and conditions of the Acknowledgment Agreements.
Section 6.3 Equity Cure. Notwithstanding anything to the contrary contained in Section 6.1, for purposes of determining whether an Event of Default has occurred under Section 5.1(a)(iii), any cash contribution (in the form of common equity or subordinated debt) made to the Borrower after the last day of any calendar month and on or prior to the day that is fifteen (15) Business Days after written notice from the Administrative Agent that the Borrower is not in compliance with Section 5.1(a)(iii) as of the end of the most recently ended calendar month will, at the request of the Borrower and to the extent so requested, be included in the calculation of such covenants by increasing the Adjusted Tangible Net Worth of the Borrower (or reducing the amount of Corporate Debt to the extent such amounts are utilized to pay down Corporate Debt)
solely for the purpose of determining compliance with the Corporate Debt to Tangible Net Worth Ratio covenant set forth at Section 5.1(a)(iii) at the end of such period and any subsequent period that includes such period (any such cash contribution to the extent so requested by the Borrower to be included, a “Specified Contribution”); provided that (i) no more than eight Specified Contributions will be made in the aggregate, and (ii) all Specified Contributions will be disregarded for all other purposes under the Transaction Documents (including for purposes of determining other items governed by reference to any of the Financial Covenants or the components thereof); and provided further that with respect to any Specified Contribution in the form of subordinated debt, (i) it does not mature prior to the Maturity Date, (ii) it is subordinated to the Liens securing the Obligations created pursuant to the terms of this Agreement on terms reasonably acceptable to the Administrative Agent, (iii) the interest thereon is payable-in-kind (allowing for deferment of interest payments and/or payment in the form of additional debt rather in cash), and (iv) it is otherwise on terms reasonably acceptable to the Administrative Agent.
ARTICLE VII
THE ADMINISTRATIVE AGENT
Section 7.1 Appointment; Nature of Relationship. The Administrative Agent is appointed by the Lenders as the Administrative Agent hereunder and under each other Transaction Document, and each of the Lenders irrevocably authorizes the Administrative Agent to act as the contractual representative of such Lender with the rights and duties expressly set forth herein and in the other Transaction Documents. The Administrative Agent agrees to act as such contractual representative upon the express conditions contained in this Article VII. Notwithstanding the use of the defined term “Administrative Agent,” it is expressly understood and agreed that the Administrative Agent shall not have any fiduciary responsibilities to any Lender by reason of this Agreement and that the Administrative Agent is merely acting as the representative of the Lenders with only those duties as are expressly set forth in this Agreement and the other Transaction Documents. In its capacity as the Lenders’ contractual representative, the Administrative Agent (A) does not assume any fiduciary duties to any of the Lenders, (B) is a “representative” of the Lenders within the meaning of Section 9-102 of the UCC as in effect in the State of New York and (C) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Transaction Documents. Each of the Lenders agrees to assert no claim against the Administrative Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims each Lender waives. The Administrative Agent shall deliver to any Lender any written information delivered by or on behalf of the Borrower or the Guarantor to the Administrative Agent in connection with the transactions contemplated by this Agreement and the other Transaction Documents promptly after any Lender’s reasonable request therefor.
Section 7.2 Powers. The Administrative Agent shall have and may exercise such powers under the Transaction Documents as are specifically delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto. The Administrative Agent shall have no implied duties or fiduciary duties to the Lenders, or any obligation to the Lenders to take any action hereunder or under any of the other Transaction Documents except any action specifically provided by the Transaction Documents required to be taken by the Administrative Agent.
Section 7.3 General Immunity. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable to the Borrower, Guarantor, or any Lender for any action taken or omitted to be taken by it or them hereunder or under any other Transaction Document or in connection herewith or therewith except to the extent such action or inaction is found in a final non-appealable judgment by a court of competent jurisdiction to have
arisen solely from (A) the gross negligence or willful misconduct of such Person or (B) breach of contract by such Person with respect to the Transaction Documents.
Section 7.4 No Responsibility for Advances, Creditworthiness, Collateral, Recitals, Etc. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (A) any statement, warranty or representation made in connection with any Transaction Document or any borrowing hereunder, (B) the performance or observance of any of the covenants or agreements of any obligor under any Transaction Document, (C) the satisfaction of any condition specified in Article III, except receipt of items required to be delivered solely to the Administrative Agent, (D) the existence or possible existence of any Event of Default or (E) the validity, effectiveness or genuineness of any Transaction Document or any other instrument or writing furnished in connection therewith. The Administrative Agent shall not be responsible to any Lender for any recitals, statements, representations or warranties herein or in any of the other Transaction Documents, for the perfection or priority of any of the Liens on any of the Collateral, or for the execution, effectiveness, genuineness, validity, legality, enforceability, collectability, or sufficiency of this Agreement or any of the other Transaction Documents or the transactions contemplated thereby, or for the financial condition of any guarantor of any or all of the Obligations (including the Guarantor), the Borrower or any of their respective Affiliates.
Section 7.5 Action on Instruction of Lenders. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Transaction Document in accordance with written instructions signed by the Majority Lenders, and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders and on all holders of Loan Notes. The Administrative Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Transaction Document unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action.
Section 7.6 Employment of Agents and Counsel. The Administrative Agent may execute any of its duties as the Administrative Agent hereunder and under any other Transaction Document by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lenders, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Administrative Agent shall be entitled to advice of counsel concerning the contractual arrangement between the Administrative Agent and the Lenders and all matters pertaining to the Administrative Agent’s duties hereunder and under any other Transaction Document.
Section 7.7 Reliance on Documents; Counsel. The Administrative Agent shall be entitled to rely upon any Loan Note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and, in respect to legal matters, upon the opinion of counsel selected by the Administrative Agent, which counsel may be employees of the Administrative Agent.
Section 7.8 The Administrative Agent’s Reimbursement and Indemnification. The Lenders agree to reimburse and indemnify (on a pro rata basis based upon their Applicable Percentage) the Administrative Agent (A) for any amounts not reimbursed by the Borrower for which the Administrative Agent is entitled to reimbursement by the Borrower under the Transaction Documents, (B) for any other expenses incurred by the Administrative Agent on behalf of the Lenders, in connection with the preparation, execution, delivery, administration and enforcement of the Transaction Documents and (C) for any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of the Transaction Documents or any other document delivered in connection therewith or the transactions contemplated thereby, or the enforcement of any of the terms thereof or of any such other documents; provided, each Lender agrees to reimburse and indemnify the Administrative Agent for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of the Transaction Documents or any other document delivered in connection therewith or the transactions contemplated thereby, or the enforcement of any of the terms thereof or of any such other documents related to such Lender failing to maintain the confidentiality of any materials provided by the Credit Manager and/or for taking any actions that cause the Administrative Agent to be liable to Freddie Mac under the Freddie Mac Acknowledgment Agreement; and provided further that in each case no Lender shall be liable for any of the foregoing to the extent any of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction to have arisen solely from the gross negligence or willful misconduct of the Administrative Agent.
Section 7.9 Rights as a Lender. With respect to its Commitment and Advances made by it and the Loan Notes issued to it, in its capacity as a Lender, the Administrative Agent shall have the same rights and powers hereunder and under any other Transaction Document as any Lender and may exercise the same as though it were not the Administrative Agent, and the term “Lender” or “Lenders”, as applicable, shall, unless the context otherwise indicates, include the Administrative Agent in its individual capacity. The Administrative Agent may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Transaction Document, with the Borrower, the Guarantor, or any of their Affiliates in which such Person is not prohibited hereby from engaging with any other Person.
Section 7.10 Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on the financial statements prepared by the Borrower and the Guarantor, and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Transaction Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Transaction Documents.
Section 7.11 Successor Agent. The Administrative Agent may resign at any time by giving written notice thereof to the Lenders, Fannie Mae, Freddie Mac, the Borrower, and the Guarantor. Notwithstanding anything herein to the contrary, following Freddie Mac’s execution of the Freddie Mac Acknowledgment Agreement, as applicable, no resignation of the Administrative Agent shall be effective until the following conditions have been satisfied: (x) receipt of Freddie Mac’s express written consent to such resignation and satisfaction of the other terms and conditions of this Section 7.11 and of the Freddie Mac Acknowledgment Agreement and (y) execution by the successor Administrative Agent, Borrower and Fannie Mae of an acknowledgment agreement (or an amendment or modification to the Fannie Mae Acknowledgment Agreement) satisfactory to Fannie Mae. The Administrative Agent may be removed at any time for cause by written notice received by the Administrative Agent from all of the other Lenders. Upon any such resignation or removal, the Lenders shall have the right to appoint, on behalf of the Borrower and the Lenders, a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Lenders and shall have
accepted such appointment within thirty (30) days after the exiting Administrative Agent’s giving notice of resignation or receipt of notice of removal, then the exiting Administrative Agent may appoint, on behalf of the Borrower and the Lenders, a successor Administrative Agent (but only if such successor is reasonably acceptable to each Lender) or petition a court of competent jurisdiction to appoint a successor Administrative Agent. Upon the acceptance of any appointment as the Administrative Agent hereunder by a successor Administrative Agent and the execution by such successor Administrative Agent, Borrower and Fannie Mae of an acknowledgment agreement (or an amendment or modification to the Fannie Mae Acknowledgment Agreement) satisfactory to Fannie Mae, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the exiting Administrative Agent, and the exiting Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Transaction Documents. After any exiting Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article VII shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Administrative Agent hereunder and under the other Transaction Documents.
Section 7.12 Transaction Documents. Each Lender authorizes the Administrative Agent to enter into each of the Transaction Documents to which it is a party and each Lender authorizes the Administrative Agent to take all action contemplated by such documents in its capacity as Administrative Agent; provided that, with respect to the Credit Manager Agreement, each Lender hereunder shall execute and deliver a joinder or related agreement acknowledging acceptance of the terms thereof, on or prior to becoming a Lender hereunder. Each Lender agrees that no Lender shall have the right individually to seek to realize upon the security granted by any Transaction Document or seek to enforce or have standing to exercise any remedy against any Agency directly, it being understood and agreed that such rights and remedies may be exercised solely by the Administrative Agent for the benefit of the Lenders upon the terms of the Transaction Documents.
Section 7.13 Erroneous Payment.
(a) Each Lender hereby agrees that (i) if the Administrative Agent notifies such Lender that the Administrative Agent has determined in its sole discretion that any funds received by such Lender from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Lender (whether or not known to such Lender) (whether as a payment, prepayment or repayment of principal, interest, fees or otherwise; individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Lender shall promptly, but in any event no later than one (1) Business Day thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect and (ii) to the extent permitted by applicable law, such Lender shall not assert any right or claim to the Erroneous Payment, and hereby waives, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payments received, including, without limitation, waiver of any defense based on “discharge for value” or any similar doctrine. A notice of the Administrative Agent to any Lender under this clause (a) shall be conclusive, absent manifest error.
(b) Without limiting the immediately preceding clause (a), each Lender hereby further agrees that if it receives an Erroneous Payment from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment sent by the Administrative Agent (or any of its Affiliates) with respect to such Erroneous Payment (an “Erroneous Payment Notice”), or (y) that such Lender otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), in each case, such Erroneous Payment was an error (and that such Lender is deemed to have knowledge of such error at the time of receipt of such Erroneous Payment) and to the extent permitted by applicable law, such Lender shall not assert any right or claim to the Erroneous Payment, and hereby waives, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payments received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine. Each Lender agrees that, in each such case, it shall promptly (and in any event within one (1) Business Day of its knowledge (or deemed knowledge) of such error) notify the Administrative Agent of such occurrence and, upon demand from the Administrative Agent, it shall promptly, but in any event no later than (1) one Business Day thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect.
(c) Each Lender, the Borrower, the Seller, the Servicer and the Sponsor hereby agree that (x) in the event an Erroneous Payment (or portion thereof) is not recovered from any Lender that has received such Erroneous Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights of or against such Lender with respect to such amount and (y) an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower, the Seller, the Servicer or the Sponsor, except, in each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrower or the Guarantor for the purpose of making such Erroneous Payment.
(d) Each party’s obligations under this Section 7.13 shall survive the resignation or replacement of the Administrative Agent, the Maturity Date or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Facility Document.
ARTICLE VIII
COLLECTION ACCOUNT
Section 8.1 Collection Account.
(a) The Borrower shall maintain or cause to be maintained at the Account Bank, a segregated non-interest bearing account titled [***] (such account, the “Collection Account”), such account bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Secured Parties. The Collection Account shall be subject at all times to the Account Control Agreement and may not be a “zero balance” account.
(b) On each Monthly Payment Date following (A) delivery of an Activation Notice by the Administrative Agent or (B) the occurrence and continuation of an Event of Default, the Borrower shall cause all Collections and other proceeds of Collateral other than the
(i) the Base Servicing Fee with respect to the related Mortgage Loans and (ii) any Termination Fee or Surplus Proceeds (as each such term is defined in the Freddie Mac Acknowledgment Agreement) payable to the Borrower, if any and as applicable, subject in all respects to the terms and provisions of the Freddie Mac Acknowledgment Agreement be remitted to the Collection Account no later than two (2) Business Days following receipt thereof. The Borrower may withdraw funds from the Collection Account in its discretion in the ordinary course of business, subject to the covenants set forth in Section 5.2(k). On each Monthly Payment Date following the occurrence and during the continuation of an Event of Default, all amounts on deposit in the Collection Account shall be applied pursuant to Section 2.7(c).
ARTICLE IX
GUARANTY
Section 9.1 Guaranty. (a) Guarantor hereby unconditionally and irrevocably guarantees the prompt and complete payment and performance of the Guaranteed Obligations when due (whether at the stated maturity, by acceleration or otherwise). This Guaranty is a guarantee of payment and performance and not merely a guaranty of collection.
(b) Guarantor further agrees to pay any and all expenses (including, without limitation, all reasonable and documented out-of-pocket fees and disbursements of counsel) which may be paid or incurred by the Administrative Agent in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Guaranteed Obligations and/or enforcing any rights with respect to, or collecting against, the Guarantor under this Guaranty. This Guaranty shall remain in full force and effect until any remaining Guaranteed Obligations are paid in full, notwithstanding that from time to time prior thereto the Borrower may be free from any due and payable Obligations.
Section 9.2 Subrogation. Notwithstanding any payment or payments made by the Guarantor hereunder or any set-off or application of funds of the Guarantor by the Administrative Agent or the Lenders, the Guarantor shall not be entitled to be subrogated to any of the rights of the Administrative Agent or the Lenders against the Borrower or any other guarantor or any collateral security or guarantee or right of offset held by the Administrative Agent or the Lenders for the payment of the Guaranteed Obligations, nor shall the Guarantor seek or be entitled to seek any contribution or reimbursement from the Borrower or any other guarantor or Person in respect of payments made by the Guarantor hereunder, until all amounts owing to the Administrative Agent and the Lenders on account of the Guaranteed Obligations are paid in full. If any amount shall be paid to the Guarantor on account of such subrogation rights at any time when all of the Guaranteed Obligations shall not have been paid in full or performed, such amount shall be held in trust for the benefit of the Administrative Agent, on behalf of the Lenders, and shall forthwith be paid to the Administrative Agent, to be credited and applied against the Guaranteed Obligations.
Section 9.3 Amendments, etc. with Respect to the Guaranteed Obligations. Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against the Guarantor, and without notice to or further assent by the Guarantor, any demand for payment of any of the Guaranteed Obligations made by the Administrative Agent or the Lenders may be rescinded by the Administrative Agent or the Lenders, and any of the Guaranteed Obligations continued, and the Guaranteed Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Administrative Agent or the Lenders, and this Agreement, the other Transaction Documents and any other document in
connection therewith may be amended, modified, supplemented or terminated, in whole or in part, in accordance with its terms and as the Administrative Agent and Lenders, may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Administrative Agent or the Lenders, for the payment of the Guaranteed Obligations may be sold, exchanged, waived, surrendered or released. Neither the Administrative Agent nor the Lenders shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Guaranteed Obligations or for this Guaranty or any property subject thereto. When making any demand hereunder against the Guarantor, the Administrative Agent may, but shall be under no obligation to, make a similar demand on the Borrower, and any failure by the Administrative Agent to make any such demand or to collect any payments from the Borrower or any release of the Borrower or such other guarantor shall not relieve the Guarantor of its Guaranteed Obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law or equity, of the Administrative Agent, on behalf of the Lenders, against the Guarantor. For the purposes hereof “demand” shall include, but shall not be limited to, the commencement and continuance of any legal proceedings.
Section 9.4 Guaranty Absolute and Unconditional. (a) Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by the Administrative Agent or the Lenders, upon this Guaranty or acceptance of this Guaranty; the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guaranty; and all dealings between the Borrower or the Guarantor, on the one hand, and the Administrative Agent and the Lenders, on the other, shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guaranty. Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Borrower or itself with respect to the Guaranteed Obligations. This Guaranty shall be construed as a continuing, absolute and unconditional guarantee of payment and performance without regard to (i) the validity or enforceability of this Agreement, the other Transaction Documents, any of the Guaranteed Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Administrative Agent or the Lenders, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by it or the Borrower against the Administrative Agent or the Lenders, (iii) any other circumstance whatsoever (with or without notice to or knowledge of the Borrower or the Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower for the Guaranteed Obligations, or of the Guarantor under this Guaranty, in bankruptcy or in any other instance or (iv) any other defense, set-off or counterclaim of a guarantor or a surety. When pursuing its rights and remedies hereunder against the Guarantor, the Administrative Agent may, but shall be under no obligation, to pursue such rights and remedies that it may have against the Borrower or any other Person or against any collateral security or guarantee for the Guaranteed Obligations or any right of offset with respect thereto, and any failure by the Administrative Agent to pursue such other rights or remedies or to collect any payments from the Borrower or any such other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Borrower or any such other Person or any such collateral security, guarantee or right of offset, shall not relieve the Guarantor of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law or equity, of the Administrative Agent against the Guarantor. This Guaranty shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantor and its successors and assigns thereof, and shall inure to the benefit of the Administrative Agent, the Lenders, and their successors, permitted endorsees, permitted transferees and permitted assigns, until all the Obligations and the Guaranteed Obligations of the Guarantor under this Guaranty
shall have been satisfied by payment in full, notwithstanding that from time to time during the term of the Credit Agreement, the Borrower may be free from any due and payable Obligations.
(b) Without limiting the generality of the foregoing, Guarantor hereby agrees, acknowledges, and represents and warrants to the Administrative Agent and the Lenders as follows:
(i) To the extent permitted by law, Guarantor hereby waives any defense arising by reason of, and any and all right to assert against the Administrative Agent or the Lenders, any claim or defense based upon, an election of remedies by the Administrative Agent which in any manner impairs, affects, reduces, releases, destroys and/or extinguishes Guarantor’s subrogation rights, rights to proceed against the Borrower for reimbursement or contribution, and/or any other rights of the Guarantor to proceed against the Borrower, or against any other person or security.
(ii) Guarantor is presently informed of the financial condition of the Borrower and of all other circumstances which diligent inquiry would reveal and which bear upon the risk of nonpayment of the Guaranteed Obligations. The Guarantor hereby covenants that it will make its own investigation and will continue to keep itself informed of the financial condition of the Borrower, of all other circumstances which bear upon the risk of nonpayment and that it will continue to rely upon sources other than the Administrative Agent and the Lenders for such information and will not rely upon the Administrative Agent or the Lenders for any such information. Guarantor hereby waives its right, if any, to require the Administrative Agent or the Lenders to disclose to Guarantor any information which they may now or hereafter acquire concerning such condition or circumstances including, but not limited to, the release of or revocation by any other guarantor.
(iii) Guarantor has independently reviewed this Agreement and related Transaction Documents and has made an independent determination as to the validity and enforceability thereof, and in executing and delivering this Agreement, Guarantor is not in any manner relying upon the validity, and/or enforceability, and/or attachment, and/or perfection of any Liens or security interests of any kind or nature granted by the Borrower or any other guarantor or Person to the Administrative Agent, now or at any time and from time to time in the future.
Section 9.5 Reinstatement. In the event that any payment on account of any of the Guaranteed Obligations is ever required to be returned by the Administrative Agent or the Lenders, for any reason (including, without limitation, bankruptcy or reorganization of the Borrower or any other obligor) or is set aside, recovered or rescinded, the Guaranteed Obligations to which such payment was applied shall for the purposes of this Guaranty be deemed to have continued in existence, notwithstanding such application, and this Guaranty shall be enforceable as to such Guaranteed Obligations fully as if such application had never been made. The bankruptcy or insolvency of Guarantor shall not terminate this Guaranty.
Section 9.6 Payments. Guarantor hereby agrees that any payments hereunder will be promptly paid to the Administrative Agent, on behalf of the Lenders, without deduction (for taxes or otherwise), abatement, recoupment, reduction, set-off or counterclaim (other than a defense of payment or performance) in U.S. Dollars and in accordance with the wiring instructions of the Administrative Agent, on behalf of the Lenders.
Section 9.7 Events of Default. If an Event of Default shall have occurred and be continuing, Guarantor agrees that, as between Guarantor, on the one hand, and the
Administrative Agent and the Lenders, on the other hand, the Obligations and Guaranteed Obligations may be declared to be due for purposes of this Guaranty notwithstanding any stay, injunction or other prohibition which may prevent, delay or vitiate any such declaration as against a Borrower and that, in the event of any such declaration (or attempted declaration), such Obligations and Guaranteed Obligations shall forthwith become due by Guarantor for purposes of this Guaranty.
ARTICLE X
MISCELLANEOUS
Section 10.1 Survival. All representations and warranties made by the parties herein, all indemnification obligations of the Borrower and Guarantor hereunder, and all terms of the Guaranty made by the Guarantor, shall survive, and shall continue in full force and effect, after the making and the repayment of the Advances hereunder and the termination of this Agreement.
Section 10.2 Amendments, Etc. Subject to Section 2.11(d), (a) neither this Agreement nor any other Transaction Document nor any provision hereof or thereof may be waived, amended or modified except (i) in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Borrower, the Administrative Agent and the Majority Lenders, except in the case of any agreement, amendment or modification required to effectuate an increase in the Commitments then in effect, which agreement, amendment or modification shall require the consent of the Borrower, the Guarantor, the Administrative Agent and each Lender consenting to such increase in the Commitments, (ii) in the case of any other Transaction Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Borrower, with (except in the case of the Administrative Agent Fee Letter) the consent of the Majority Lenders, or (iii) with respect to certain matters relating to the Collection Account, as provided in Section 5.2(l); provided that no such agreement shall (A) increase the Commitment of any Lender without the written consent of such Lender (including any such Lender that is a Defaulting Lender), (B) reduce or forgive the principal amount of any Advance or reduce the rate of interest thereon, or reduce or forgive any interest or fees payable hereunder, without the written consent of each Lender (including any such Lender that is a Defaulting Lender) affected thereby, (C) postpone any scheduled date of payment of the principal amount of any Advance, or any date for the payment of any interest, fees or other Obligations payable hereunder, or reduce the amount of, waive or excuse any such payment, without the written consent of each Lender (including any such Lender that is a Defaulting Lender) affected thereby, (D) change any of the provisions of this Section or the definition of “Majority Lenders” or any other provision of any Transaction Document specifying the number or percentage of Lenders required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (other than any Defaulting Lender) directly affected thereby, (E) change Section 10.7(b), (F) change the provisions of Section 2.14 relating to the extension of the Availability Period End Date, or the consent requirements with respect thereto, except with the consent of each Lender (other than any Defaulting Lender), or (G) release all or substantially all of the Collateral without the written consent of each Lender (other than any Defaulting Lender); provided, further, that no such agreement shall amend or modify the definition of “Borrowing Base” or any constituent term thereof in a manner that is adverse to the Lenders without the written consent of each Lender (other than any Defaulting Lender); provided, further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent hereunder without the prior written consent of the Administrative Agent (it being understood that any amendment to Section 10.7 shall require the consent of the Administrative Agent). The Administrative Agent may also amend Exhibit E attached hereto to reflect assignments entered into pursuant to
Section 10.8. Notwithstanding anything herein to the contrary, no Loan Note nor Exhibit C attached hereto may be amended without the prior express written consent of Freddie Mac.
(b) The Lenders hereby irrevocably authorize the Administrative Agent, at its option and in its sole discretion, to release any Liens granted to the Administrative Agent by the Borrower or the Guarantor on any Collateral (i) upon the termination of all of the Commitments, payment and satisfaction in full in cash of all Obligations (other than contingent obligations), (ii) constituting property being Disposed of if the Disposition is made in compliance with the terms of this Agreement, or (iii) as required to effect any sale or other disposition of such Collateral in connection with any exercise of remedies of the Administrative Agent and the Lenders pursuant to Article VI. Except as provided in the preceding sentence, the Administrative Agent will not release any Liens on Collateral without the prior written authorization of the Majority Lenders. Any such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of the Borrower or the Guarantor in respect of) all interests retained by the Borrower or Guarantor, including the proceeds of any sale, all of which shall continue to constitute part of the Collateral. Any execution and delivery by the Administrative Agent of documents in connection with any such release shall be without recourse to or warranty by the Administrative Agent.
(c) Notwithstanding anything in this Agreement or any other Transaction Document to the contrary, none of Sections 2.19, 6.2, 10.2(a), 10.2 (c) or 10.23 may be amended without the written consent of Freddie Mac. Freddie Mac shall be an express and intended third party beneficiary of this Section 10.2(c) and each of Sections 2.19, 6.2, 10.2(a) and 10.23.
Section 10.3 Notices, Etc. All notices and other communications provided to any party hereunder shall be in writing and mailed or delivered by courier or facsimile at the address for such party set forth in Schedule 10.3 hereto or in the case of any party, at such address or other address as shall be designated by such party in a written notice to each of the other parties hereto. Notwithstanding the foregoing, (i) any Schedule of Assets may be delivered by posting to a FTP site and (ii) each Monthly Report, any notice obligations required by Section 5.1(f), each Borrowing Base Certificate described in Section 2.4(a) and any funding request and other reporting may be delivered by electronic mail; provided that such electronic mail is sent by a Responsible Officer and each such Monthly Report or Borrowing Base Certificate is accompanied by an electronic reproduction of the signature of a Responsible Officer. All such notices and communications shall be effective, upon receipt; provided that notice by facsimile or email shall be effective upon electronic or telephonic confirmation of receipt from the recipient.
Section 10.4 No Waiver; Remedies. No failure on the part of the Administrative Agent or any Lender to exercise, and no delay in exercising, any right hereunder or under the Loan Notes shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.
Section 10.5 Indemnification. The Borrower agrees to indemnify the Administrative Agent, each Lender, and their respective Related Parties (collectively, the “Indemnitees”) from and hold each of them harmless against any and all losses, liabilities, claims, damages or expenses to which such Indemnitee may become subject arising out of, resulting from or in connection with any of the Transaction Documents or any other agreement, document, instrument or transaction related thereto, the use of proceeds thereof and the transactions contemplated hereby, and to reimburse each Indemnitee upon written demand therefor (together with reasonable back-up documentation supporting such reimbursement request) for any reasonable and documented legal or other out-of-pocket expenses incurred in connection with
investigating or defending any of the foregoing of one counsel to such Indemnitees, taken as a whole, and, in the case of a conflict of interest, of one additional counsel to the affected Indemnitee taken as a whole (and, if reasonably necessary, of one local counsel or one regulatory counsel in any material relevant jurisdiction); provided that the foregoing indemnity and reimbursement obligation will not, as to any Indemnitee, apply to (A) losses, claims, damages, liabilities or related expenses to the extent they are found in a final non-appealable judgment of a court of competent jurisdiction to arise from the willful misconduct, bad faith or gross negligence of such Indemnitee or any of its affiliates or Controlling persons or any of the officers, directors, employees, advisors or agents of any of the foregoing or (B) any settlement entered into by such Indemnitee without the Borrower’s written consent (such consent not to be unreasonably withheld or delayed). This Section 10.5 shall not apply with respect to Taxes other than any Taxes that represent losses, liabilities, claims and damages arising from any non-Tax Proceeding. Each party hereto, waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding against any other party hereto arising out of or relating to this Agreement or any other Transaction Document any special, exemplary, indirect, punitive or consequential damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement).
Section 10.6 Costs, Expenses and Taxes. The Borrower agrees to pay all reasonable and documented costs and expenses in connection with the preparation, execution, delivery, filing, recording, administration, modification, amendment or waiver of this Agreement, the Loan Notes and the other documents to be delivered hereunder, including the reasonable and documented fees and out-of-pocket expenses of counsel for the Administrative Agent (limited to one primary counsel) with respect thereto and with respect to advising the Administrative Agent as to its rights and responsibilities under this Agreement and the other Transaction Documents; provided that the Borrower’s obligations in respect of amounts incurred prior to the Closing Date through the date on which the Acknowledgment Agreements are obtained shall not exceed [***]. The Borrower further agrees to pay on demand all reasonable and documented costs and expenses, if any (including reasonable and documented counsel fees and expenses) (A) in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, the Loan Notes and the other documents to be delivered hereunder and (B) incurred by the Administrative Agent (subject to the limitation in the immediately preceding sentence) in connection with the transactions described herein and in the other Transaction Documents (including in connection with diligence performed with respect to the Collateral), including in any case reasonable and documented counsel fees and expenses in connection with the enforcement of rights under this Section 10.6. In addition, the Borrower shall pay any and all Other Taxes and agrees to save the Administrative Agent and each Lender harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such Other Taxes.
Section 10.7 Right of Set-off; Ratable Payments; Relations Among Lenders. (a) Upon the occurrence and during the continuance of any Event of Default, each of the Administrative Agent and the Lenders are hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Administrative Agent or such Lender to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement and the Loan Notes, whether or not the Administrative Agent or such Lenders shall have made any demand under this Agreement or the Loan Notes and although such obligations may be unmatured. The Administrative Agent and each Lender agrees promptly to notify the Borrower after any such set-off and application; provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Administrative Agent and the
Lenders under this Section 10.7(a) are in addition to other rights and remedies (including other rights of set-off) which the Administrative Agent and the Lenders may have.
(b) If any Lender, whether by setoff or otherwise, has payment made to it upon its Advances in a greater proportion than that received by any other Lender, such other Lender agrees, promptly upon demand, to purchase a portion of the Advances held by the Lenders so that after such purchase each Lender will hold its ratable share of Advances. If any Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateral or other protection for its Obligations or such amounts which may be subject to setoff, such Lender agrees, promptly upon written demand, to take such action necessary such that all Lenders share in the benefits of such collateral ratably in proportion to the obligations owing to them. In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be made.
(c) Except with respect to the exercise of set-off rights of any Lender in accordance with Section 10.7(a), the proceeds of which are applied in accordance with this Agreement, each Lender agrees that it will not take any action, nor institute any actions or proceedings, against the Borrower or any other obligor hereunder or with respect to any Collateral or Transaction Document, without the prior written consent of the other Lenders or, as may be provided in this Agreement or the other Transaction Documents, at the direction of the Administrative Agent.
(d) The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case of the Administrative Agent) authorized to act for, any other Lender.
Section 10.8 Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the Borrower, the Guarantor, the Administrative Agent and each Lender, and their respective successors and permitted assigns, except that the Borrower and the Guarantor shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Administrative Agent and the Lenders, and any assignment by the Borrower or Guarantor in violation of this Section 10.8 shall be null and void. Notwithstanding anything to the contrary in the first sentence of this Section 10.8, any Lender may at any time, without the consent of the Administrative Agent, assign all or any portion of its rights under this Agreement and any Loan Note to a Federal Reserve Bank; provided that no such assignment or pledge shall release the transferor Lender from its obligations hereunder. Subject to the terms of the Acknowledgment Agreements, each Lender may assign to one or more banks or other entities all or any part or portion of, or may grant participations to one or more banks or other entities in all or any part or portion of its rights and obligations hereunder (including its Commitment, its Loan Notes or its Advances); provided that (A) each party to such assignment shall execute and deliver an Assignment and Assumption to the Administrative Agent, (B) shall be to (x) a bank, other financial institution or lender which is reasonably acceptable to the Administrative Agent, or (y) a “qualified institutional buyer”, as defined in Rule 144A under the Securities Act of 1933, as amended, reasonably acceptable to the Administrative Agent, and (C) unless an Event of Default has occurred and is continuing, the Borrower shall have the right to consent to any assignment of the Lender’s rights and obligations under this Agreement, such consent not to be unreasonably withheld, conditioned or delayed; provided that no such consent of the Administrative Agent or the Borrower shall be required for an assignment to any Lender or an Affiliate of a Lender.
Upon, and to the extent of, any assignment (unless otherwise stated therein) made by any Lender hereunder, the assignee or purchaser of such assignment shall be a Lender hereunder for all purposes of this Agreement and shall have all the rights, benefits and
obligations (including the obligation to provide documentation pursuant to Section 2.15(g)) of a Lender hereunder. The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at one of its offices a register (the “Register”) for the recordation of the names and addresses of the Lenders, the Commitment and outstanding principal amounts (and accrued interest) of the Advances owing to each Lender pursuant to the terms hereof from time to time and any assignment of such Commitment or outstanding Advances. The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
Any Lender may sell participation interests in its Advances and obligations hereunder (each such recipient of a participation a “Participant”); provided that after giving effect to the sale of such participation, such Lender’s obligations hereunder and rights to consent to any waiver hereunder or amendment hereof shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, all amounts payable to such Lender hereunder and all rights to consent to any waiver hereunder or amendment hereof shall be determined as if such Lender had not sold such participation interest, and the Borrower and the Administrative Agent shall continue to deal solely and directly with such Lender and not be obligated to deal with such participant. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the outstanding principal amounts (and accrued interest) of each Participant’s interest in the Advances or other obligations under the Transaction Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Transaction Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations and Proposed Treasury Regulations Section 1.163-5(b) (or any amended or successor version). The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent shall have no responsibility for maintaining a Participant Register. Each recipient of a participation shall, to the fullest extent permitted by law, have the same rights, benefits and obligations (including the obligation to provide documentation pursuant to Section 2.15(g) (it being understood that the documentation required under Section 2.15(g) shall be delivered to the participating Lender)), hereunder with respect to the rights and benefits so participated as it would have if it were a Lender hereunder, except that no Participant shall be entitled to receive any greater payment under Sections 2.11 or 2.15 than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation.
Notwithstanding any other provision of this Agreement to the contrary, a Lender may pledge as collateral, or grant a security interest in, all or any portion of its rights in, to and under this Agreement to (i) a security trustee in connection with the funding by such Lender of Advances or (ii) a Federal Reserve Bank to secure obligations to such Federal Reserve Bank, in each case without the consent of the Borrower; provided that no such pledge or grant shall release such Lender from its obligations under this Agreement.
Section 10.9 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 10.10 Jurisdiction. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK (NEW YORK COUNTY) OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, OR ANY LEGAL PROCESS WITH RESPECT TO ITSELF OR ANY OF ITS PROPERTY, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
Section 10.11 Waiver of Jury Trial. ALL PARTIES HEREUNDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE PARTIES IN CONNECTION HEREWITH OR THEREWITH. ALL PARTIES ACKNOWLEDGE AND AGREE THAT THEY HAVE RECEIVED FULL AND SIGNIFICANT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR ALL PARTIES TO ENTER INTO THIS AGREEMENT.
Section 10.12 Section Headings. All section headings are inserted for convenience of reference only and shall not affect any construction or interpretation of this Agreement.
Section 10.13 Tax Characterization. The parties hereto intend for the transactions effected hereunder to constitute indebtedness of the Borrower to the Lenders, secured by the Collateral, for U.S. federal income tax purposes.
Section 10.14 Execution. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or by e-mail in portable document format (.pdf) shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 10.15 Limitations on Liability. None of the members, managers, general or limited partners, officers, employees, agents, shareholders, directors, Affiliates or holders of corporate interests of or in the Borrower or the Guarantor shall be under any liability to the Administrative Agent or the Lenders, respectively, any of their successors or assigns, or any other Person for any action taken or for refraining from the taking of any action in such capacities or otherwise pursuant to this Agreement or for any obligation or covenant under this Agreement, it being understood that this Agreement and the obligations created hereunder shall be, to the fullest extent permitted under applicable law, with respect to the Borrower or the
Guarantor, solely the corporate obligations of the Borrower or the Guarantor, as applicable. The Borrower, the Guarantor, and any member, manager, partner, officer, employee, agent, shareholder, director, Affiliate or holder of a corporate interest of or in the Borrower or Guarantor, as applicable, may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person (other than the Borrower or the Guarantor) respecting any matters arising hereunder.
Section 10.16 Confidentiality. (a) This Agreement and its terms, provisions, supplements and amendments, and notices and reports delivered hereunder or under any other Transaction Document, are proprietary to the Administrative Agent, the Lenders, the Borrower, and the Guarantor, and shall be held by each party hereto, as applicable, in strict confidence, and shall not be disclosed to any third party without the written consent of Administrative Agent (at the written direction of the applicable Lender), the Borrower, or the Guarantor, as applicable, except for (i) disclosure to Administrative Agent, any Lender’s assignees, participants, prospective assignees or prospective participants, any Lender’s, Guarantor’s, or Borrower’s direct and indirect Affiliates and Subsidiaries, agents, consultants, attorneys or accountants, but only to the extent such disclosure is necessary and such parties agree to hold all information in strict confidence, provided that, any such prospective assignee or prospective participant is advised of, and agrees in writing to be bound by, the provisions of this Section 10.16, or (ii) disclosure required by law, rule, regulation or order of a court or other regulatory body. Notwithstanding the foregoing or anything to the contrary contained herein or in any other Transaction Documents, the parties hereto may disclose to any and all Persons, without limitation of any kind, the federal, state and local tax treatment of the Transactions, any fact relevant to understanding the federal, state and local tax treatment of the Transactions, and all materials of any kind (including opinions or other tax analyses) relating to such federal, state and local tax treatment and that may be relevant to understanding such tax treatment; provided that neither the Borrower nor the Guarantor may disclose the name of or identifying information with respect the Administrative Agent or the Lenders or any pricing terms or other nonpublic business or financial information (including any sublimits and financial covenants) that is unrelated to the federal, state and local tax treatment of the Transactions and is not relevant to understanding the federal, state and local tax treatment of the Transactions, without the prior written consent of the Administrative Agent (at the written direction of the applicable Lender).
(b) Notwithstanding anything in this Agreement to the contrary, the Administrative Agent and each Lender shall comply with all applicable local, state and federal laws, including, without limitation, all privacy and data protection law, rules and regulations that are applicable to the Assets and/or any applicable terms of this Agreement (the “Confidential Information”). The Administrative Agent and each Lender understand that the Confidential Information may contain “nonpublic personal information”, as that term is defined in Section 509(4) of the Gramm-Leach-Bliley Act (the “GLB Act”), and the Administrative Agent and each Lender agree to maintain such nonpublic personal information that it receives hereunder in accordance with the GLB Act and other applicable federal and state privacy laws. Notwithstanding the foregoing, the Administrative Agent and the Lenders may disclose Confidential Information expressly for marketing purposes, as and to the extent permitted by the GLB Act. The Administrative Agent and each Lender shall implement such physical and other security measures as shall be necessary to (a) ensure the security and confidentiality of the “nonpublic personal information” of the “customers” and “consumers” (as those terms are defined in the GLB Act) of any Lender, the Administrative Agent or any Affiliate of the Administrative Agent which the Administrative Agent or any Lender holds, (b) protect against any anticipated threats or hazards to the security and integrity of such nonpublic personal information, and (c) protect against any unauthorized access to or use of such nonpublic personal information. The Administrative Agent and each Lender each represents and warrants that it has implemented appropriate measures to meet the objectives of Section 501(b) of the GLB Act and
of the applicable standards adopted pursuant thereto, as now or hereafter in effect. The Administrative Agent shall notify the Borrower promptly following discovery of any breach or compromise of the security, confidentiality, or integrity of nonpublic personal information of the customers and consumers of the Borrower or any Affiliate of the Borrower.
Section 10.17 Merger. This Agreement, the exhibits and schedules hereto, the other Transaction Documents and the agreements, documents and instruments to be executed and delivered in connection herewith and therewith contain the final, complete and exclusive statement of the agreement between the parties with respect to the transactions contemplated herein and all other prior or contemporaneous oral communications (including, for avoidance of doubt, communications in connection with the preparation of this Agreement and the other Transaction Documents) and agreements, and all prior written communications (including, for avoidance of doubt, written drafts of this Agreement and the other Transaction Documents) and agreements, with respect to the subject matter hereof are merged herein and superseded.
Section 10.18 Lien Release. When any portion of the Collateral is transferred as permitted by the terms hereof, the security interest in and the Lien on such Collateral shall automatically be released, and the Secured Parties will no longer have any security interest in, lien on, or claim against such Collateral. The Administrative Agent agrees to file termination statements and take all other action reasonably requested by the Borrower (at the Borrower’s expense) to evidence such release.
Section 10.19 Customer Identification - USA Patriot Act Notice. The Administrative Agent and each Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56, signed into law October 26, 2001) (the “Patriot Act”), and the Administrative Agent’s and each Lender’s policies and practices, the Administrative Agent and the Lenders are required to obtain, verify and record certain information and documentation that identifies the Borrower, which information includes the name and address of the Borrower and such other information that will allow the Administrative Agent or such Lender to identify the Borrower in accordance with the Patriot Act.
Section 10.20 Administrative Agent Compliance with Applicable Anti-Terrorism and Anti-Money Laundering Regulations. In order to comply with laws, rules, regulations and executive orders in effect from time to time applicable to banking institutions, including those relating to funding of terrorist activities and money laundering, the Administrative Agent is required to obtain, verify and record certain information relating to individuals and entities which maintain a business relationship with the Administrative Agent. Accordingly, each of the parties agrees to provide to the Administrative Agent upon its request from time to time such identifying information and documentation as may be available for such party in order to enable the Administrative Agent to comply with such laws, rules, regulations and executive orders in effect from time to time applicable to banking institutions, including the USA Patriot Act and any other laws relating to funding of terrorist activities and money laundering.
Section 10.21 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Transaction Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Transaction Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Transaction Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.
Section 10.22 Acknowledgement Regarding Any Supported QFCs. To the extent that the Transaction Documents provide support, through a guarantee or otherwise, for Derivative Contracts or any other agreement or instrument that is a QFC (such support “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regime”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Transaction Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Transaction Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Transaction Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
Section 10.23 Provisions applicable to Freddie Mac and the Collateral. Notwithstanding anything in this Agreement to the contrary, the Administrative Agent and the Lenders acknowledge and agree that:
(a) The Borrower’s right, title and interest in and to the Freddie Mac MSRs, any Termination Fee, any Surplus Proceeds and any Shared Net Servicing Revenue, in each case, if any and as applicable, serving as Collateral is and may only be pledged by the Borrower, as applicable, as collateral for the purposes set forth in, and on the terms and conditions set forth in, the Freddie Mac Acknowledgment Agreement;
(b) notwithstanding anything in this Agreement to the contrary, the terms of this Agreement, the transactions contemplated hereby, and any payments hereunder are subject in all respects to all rights, title, powers, prerogatives and interests of Freddie Mac and the terms and provisions of the Freddie Mac Acknowledgment Agreement. In addition, whenever in this Agreement there is a requirement of the Agency’s consent, the Agency’s approval, the Agency’s determination, the Agency’s acceptance, or the Agency’s judgment (or Freddie Mac’s consent, Freddie Mac’s approval, Freddie Mac’s determination, Freddie Mac’s acceptance or Freddie Mac’s judgment) or any other phrase of similar nature pertaining to an action required of the Agency or Freddie Mac, it is understood by such phrase that Freddie Mac shall exercise the granting or withholding of its consent, approval, determination, acceptance, right or judgment in its sole and absolute discretion.
(c) none of the Secured Parties is a third party beneficiary of the Freddie Mac Servicing Contract or the Freddie Mac Acknowledgement Agreement (it being understood that the Administrative Agent on behalf of the Secured Parties is a party to the Freddie Mac Acknowledgement Agreement);
(d) none of the Freddie Mac Servicing Contract, any Freddie Mac MSR or any Freddie Mac MSR Collateral is a “security” within the meaning of the UCC;
(e) the rights, powers and prerogatives of Freddie Mac constitute an “adverse claim” relating to a “financial asset” (as defined in Article 8 of the UCC) with respect to any Freddie Mac MSR, any Freddie Mac MSR Collateral or any Servicing Contract, and any payments under any such agreement (including without limitation any Base Servicing Fees);
(f) it is a violation of Freddie Mac’s rights for any Secured Party or any other Person (other than Freddie Mac) to sell, assign or attempt to sell or assign the Freddie Mac Servicing Contract, any Freddie Mac MSR or any Freddie Mac MSR Collateral or any other underlying agreement other than as expressly set forth in the Freddie Mac Acknowledgement Agreement and subject to Freddie Mac’s approval or any of the rights, powers or prerogatives of Freddie Mac;
(g) each Secured Party expressly waives the right to opt into Article 8 of the UCC such that any Secured Party may not claim protected purchaser status with respect to all or any portion of the Collateral;
(h) other than the Freddie Mac Acknowledgement Agreement, (i) none of the Transaction Documents is an obligation of, and is not guaranteed by, Freddie Mac, and (ii) Freddie Mac has not approved the Transaction Documents; and
(i) Notwithstanding anything in this Agreement to the contrary, effective as of each VPC Servicing Transfer Date which occurs pursuant to the provisions of a VPC Agreement (each such date, a “Release Date”), and without any payment by the Borrower or compliance by Borrower with any other terms and provisions of this Agreement, and each Secured Party hereby covenants, represents, and warrants to Freddie Mac, without any further requirement or action by any Secured Party that each Secured Party shall be conclusively deemed to have fully and finally released its lien, charge, security interest, encumbrance, claims,
or interests arising out of or relating to (A) the Freddie Mac MSRs pertaining to those subject to the transfer of servicing scheduled to occur on such VPC Servicing Transfer Date (the “Removed Freddie Mac MSRs”), and (B) the Freddie Mac Acknowledgment Agreement, including without limitation, any right to make claims against Freddie Mac (for itself and for any principal), solely as related to the Removed Freddie Mac MSRs. If requested by Freddie Mac, Administrative Agent shall promptly execute such further documentation as requested by Freddie Mac in order to further effectuate the terms and provisions of this Section 10.23(i).
(j)
Freddie Mac shall be an express third party beneficiary of this Section 10.23 and shall be entitled to rely upon this Section 10.23 in all respects.
Section 10.24 No Novation. This Agreement is not intended to, and does not, novate the Existing Credit Agreement, and the Borrower reaffirms that the existing security interest created by the Existing Credit Agreement and each other Transaction Document is and remains in full force and effect.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
HOME POINT FINANCIAL CORPORATION,
as Borrower
By: _________________________________
Name:
Title:
HOME POINT CAPITAL INC., as Guarantor
By: __________________________________
Name:
Title:
GOLDMAN SACHS BANK USA, as Administrative Agent
By:
Name:
Title:
GOLDMAN SACHS BANK USA, as Lender
By:
Name:
Title:
EXHIBIT A
Form of Compliance Certificate
Compliance Certificate for the [Quarter] [Month] Ended
To: Goldman Sachs Bank USA
200 West Street
New York, NY 10282
Attention: [***]
Structured Finance Investing & Lending Telephone [***]
Email: [***]
Goldman Sachs Warehouse Covenants
2001 Ross Ave, Suite 2800
Dallas, TX 75201
Attention: [***]
Telephone No.: [***]
Email: [***]
Structured Finance Asset Management
2001 Ross Ave, Suite 2800
Dallas, TX 75201
Attention: [***]
Telephone No.: (972) 368-5150
Email: [***]
Re: Compliance Certificate
Ladies and Gentlemen:
Reference is made to that certain Second Amended and Restated Credit Agreement, dated as of May 4, 2021, by and between Home Point Financial Corporation, as borrower (“Borrower”), Home Point Capital Inc., as guarantor (“Guarantor”), Goldman Sachs Bank USA, as administrative agent (“Agent”) and the lenders from time to time party thereto (as amended, supplemented or restated from time to time, the “Agreement”); capitalized terms used herein without definition shall have the meanings assigned those terms in the Agreement.
This Certificate is furnished to the Agent pursuant to Section 5.1(a), Section 5.1(b)(iii) and Section 5.1(v)(vii) of the Agreement.
1. Authority. I am the duly elected, qualified and acting [__] of [Borrower][Guarantor] and hereby certify that the information provided in this Certificate is true, correct and complete.
2. Fiscal Period. This Certificate is for the fiscal period ended [__] (the “Certification Date”).
3. Financial Statements. The accompanying financial statements fairly present, in all material respects, the financial condition and results of operations of [Borrower][Guarantor] in accordance with GAAP, consistently applied, as at the end of, and for the fiscal [quarter][year] ended on, the Certification Date (subject to normal year-end audit adjustments).
4. No Default. To my knowledge, no Event of Default or Potential Event of Default under the Agreement has occurred or is continuing as of the date of this Certificate.
5. Minimum Liquidity. [Borrower][Guarantor] has, as of the last day of each calendar month ending after the Closing Date, complied with the liquidity covenant pursuant to Section 5.1(a)(i) of the Agreement during the fiscal [quarter][month] ending on the Certification Date. The information provided below is true, complete and correct as of the Certification Date:
(A) Cash: $[__].[__]
(B) Cash Equivalents: $[__].[__]
(C) Availability under Agreement: $[__].[__]
--- (A), (B) and (C) is equal to or greater than [________________].
6. Minimum Adjusted Tangible Net Worth. [Borrower][Guarantor] has at the end of each calendar month complied with the minimum Adjusted Tangible Net Worth covenant pursuant to Section 5.1(a)(ii) of the Agreement during the fiscal [quarter][month] ending on the Certification Date. The information provided below is true, complete and accurate as of the Certification Date:
(A) Total Assets: $[__].[__]
(B) Adjusted Tangible Net Worth: $[__].[__]
--- (B) is at least equal to or greater than [$____________].
7. Corporate Debt to Tangible Net Worth. [Borrower][Guarantor] has at the end of each calendar month complied with the Corporate Debt to Tangible Net Worth Ratio covenant pursuant to Section 5.1(a)(iii) of the Agreement during the fiscal [quarter] [month] ending on the Certification Date. The information provided below is true, complete and accurate as of the Certification Date:
(A) Corporate Debt: $[__].[__]
(B) Adjusted Tangible Net Worth: $[__].[__]
(A) over (B) is at least equal to or greater than [__]:1.00.
IN WITNESS WHEREOF, the undersigned has executed this Certificate on the date set forth below:
Name: _______________________________
Title:
Date:
SCHEDULE 1
[ATTACH UPDATED SCHEDULE OF ASSETS AS OF CERTIFICATION DATE]
EXHIBIT B
Form of Notice of Borrowing
__________ ___, 20__
To: Goldman Sachs Bank USA as Administrative Agent
Ladies and Gentlemen:
Reference is made to the Second Amended and Restated Credit Agreement, dated as of May 4, 2021 (the “Credit Agreement”), by and among Home Point Financial Corporation, as Borrower (the “Borrower”), Home Point Capital Inc., as guarantor (“Guarantor”), Goldman Sachs Bank USA, as Administrative Agent for the financial institutions that may from time to time become parties thereto as Lenders (in such capacity, the “Administrative Agent”), and the Lenders. Capitalized terms used herein but not defined herein shall have the meanings assigned to such terms in the Credit Agreement.
In accordance with Section 2.4 of the Credit Agreement, the Borrower hereby requests that the Lenders provide an Advance based on the following criteria:
Aggregate principal amount of Advance requested: $________________
Requested Borrowing Date: ________ ___, 20__1
Account(s) to which Agent should wire the balance of the requested funds:
Bank Name:
ABA No.:
Account Name:
Account No.:
Reference:
Attached to this notice as Exhibit A is the Borrowing Base Certificate in connection with this Advance.
The Borrower hereby represents and warrants that the conditions set forth in Section 3.2 of the Credit Agreement have been satisfied on and as of the date hereof.
Very truly yours,
HOME POINT FINANCIAL CORPORATION
By:
Name:
Title:
1 No earlier than three Business Days after the date of delivery of this Notice of Borrowing.
EXHIBIT A TO NOTICE OF BORROWING
Form of Borrowing Base Certificate
BORROWING BASE CERTIFICATE
HOME POINT FINANCIAL CORPORATION
[_________], 20[_]
In connection with that certain Second Amended and Restated Credit Agreement, dated as of May 4, 2021 (the “Credit Agreement”), among Home Point Financial Corporation, as Borrower (the “Borrower”), Home Point Capital Inc., as guarantor (“Guarantor”), Goldman Sachs Bank USA, as administrative agent for the financial institutions that may become parties thereto as Lenders, and the Lenders, the Borrower hereby certifies that:
The sum of all outstanding Advances will not exceed the Aggregate Commitment Amount[, plus the Uncommitted Advance Amount], after giving effect to the Advance requested in the attached Borrowing Notice.
The attached Schedule I sets forth the borrowing base calculations (the “Borrowing Base Calculations”) reflecting a Borrowing Base that equals or exceeds the sum of the outstanding Advances after giving effect to the Advance requested and provides all data used, in Excel format, to calculate the foregoing as of the Borrowing Date and the computations reflected in the Borrowing Base Calculations are true, correct and complete.
The attached Schedule of Eligible Assets and Schedule of Ineligible Assets includes all Assets pledged to the Administrative Agent pursuant to the terms of the Credit Agreement, and that all information contained therein is true, accurate and complete.
Capitalized terms used but not defined herein shall have the meanings specified in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date first written above.
HOME POINT FINANCIAL CORPORATION,
as Borrower
By:
Name:
Title:
EXHIBIT C
Form of Loan Note
LOAN NOTE
Commitment up to $[●] [●], 202[_]
New York, New York
THE HOLDER OF THIS NOTE SHALL BE (I) SUBJECT TO, AND BY ACCEPTANCE OF SUCH LOAN NOTE RATIFIES AND REAFFIRMS, THE PROVISIONS CONTAINED IN THE CREDIT AGREEMENT (AS DEFINED BELOW), AND (II) SUBORDINATE TO (A) ALL RIGHTS, POWERS AND PREROGATIVES OF THE AGENCIES; AND (B) CLAIMS OF THE AGENCIES ARISING OUT OF ANY AND ALL DEFAULTS UNDER A SERVICING CONTRACT WITH THE AGENCIES, AND OUTSTANDING PREROGATIVES OF THE AGENCIES, ALL AS MORE PARTICULARLY SET FORTH IN THE ACKNOWLEDGMENT AGREEMENTS (AS APPLICABLE) AND THE CREDIT AGREEMENT.
THE RIGHTS, POWERS AND PREROGATIVES OF THE AGENCIES INCLUDE THE RIGHT OF THE AGENCIES TO DISQUALIFY (IN WHOLE OR IN PART) THE BORROWER FROM PARTICIPATING IN A MORTGAGE SELLING OR SERVICING PROGRAM OR A SECURITIES GUARANTY PROGRAM WITH THE AGENCIES; THE RIGHT TO TERMINATE (IN WHOLE OR IN PART) SERVICING CONTRACT RIGHTS OF THE BORROWER RELATING TO SUCH MORTGAGE SELLING OR SERVICING PROGRAM OR SECURITIES GUARANTY PROGRAM; AND THE RIGHT TO TRANSFER AND SELL ALL OR ANY PORTION OF THE SERVICING CONTRACT RIGHTS FOLLOWING THE TERMINATION OF THOSE RIGHTS.
NO LOAN NOTE MAY BE TRANSFERRED EXCEPT IN STRICT COMPLIANCE WITH THE RESTRICTIONS ON ASSIGNMENTS, AND SUBJECT TO THE LIMITATIONS, SET FORTH IN SECTION 10.8 OF THE CREDIT AGREEMENT. PARTICIPATIONS IN ANY LOAN NOTE MAY ONLY BE CONVEYED IN STRICT COMPLIANCE WITH, AND SUBJECT TO THE LIMITATIONS SET FORTH IN, SECTION 10.8 OF THE CREDIT AGREEMENT. ANY PURPORTED TRANSFER OF ANY LOAN NOTE OR ANY BENEFICIAL INTERESTS THEREIN THAT IS IN BREACH, AT THE TIME MADE, OF ANY TRANSFER RESTRICTIONS SET FORTH IN THE CREDIT AGREEMENT IS VOID AB INITIO.
Reference is made to that certain Second Amended and Restated Credit Agreement, dated as of May 4, 2021 (as may be amended from time to time, the “Credit Agreement”), by and among Home Point Financial Corporation (the “Borrower”), Home Point Capital Inc. (the “Guarantor”), Goldman Sachs Bank USA, as administrative agent for the Lenders that may become parties thereto (the “Administrative Agent”), and the Lenders. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.
FOR VALUE RECEIVED, the Borrower hereby promises to pay [●], as a Lender (the “Loan Note Holder”) on the Maturity Date or such earlier date as provided in the Credit Agreement (whether or not shown on Schedule I attached hereto (or such electronic counterpart)), in immediately available funds in lawful money of the United States the principal amount of up to $[●] or, if less, the aggregate unpaid principal amount of all Advances made by
the Lenders to the Borrower pursuant to the Credit Agreement, together with all accrued but unpaid interest thereon.
The Borrower also agrees to pay interest in like money to the Loan Note Holder, on the unpaid principal amount of each such Advance from time to time from the date of each such Advance until payment in full thereof at the rate or rates and on the dates set forth in the Credit Agreement.
This Loan Note is one of the Loan Notes referred to in, and is entitled to the benefits of, the Credit Agreement, which, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of the principal hereof prior to the maturity hereof upon the terms and conditions specified therein and is secured by the Collateral including the Assets.
In the event of any inconsistency between the provisions of this Loan Note and the provisions of the Credit Agreement, the Credit Agreement will prevail.
THIS LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS LOAN NOTE MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS LOAN NOTE, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, OR ANY LEGAL PROCESS WITH RESPECT TO ITSELF OR ANY OF ITS PROPERTY, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS LOAN NOTE OR ANY DOCUMENT RELATED HERETO. EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
ALL PARTIES HEREUNDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS LOAN NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE PARTIES IN CONNECTION HEREWITH OR THEREWITH. ALL PARTIES ACKNOWLEDGE AND AGREE THAT THEY HAVE RECEIVED FULL AND SIGNIFICANT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR ALL PARTIES TO ENTER INTO THIS LOAN NOTE.
Subject to the terms of Section 10.8 of the Credit Agreement, this Loan Note may be transferred or assigned by the holder hereof at any time, subject to compliance with any applicable law. This Loan Note shall be binding upon the Borrower and shall inure to the benefit of the holder hereof and its successors and assigns. The obligations and liabilities of the Borrower hereunder may not be assigned to any Person without the prior written consent of the holder hereof. Any such assignment in violation of this paragraph shall be void and of no force or effect.
No Lender shall have any right individually to realize upon any of the Collateral, it being understood and agreed that (i) all powers, rights and remedies under the Credit Agreement may be exercised solely by the Administrative Agent, on behalf of Lenders in accordance with the terms of the Credit Agreement and all powers, rights and remedies under the Transaction Documents may be exercised solely by the Administrative Agent, (ii) in the event any notice is due from an Agency pursuant to its Acknowledgment Agreement or otherwise, the Agency shall be deemed to have complied to the extent the notice is provided to the Administrative Agent under such Agency’s Acknowledgment Agreement; and the Lender, by its acceptance of this Loan Note, acknowledges and agrees that only the Administrative Agent will receive such notice and that no Lender has a right to require an Agency to send it a copy of such notice or otherwise communicate with it, and (iii) any disputes, claims or suits against an Agency arising out of or relating to the Credit Agreement or such Agency’s Acknowledgment Agreement may be submitted and pursued only by the Administrative Agent and not by any Lender directly.
In the event of any dispute, claim or suit between the Lenders, the Borrower, the Guarantor, and/or the Administrative Agent, on the one hand, and an Agency, on the other, including without limitation, any claim made or position taken by a Lender in a Borrower bankruptcy proceeding, the Lender, by acceptance of this Note, acknowledges and agrees that for all purposes of the Credit Agreement the Borrower and the Administrative Agent are the sole Persons with any right to deal with an Agency with respect to the Credit Agreement or the applicable Acknowledgment Agreement.
Demand, presentment, protest and notice of nonpayment and protest are hereby waived by the Borrower.
[Signature page follows.]
IN WITNESS WHEREOF, this Loan Note has been duly executed and delivered on behalf of the Borrower by its duly authorized officer on the date and year first written above.
HOME POINT FINANCIAL CORPORATION
By:
Name:
Title:
Schedule I
INCREASES AND DECREASES
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EXHIBIT D
Assignment and Assumption
ANY HOLDER OF A LOAN NOTE (AS SUCH TERM IS DEFINED IN THE CREDIT AGREEMENT, WHICH IS DEFINED BELOW) SHALL BE (I) SUBJECT TO, AND BY ACCEPTANCE OF SUCH LOAN NOTE RATIFIES AND REAFFIRMS, THE PROVISIONS CONTAINED IN THE CREDIT AGREEMENT (AS DEFINED BELOW), AND (II) SUBORDINATE TO (A) ALL RIGHTS, POWERS AND PREROGATIVES OF THE AGENCIES; AND (B) CLAIMS OF THE AGENCIES ARISING OUT OF ANY AND ALL DEFAULTS UNDER A SERVICING CONTRACT WITH THE AGENCIES, AND OUTSTANDING PREROGATIVES OF THE AGENCIES, ALL AS MORE PARTICULARLY SET FORTH IN THE ACKNOWLEDGMENT AGREEMENTS AND THE CREDIT AGREEMENT.
THE RIGHTS, POWERS AND PREROGATIVES OF THE AGENCIES INCLUDE THE RIGHT OF THE AGENCIES TO DISQUALIFY (IN WHOLE OR IN PART) THE BORROWER FROM PARTICIPATING IN A MORTGAGE SELLING OR SERVICING PROGRAM OR A SECURITIES GUARANTY PROGRAM WITH THE AGENCIES; THE RIGHT TO TERMINATE (IN WHOLE OR IN PART) SERVICING CONTRACT RIGHTS OF THE BORROWER RELATING TO SUCH MORTGAGE SELLING OR SERVICING PROGRAM OR SECURITIES GUARANTY PROGRAM; AND THE RIGHT TO TRANSFER AND SELL ALL OR ANY PORTION OF THE SERVICING CONTRACT RIGHTS FOLLOWING THE TERMINATION OF THOSE RIGHTS.
NO LOAN NOTE MAY BE TRANSFERRED EXCEPT IN STRICT COMPLIANCE WITH THE RESTRICTIONS ON ASSIGNMENTS, AND SUBJECT TO THE LIMITATIONS, SET FORTH IN SECTION 10.8 OF THE CREDIT AGREEMENT. PARTICIPATIONS IN ANY LOAN NOTE MAY ONLY BE CONVEYED IN STRICT COMPLIANCE WITH, AND SUBJECT TO THE LIMITATIONS SET FORTH IN, SECTION 10.8 OF THE CREDIT AGREEMENT. ANY PURPORTED TRANSFER OF ANY LOAN NOTE OR ANY BENEFICIAL INTERESTS THEREIN THAT IS IN BREACH, AT THE TIME MADE, OF ANY TRANSFER RESTRICTIONS SET FORTH IN THE CREDIT AGREEMENT IS VOID AB INITIO.
ASSIGNMENT AND ASSUMPTION dated [_____________], between [_______________________] (the “Assignor”) and [__________________________] (the “Assignee”).
PRELIMINARY STATEMENTS
Reference is made to the Second Amended and Restated Credit Agreement, dated as of May 4, 2021 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Home Point Financial Corporation, as the borrower (the “Borrower”), Home Point Capital Inc. (the “Guarantor”), the Lenders a party thereto from time to time and Goldman Sachs Bank USA, as the administrative agent (in such capacity, the “Administrative Agent”). Terms defined in the Credit Agreement and not otherwise defined herein are used herein with the meanings ascribed thereto in the Credit Agreement.
WHEREAS, the Assignor is a Lender under the Credit Agreement and desires to sell and assign to the Assignee, and the Assignee desires to purchase and assume from the Assignor, on the terms and conditions set forth below, a [___] percent [(____%)] interest in such Lender’s aggregate portion of the Aggregate Commitment Amount (including any Advances thereunder)
and rights and obligations under the Credit Agreement and the other Transaction Documents (the “Assigned Percentage”).
NOW, THEREFORE, the Assignor and the Assignee hereby agree as follows:
In consideration of the Assignee’s payment to the Assignor of [$_____________], the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, as of the “Effective Date” (as defined below), the Assigned Percentage, together (a) with all of the Assignor’s rights and obligations under the Credit Agreement and the other Transaction Documents with respect to such Assigned Percentage and (b) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as the Lender) against any Person, whether known or unknown arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (a) above (the rights and obligations sold and assigned pursuant to clauses (a) and (b) above being referred to herein collectively as, the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.
The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Transaction Document (other than those made in clause (a) above), (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Transaction Documents or any collateral thereunder, (iii) the financial condition of the Borrower, the Guarantor, any of their Affiliates or any other Person obligated in respect of any Transaction Document or (iv) the performance or observance by the Borrower, the Guarantor, or any of their Affiliates or any other Person of any of their respective obligations under any Transaction Document.
The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) from and after the Effective Date (as defined below), it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iii) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.1(b) thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Assignor, (iv) if it is an entity that is not created or organized under the laws of the United States or a political subdivision thereof, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly contemplated and executed by the Assignee and (v) it is an “Eligible Assignee” (as defined in the Freddie Mac Acknowledgment Agreement); and (b) agrees that (i) it will, independently and without reliance on the Assignor, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Transaction Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Transaction Documents are required to be performed by it as a Lender.
This Assignment and Assumption shall become effective as of [_____________] (the “Effective Date”), following the execution of this Assignment and Assumption.
From and after the Effective Date, the Administrative Agent or the Assignee, as applicable, shall make all payments under the Credit Agreement in respect of the Assigned Interest (including, without limitation, all payments of principal, interest and fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement for periods prior to the Effective Date directly between themselves.
This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.
THIS ASSIGNMENT AND ASSUMPTION SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, intending to be legally bound, each of the undersigned has caused this Assignment and Assumption to be executed on its behalf by its officer thereunto duly authorized, as of [_____________].
[NAME OF ASSIGNOR], as Assignor
By:_____________________________
Name:
Title: ____________________________________
[NAME OF ASSIGNEE], as Assignee
By:______________________________________
Name:
Title: ____________________________________
Notice Address for Assignee:
EXHIBIT E
Commitments
| | | | | |
| Lenders | Commitment |
| [***] | [***] |
| |
EXHIBIT F
Form of Monthly Report
EXHIBIT G
FORM OF NOTICE OF PREPAYMENT
[Date]
Goldman Sachs Bank USA, as Administrative Agent
200 West Street
New York, New York 10282
Attention: [__]
Ladies and Gentlemen:
Reference is made to that certain Second Amended and Restated Credit Agreement, dated as of May 4, 2021, (the “Credit Agreement”), among Home Point Financial Corporation, as borrower (the “Borrower”), Home Point Capital Inc., as guarantor (“Guarantor”), Goldman Sachs Bank USA, as administrative agent (the “Administrative Agent”) and the Lender from time to time party thereto. Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Credit Agreement. The Borrower hereby gives you irrevocable notice, pursuant to Section 2.10 the Credit Agreement, that it proposes to prepay the Advances outstanding thereunder. The Borrower sets forth below the information related to such prepayment:
(i) The aggregate amount of the prepayment requested is $ _______________, relating to the Aggregate Commitment Amounts.
(ii) The Redemption Date of the prepayment requested is _______________, 20__.
(iii) Attached is a Schedule of Eligible Assets identifying the Assets that the Borrower proposes to release under the Credit Agreement in connection with such prepayment.
In accordance with Section 2.10 of the Credit Agreement, the undersigned, a duly appointed officer of the Borrower, hereby certifies that, after giving effect to the prepayment requested hereunder:
no selection procedures are used with respect to identification of Assets to be released or retained that are materially adverse to the Lenders;
no Borrowing Base Deficiency, Funding Base Deficiency, Potential Event of Default or Event of Default shall exist either prior to, or after giving effect to the prepayment of the applicable portion of the Advances outstanding and the release of the related Collateral (unless, in the case of a Borrowing Base Deficiency or Funding Base Deficiency, the amount of such deficiency is eliminated as a result of such prepayment and release); and
the representations and warranties set forth in Article IV are true and correct as of such Redemption Date (except to the extent such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects as of such earlier date) after giving effect to such prepayment and release.
Very truly yours,
HOME POINT FINANCIAL CORPORATION
By:
Name:
Title:
Schedule I
1. Borrower’s Account
[***]
2. Administrative Agent’s Account
[***]
Schedule II
Valuation Agents
1. [***]
Schedule III
Dealers
1. [***]
Schedule IV
Minimum Haircut Trigger Event2
[***]
2 The figures included in this Schedule IV (other than [***] are illustrative, and do not necessarily reflect actual values.
Schedule 4.1(c)
Ownership Structure of the Borrower, the Guarantor, and their Subsidiaries
| | | | | | | | | | | | | | |
| Issuer | Record Owner | Certificate No. | No. Shares Issued and Outstanding | Percent Owned |
| Home Point Financial Corporation | Home Point Capital Inc. | [***] | [***] | 100% |
| HPC Insurance Agency, LLC | Home Point Capital Inc. | [***] | [***] | 100% |
| Home Point Asset Management LLC | Home Point Capital Inc. |
[***] |
[***] | 100% |
| Home Point Mortgage Acceptance Corporation | Home Point Asset Management LLC | [***] | [***] | 100% |
Employee Benefit Plans
1. Home Point Capital Inc. 2021 Incentive Plan
2. Home Point Capital Inc. 2021 Employee Stock Purchase Plan
Schedule 4.1(q)
Indebtedness of the Borrower and the Guarantor
| | | | | |
| Total Capacity |
| Servicer Advance Facility | |
| [***] | [***] |
| |
| MSR Facility | |
| [***] | [***] |
| |
| Warehouse Lines | |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
| [***]l | [***] |
| [***] | [***] |
| |
| Total: | [***] |
| |
| Senior Notes | |
| [***] | [***] |
| |
| Other | |
| [***] | [***] |
| [***] | [***] |
| [***] | [***] |
Schedule 5.2(a)
Liens
The Liens evidenced by the below Uniform Commercial Code financing statements and any continuations or replacements thereof:
[***]
Schedule 10.3
Notice Addresses
(a) If to the Borrower or Guarantor:
Home Point Financial Corporation
2211 Old Earhart Road, Suite 250
Ann Arbor, MI 48105
Attention: Chief Legal Officer
Email: ) [***]
(b) If to the Administrative Agent and/or the Initial Lender:
Goldman Sachs Bank USA
200 West Street
New York, New York 10282
E-mail: [***]
with a copy to: [***]
and for calculations of interest, principal and delivery of Monthly Reports, with a copy to: [***]
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
CHANGE IN TERMS AGREEMENT
(Standard Seller Warehouse Document Modifications)
THIS CHANGE IN TERMS AGREEMENT (this "Agreement") is made and entered into by the undersigned executing this Agreement as "Seller" and TEXAS CAPITAL BANK ("Bank") and is effective as of the date set forth below Bank's signature block hereto (the "Effective Date").
RECITALS
A. Seller and Bank have entered into, or are otherwise bound under, that certain Mortgage Warehouse Agreement (as modified or amended from time to time, including pursuant to this Agreement, and including all addenda and exhibits to each of the foregoing, the "Warehouse Agreement") as of SEPTEMBER 1, 2021. Capitalized terms used and not otherwise defined herein shall have the respective meanings assigned to such terms in the Warehouse Agreement.
B. Seller and Bank now desire to modify and amend certain terms and provisions of the Warehouse Agreement and/or the other Warehouse Documents as more particularly described herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, the covenants, representations, warranties and/or agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby covenant and agree as follows:
1. Participation Interest Rate.
(a) The defined term "Participation Interest Rate" in Section 1.1 of the Warehouse Agreement is hereby deleted and replaced with the following:
"Participation Interest Rate" shall mean, with respect to any Participated Mortgage Loan, the per annum rate of interest payable to Bank in connection with such Participated Mortgage Loan and its Participation Interest therein, which rate shall be calculated as a variable rate equal to the greater of: (a) Term SOFR as of the related Purchase Date, as Term SOFR may vary from day to day thereafter, plus [***]; or (b) the Participation Interest Rate Floor; provided, however, that the Participation Interest Rate for any Participated Mortgage Loan shall not at any time be greater than the maximum rate permitted under applicable Law. Subject to applicable Law, Bank may, in its sole and absolute discretion, adjust the Participation Interest Rate applicable to Participated Mortgage Loans upon thirty (30) days advance written notice to Seller, in which case, commencing upon the thirty-first (31st) day after the date of such notice, the Participation Interest Rate for any and all Mortgage Loans in which Bank elects to purchase Participation Interests on or after such thirty-first (31st) day shall be the lesser of (a) the rate of interest set forth in such written notice or (b) the maximum rate permitted under applicable Law for the applicable Participated Mortgage Loan. All interest hereunder shall be calculated on the basis of a three hundred sixty (360) day year and shall accrue on the actual number of days elapsed for any whole or partial month in which interest is being calculated.
(b) The following definitions are hereby added to Section 1.2 of the Warehouse Agreement:
"Term SOFR" means, with respect to each Advance, the 1 month Term SOFR Reference Rate ("CME Term SOFR"), as of the date two (2) Business Days prior to the applicable determination date, as announced and published by CME Group Benchmark Administration Limited ("CBA") on the website of the CBA, currently at https://www.cmegroup.com/market-data/cme-group-benchmark- administration/term-sofr.html, or in any widely circulated and publicly available source designated and approved by Bank in Bank's sole discretion, or, if CME Term SOFR shall, in Bank's sole discretion, cease to be widely utilized as a reference rate by commercial banks in the United States, an alternative independent rate publicly available and widely utilized by US commercial banks, selected by Bank and reasonably equivalent to CME Term SOFR. If at any time Term SOFR as determined in accordance with the foregoing provisions of this definition would otherwise be less than zero, then Term SOFR shall be deemed zero for purposes of this Agreement.
2. Participation Interest Rate Floor. The defined term "Participation Interest Rate Floor" in Section 1.1 of the Warehouse Agreement is hereby deleted and replaced with the following:
"Participation Interest Rate Floor" shall mean an interest rate equal to [***]. Subject to applicable Law, Bank may, in its sole and absolute discretion, adjust the Participation Interest Rate Floor applicable to Participated Mortgage Loans upon thirty (30) days advance written notice to Seller, in which case, commencing upon the thirty-first (31st) day after the date of such notice, the Participation Interest Rate Floor set forth in such written notice shall apply to any and all Mortgage Loans in which Bank elects to purchase Participation Interests on or after such thirty-first (31st) day.
3. Representations and Warranties.
(a) Seller represents and warrants to Bank that all representations and warranties made by Seller to Bank in the Warehouse Documents as of the date thereof are true and correct as of the Effective Date, as if such representations and warranties were recited herein in their entirety. Any other representations and warranties made in this Agreement shall not limit the generality of the preceding sentence.
(b) As of the Effective Date, Seller hereby represents to Bank that: (i) no Event of Default exists; and (ii) no event or condition exists which, with the giving of notice or the passage of time or both, would constitute an Event of Default.
(c) As of the Effective Date, Seller represents and warrants to Bank that there is no fact that Seller is aware of and has not disclosed to Bank in writing that could have a material adverse effect on the Participation Interests or the ability of Seller to perform its obligations under the Warehouse Documents.
(d) As of the Execution Date, Seller represents and warrants to Bank that Seller has the power and authority required to enter into and perform its obligations under this Agreement and to make the agreements set forth herein. Without limiting the generality of the foregoing, as of the Effective Date: (i) the resolutions of Seller and each other entity (if any) which were most recently executed and delivered to Bank in connection with the Warehouse Agreement (collectively, the "Resolutions") are presently in full force and effect, and have not been rescinded, amended or otherwise modified; (ii) the formation and governance documents attached to the Resolutions (collectively, the "Organizational Documents"), are presently in full force and effect, and have not
been rescinded, amended or otherwise modified; (iii) the execution and delivery of this Agreement and the other documents to be executed by or on behalf of Seller and delivered to Bank in connection with this Agreement (collectively, the "Change in Terms Documents"), and the consummation by Seller of the transactions contemplated hereby and thereby, and the performance by Seller of its obligations hereunder and thereunder, are duly and validly authorized by the Resolutions and the Organizational Documents; (iv) each person executing the Change in Terms Documents on behalf of Seller has the requisite power and authority to do so pursuant to the Resolutions and the Organizational Documents; (v) no consent or approval is required from any person or entity (other than consents or approvals previously obtained) for the execution, delivery and performance of the Change in Terms Documents by Seller; and (vi) upon execution, each Change in Terms Document constitutes the legal, valid and binding obligations of Seller, enforceable in accordance with the terms thereof.
4. Miscellaneous Provisions.
(a) AS A MATERIAL INDUCEMENT TO BANK TO ENTER INTO THIS AGREEMENT, SELLER HEREBY DECLARES THAT, AS OF THE EFFECTIVE DATE, IT HAS NO CLAIMS, SET-OFFS, COUNTERCLAIMS, DEFENSES OR OTHER CAUSES OF ACTION AGAINST BANK ARISING OUT OF ANY OF THE WAREHOUSE DOCUMENTS OR ANY OTHER DOCUMENT MENTIONED HEREIN OR OTHERWISE; AND, TO THE EXTENT ANY SUCH CLAIMS, SETOFFS, COUNTERCLAIMS, DEFENSES OR OTHER CAUSES OF ACTION MAY EXIST, WHETHER KNOWN OR UNKNOWN, SUCH ITEMS ARE HEREBY WAIVED BY SELLER.
(b) Effective as of the Effective Date, the Warehouse Agreement and the other Warehouse Documents are hereby supplemented, modified and amended as provided herein. The provisions of this Agreement supersede, modify and amend any and all inconsistent or conflicting provisions in the Warehouse Agreement and the other Warehouse Documents (including any and all written change in terms agreements executed by Seller and Bank prior to the Effective Date). Except as hereby supplemented, modified or amended, the Warehouse Agreement and the other Warehouse Documents are in full force and effect as of the Effective Date. The Warehouse Agreement and the other Warehouse Documents, as hereby supplemented, modified or amended, are ratified and confirmed by Seller as of the Effective Date.
(c) Except as may be expressly set forth in this Agreement, nothing contained herein shall affect, impair or release the liability of any Person who may now or hereafter be liable to Bank under the Warehouse Documents.
(d) This Agreement shall be governed by and construed in accordance with Texas law and applicable federal law.
(e) Seller represents and warrants that it has the power and authority required to enter into and perform its obligations under this Agreement and to make the agreements set forth herein. This Agreement may not be modified, amended or discharged except by written amendment executed by Seller and Bank. The terms and provisions of this Agreement shall be binding upon any successors and assigns of Seller permitted pursuant to the terms of the Warehouse Agreement and shall benefit the successors and assigns of Bank.
(f) This Agreement may be executed in multiple counterparts, each to constitute a separate agreement, but all, taken together, to constitute one and the same agreement.
(g) The liability of all Persons obligated to Bank in any manner under this Agreement shall be joint and several. If more than one Person shall execute this Agreement as "Seller", then the term "Seller" as used herein shall refer both to each such Person individually and to all such Persons collectively.
(h) This Agreement may be signed electronically or digitally in the manner specified by Bank. Each of the undersigned consents to the use of electronic and/or digital signatures by any or all of the undersigned in such manner specified by Bank. The undersigned agree not to deny the legal effect or enforceability of this Agreement solely because this Agreement was signed using electronic or digital signatures. Further, the undersigned agree not to object to the
admissibility of this Agreement if it bears an electronic or digital signature on the grounds that any signature is not in its original form or on the grounds that this Agreement does not comply with Chapter 26 of the Texas Business and Commerce Code or any similar law.
(i) THIS WRITTEN AGREEMENT AND THE OTHER WAREHOUSE DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Signature Pages Follow]
EXECUTED to be effective as of the Effective Date.
| | | | | |
| SELLER:
HOME POINT FINANCIAL CORPORATION, A NEW JERSEY CORPORATION By:/s/ Joseph Ruhlin
Name: JOSEPH RUHLIN
Title: TREASURER
Seller’s Execution Date: May 10, 2022 |
[Bank's Signature Page Follows]
ACCEPTED AND AGREED to by Bank at Richardson, Collin County, Texas, and executed to be effective as of the Effective Date.
| | | | | |
| BANK:
TEXAS CAPITAL BANK By:/s/ Heather Crawford
Name: Heather Crawford
Title: Vice President
Effective Date: May 11, 2022 |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
AMENDMENT NO. 2 TO
MASTER REPURCHASE AGREEMENT
This Amendment No. 2 (this “Amendment”), dated as of May 13, 2022, amends that certain Master Repurchase Agreement, dated as of August 14, 2020, as amended by Amendment No. 1 to Master Repurchase Agreement, dated as of June 30, 2021 (as may be further amended, restated, supplemented, or otherwise modified from time to time, the “Repurchase Agreement”), by and among Barclays Bank PLC, as purchaser and agent (“Purchaser”) and Home Point Financial Corporation, as seller (“Seller”). Capitalized terms used herein but not otherwise defined shall have the meanings given to such terms in the Repurchase Agreement.
WHEREAS, the parties hereto desire to amend the Repurchase Agreement as described below.
NOW, THEREFORE, pursuant to the provisions of the Repurchase Agreement concerning modification and amendment thereof, and in consideration of the amendments, agreements and other provisions herein contained and of certain other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged by the parties hereto, it is hereby agreed between Purchaser and Seller as follows:
Section 1.Amendments. Effective as of May 13, 2022, the Repurchase Agreement is hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in Exhibit A hereto.
Section 2.Fees and Expenses. Seller agrees to pay to Purchaser all fees and out of pocket expenses incurred by Purchaser in connection with this Amendment, including without limitation, the Structuring Fee and all reasonable fees and out of pocket costs and expenses of the legal counsel to Purchaser incurred in connection with this Amendment, in accordance with Section 23(a) of the Repurchase Agreement.
Section 3.Effectiveness of Amendment. The parties hereto agree that this Amendment shall not be effective until the execution and delivery of this Amendment by the parties hereto.
Section 4.Effect of Amendment. Except as expressly amended and modified by this Amendment, all provisions of the Repurchase Agreement shall remain in full force and effect and all such provisions shall apply equally to the terms and conditions set forth herein. After this Amendment becomes effective, all references in the Repurchase Agreement (or in any other document relating to the Mortgage Loans) to “this Agreement,” “hereof,” “herein” or words of similar effect referring to such Repurchase Agreement shall be deemed to be references to such Repurchase Agreement as amended by this Amendment. This Amendment shall not be deemed to expressly or impliedly waive, amend or supplement any provision of the Repurchase Agreement other than as set forth herein.
Section 5.Successors and Assigns. This Amendment shall be binding upon the parties hereto and their respective successors and assigns.
Section 6.Section Headings. The various headings and sub-headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or the Repurchase Agreement or any provision hereof or thereof.
Section 7.Representations. In order to induce Purchaser to execute and deliver this Amendment, Seller hereby represents to Purchaser that as of the date hereof (i) it is in full compliance with all of the terms and conditions of the Program Documents and remains bound by the terms thereof and (ii) no Default or Event of Default has occurred and is continuing under the Program Documents.
Section 8.GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF (EXCEPT FOR SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 9.Counterparts. This Amendment may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Amendment by signing and delivering one or more counterparts. The parties intend that faxed signatures and electronically imaged signatures such as .pdf files shall constitute original signatures and are binding on all parties. The original documents shall be promptly delivered, if requested. The parties agree that this Amendment, any addendum, exhibit or amendment hereto or any other document necessary for the consummation of the transactions contemplated by this Amendment may be accepted, executed or agreed to through the use of an electronic signature in accordance with E-Sign, UETA and any applicable state law. Any document accepted, executed or agreed to in conformity with such laws will be binding on all parties hereto to the same extent as if it were physically executed and each party hereby consents to the use of any secure third party electronic signature capture service with appropriate document access tracking, electronic signature tracking and document retention as may be reasonably chosen by a signatory hereto, including but not limited to DocuSign.
[Signature Pages to Follow]
IN WITNESS WHEREOF, each undersigned party has caused this Amendment to the Repurchase Agreement to be duly executed by one of its officers thereunto duly authorized as of the date and year first above written.
| | | | | |
BARCLAYS BANK PLC, as Purchaser and Agent |
| |
| By: | /s/ Xiao Huang |
| Name: | Xiao Huang |
| Title: | Authorized Signatory |
| | | | | |
HOME POINT FINANCIAL CORPORATION,
as Seller |
| |
| By: | /s/ Joseph Ruhlin |
| Name: | Joseph Ruhlin |
| Title: | Senior Managing Director - Treasurer |
Signature Page to Amendment No. 2 to Barclays-Home Point Master Repurchase Agreement
EXHIBIT A
Conformed Through:
Amendment No. 1, dated as of June 30, 2021
Amendment No. 2, dated as of May 13, 2022
MASTER REPURCHASE AGREEMENT
Between
BARCLAYS BANK PLC, as Purchaser and Agent
and
HOME POINT FINANCIAL CORPORATION, as Seller
Dated as of August 14, 2020
TABLE OF CONTENTS
1. APPLICABILITY 1
2. DEFINITIONS AND INTERPRETATION 1
3. THE TRANSACTIONS 23
4. CONFIRMATION 25[RESERVED] 26
5. TAKEOUT COMMITMENTS 2526
6. PAYMENT AND TRANSFER 26
7. MARGIN MAINTENANCE 2627
8. TAXES; TAX TREATMENT 2728
9. BENCHMARK REPLACEMENT 30
910. SECURITY INTEREST; PURCHASER’S APPOINTMENT AS ATTORNEY-IN-FACT 2931
1011. CONDITIONS PRECEDENT 3132
1112. RELEASE OF PURCHASED ASSETS 3536
1213. RELIANCE 3536
1314. REPRESENTATIONS AND WARRANTIES 3536
1415. COVENANTS OF SELLER 3940
1516. REPURCHASE OF PURCHASED ASSETS 4748
1617. SERVICING OF THE MORTGAGE LOANS; SERVICER TERMINATION 4749
1718. EVENTS OF DEFAULT 5152
1819. REMEDIES 5354
1920. DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE 5557
2021. USE OF EMPLOYEE PLAN ASSETS 5557
2122. INDEMNITY 5657
2223. WAIVER OF REDEMPTION AND DEFICIENCY RIGHTS 5758
2324. REIMBURSEMENT; SET-OFF 5759
2425. FURTHER ASSURANCES 5860
2526. ENTIRE AGREEMENT; PRODUCT OF NEGOTIATION 5960
2627. TERMINATION 5960
2728. REHYPOTHECATION; ASSIGNMENT 5961
2829. AMENDMENTS, ETC. 6062
2930. SEVERABILITY 6062
3031. BINDING EFFECT; GOVERNING LAW 6062
3132. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION AND VENUE; SERVICE OF PROCESS 6062
3233. SINGLE AGREEMENT 6163
3334. INTENT 6163
3435. NOTICES AND OTHER COMMUNICATIONS 6365
3536. CONFIDENTIALITY 6466
3637. DUE DILIGENCE 6567
3738. USA PATRIOT ACT; OFACSANCTIONS AND ANTI-TERRORISM 6668
3839. EXECUTION IN COUNTERPARTS 6769
3940. CONTRACTUAL RECOGNITION OF BAIL-IN 6769
4041. CONTRACTUAL RECOGNITION OF UK STAY IN RESOLUTION 6870
4142. NOTICE REGARDING CLIENT MONEY RULES. 6870
4243. REGISTER. 6870
4344. BENCHMARK REPLACEMENT[RESERVED]. 6971
SCHEDULES AND EXHIBITS
EXHIBIT A-1 MONTHLY CERTIFICATION
EXHIBIT A-2 QUARTERLY CERTIFICATION
EXHIBIT B REPRESENTATIONS AND WARRANTIES WITH RESPECT TO MORTGAGE LOANS
EXHIBIT C FORM OF TRANSACTION NOTICE
EXHIBIT D FORM OF GOODBYE LETTER
EXHIBIT E FORM OF WAREHOUSE LENDER’S RELEASE
EXHIBIT F LIST OF DISAPPROVED MEMBERS OF THE MORTGAGE BACKED SECURITIES DIVISION OF THE FIXED INCOME CLEARING CORPORATION
EXHIBIT G FORM OF ESCROW INSTRUCTION LETTER
EXHIBIT H FORM OF SELLER MORTGAGE LOAN SCHEDULE
EXHIBIT I FORM OF PREFUNDING REQUEST
EXHIBIT JJ FORM OF SELLER FINANCIAL STATEMENTS (ANNUAL)
EXHIBIT KK FORM OF SELLER FINANCIAL STATEMENTS (PERIODIC)
MASTER REPURCHASE AGREEMENT
Dated as of August 14, 2020
BETWEEN:
BARCLAYS BANK PLC, in its capacity as purchaser (together with its permitted successors and assigns in such capacity hereunder, “Barclays” or a “Purchaser”) and agent pursuant hereto (together with its permitted successors and assigns in such capacity hereunder, “Agent”),
and
HOME POINT FINANCIAL CORPORATION, in its capacity as a seller (together with its permitted successors and assigns in such capacity hereunder, “Seller”).
1.APPLICABILITY
Purchaser from time to time shall (with respect to the Committed Amount) and may (with respect to the Uncommitted Amount) upon the terms and conditions set forth herein, in which Seller sells to Purchaser Eligible Mortgage Loans, on a servicing-released basis, and, if applicable, Takeout MBS, against the transfer of funds by Purchaser, with a simultaneous agreement by Purchaser to transfer to Seller such Purchased Assets on a date certain not later than one year following such transfer, against the transfer of funds by Seller; provided, that the Aggregate MRA Purchase Price shall not exceed, as of any date of determination, the lesser of (a) the Maximum Aggregate Purchase Price and (b) the Asset Base. Each such transaction shall be referred to herein as a “Transaction,” and shall be governed by this Agreement. This Agreement sets forth the procedures to be used in connection with periodic requests for Purchaser to enter into Transactions with Seller. Seller hereby acknowledges that Purchaser is under no obligation to enter into, any Transaction pursuant to this Agreement with respect to the Uncommitted Amount. Seller acknowledges that during the term of this Agreement, Agent may undertake to join any of Sheffield Receivables Corporation, Barclays Bank Delaware, any other asset-backed commercial paper conduit administered by Agent or any Affiliate of the Agent as additional purchasers under this Agreement, and Seller hereby consents to the joinder of such additional purchasers.
2.DEFINITIONS AND INTERPRETATION
(a)Defined Terms.
“30+ Day Delinquent Mortgage Loan” means any Mortgage Loan that, as of any determination date, using the MBA Methodology, is thirty (30) or more days delinquent (inclusive of any grace period).
“Accepted Servicing Practices” means with respect to any Mortgage Loan, those accepted, customary and prudent mortgage servicing practices (including collection procedures) of prudent mortgage banking institutions that service mortgage loans of the same type as the Mortgage Loans in the jurisdiction where the related Mortgaged Property is located, and which are in accordance with the requirements of each Agency Program, applicable law, FHA regulations and VA regulations, if applicable, and the requirements of any private mortgage insurer so that the FHA insurance, VA guarantee or any other applicable insurance or guarantee in respect of any Mortgage Loan is not voided or reduced.
“Accrual Period” means, with respect to each Monthly Payment Date for any Transaction, the immediately prior calendar month beginning with the first calendar day of such month to and including the last calendar day of such month; provided that with respect to the first Monthly Payment Date of a Transaction following the related Purchase Date, the Accrual Period shall commence on the related Purchase Date and provided further that the last Accrual Period shall end on the day prior to the Termination Date.
“Additional Eligible Loan Criteria” has the meaning assigned thereto in the Pricing Side Letter.
“Additional Purchased Mortgage Loans” has the meaning assigned thereto in Section 7(b) hereof.
“Adjustable Rate Mortgage Loan” means a Mortgage Loan that provides for the adjustment of the Mortgage Interest Rate payable in respect thereto.
“Affiliate” means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person; provided that other than the Seller and its Subsidiaries, no other portfolio company of Stone Point Capital LLC or its affiliates shall be deemed an Affiliate of Seller. For the purposes of this definition, “control” means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise and the terms “controlling,” “controlled by” and “under common control with” have meanings correlative to the meaning of “control.”
“Agency” means Freddie Mac, Fannie Mae or Ginnie Mae, as applicable.
“Agency Guide” means the Freddie Mac Guide, the Fannie Mae Guide, or the Ginnie Mae Guide, as applicable.
“Agency Mortgage Loans” means Fannie Mae Mortgage Loans, Freddie Mac Mortgage Loans, and Ginnie Mae Mortgage Loans.
“Agency Program” means the Freddie Mac Program, the Fannie Mae Program or the Ginnie Mae Program, as applicable.
“Agency Renovation Mortgage Loan” means any Agency Mortgage Loan that is an FHA 203k Mortgage Loan, a Fannie Mae HomeStyle Loan, or any other Agency Mortgage Loan originated in accordance with an Agency program for construction, renovation or rehabilitation of the related Mortgaged Property.
“Agent” has the meaning set forth in the preamble.
“Aggregate MRA Purchase Price” means as of any date of determination, an amount equal to the aggregate Purchase Price for all Purchased Assets, then subject to Transactions under this Agreement.
“Agreement” means this Master Repurchase Agreement (including all exhibits, schedules and other addenda thereto), as it may be amended, further supplemented or otherwise modified from time to time.
“ALTA” means the American Land Title Association.
“Alternative Rate” means a per annum rate based on an index that is a commercially reasonable substitute for the then-current Benchmark, as determined by Purchaser.
“Applicable Agency” means Ginnie Mae, Fannie Mae or Freddie Mac, as applicable.
“Applicable Margin” has the meaning assigned thereto in the Pricing Side Letter.
“Approvals” means with respect to Seller, the approvals obtained from the Applicable Agency or HUD in designation of Seller as a Ginnie Mae-approved issuer, an FHA-approved mortgagee, a VA-approved lender, a Fannie Mae-approved lender or a Freddie Mac-approved Seller/Servicer, as applicable, in good standing.
“Asset Base” has the meaning assigned thereto in the Pricing Side Letter.
“Assignment and Acceptance” has the meaning assigned thereto in Section 28(b) hereof.
“Assignment of Mortgage” means, with respect to any Mortgage, an assignment of the Mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the assignment of the Mortgage to Purchaser.
“ATR Rules”: The “ability to repay” rules specified in the federal Truth-in-Lending Act as amended pursuant to rulemaking authority provided under the federal Dodd-Frank Act which require lenders to make a reasonable, good-faith determination that a Mortgagor has an ability to repay the loan as determined by the following eight (8) underwriting factors, or as otherwise required pursuant to such rules: (i) current or reasonably expected income or assets (other than the value of the property that secures the loan) that the Mortgagor will rely on to repay the loan, (ii) current employment status (if the originator relies on employment income when assessing the Mortgagor’s ability to repay), (iii) monthly mortgage payment for the loan, (iv) monthly payment on any simultaneous loans secured by the same property, (v) monthly payments for property taxes and required insurance, and certain other costs related to the property such as homeowners association fees or ground rent, (vi) debts, alimony, and child-support obligations, (vii) monthly debt-to-income ratio or residual income, calculated using the total of all of the mortgage and nonmortgage obligations listed above, as a ratio of gross monthly income and (viii) credit history.
“Attorney Bailee Letter” has the meaning assigned thereto in the Custodial and Disbursement Agreement.
“Bail-In Action” means the exercise by the Bank of England (or any successor resolution authority) of any write-down or conversion power existing from time to time (including, without limitation, any power to amend or alter the maturity of eligible liabilities of an institution under resolution or amend the amount of interest payable under such eligible liabilities or the date on which interest becomes payable, including by suspending payment for a temporary period and together with any power to terminate and value transactions) under, and exercised in compliance with, any laws, regulations, rules or requirements in effect in the United Kingdom relating to the transposition of the European Banking Recovery and Resolution Directive as amended from time to time, including but not limited to, the Banking Act 2009 as amended from time to time, and the instruments, rules and standards created thereunder, pursuant to which Purchaser’s obligations (or those of Purchaser’s affiliates) can be reduced (including to zero), canceled or converted into shares, other securities, or other obligations of Purchaser or any other person.
“Bank” means (i) Merchants Bank of Indiana and its successors and permitted assigns, or (ii) such other bank as may be mutually acceptable to the Seller and the Purchaser.
“Bankruptcy Code” means 11 U.S.C. §§ 101 et seq., as amended from time to time.
“Benchmark” means, initially LIBOR; provided that if a replacement has occurred pursuant to Section 43, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced the prior benchmark rate. Any reference to “Benchmark” shall include, as applicable, the published component used in the calculation thereof.
“Benchmark Replacement” means:
(1) For purposes of Section 43(b), the first alternative set forth below that can be determined by the Agent:
(a) the sum of: (i) Term SOFR and (ii) [***] for a tenor of one-month’s duration, or
(b) the sum of: (i) Daily Compounded SOFR and (ii) the spread adjustment selected or recommended by the Relevant Governmental Body for the replacement of LIBOR with a SOFR-based rate having approximately the same length as the Accrual Period; and
(2) For purposes of Section 43(c), the sum of (a) the alternate benchmark rate and (b) an adjustment (which may be a positive or negative value or zero), in each case, that has been selected by Agent and Purchaser as the replacement for the relevant tenor of such Benchmark giving due consideration to any evolving or then-prevailing market convention, including any applicable recommendations made by the Relevant Governmental Body, for U.S. dollar-denominated syndicated or bilateral credit facilities at such time;
provided that, if the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the LIBOR Floor, the Benchmark Replacement will be deemed to be the LIBOR Floor for the purposes of this Agreement and the other Program Documents.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Accrual Period,” timing and frequency of determining rates and making payments of interest, timing of seller requests or repurchase, the applicability and length of lookback periods and other technical, administrative or operational matters) that the Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Agent in a manner substantially consistent with market practice (or, if the Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Agent determines that no market practice for the administration of the Benchmark Replacement exists, in such other manner of administration as the Agent decides is reasonably necessary in connection with the administration of this Agreement).
“Benchmark Transition Event” means, with respect to any then-current Benchmark other than LIBOR, the occurrence of a public statement or publication of information by or on behalf of the administrator of the then-current Benchmark, the regulatory supervisor for the administrator of such Benchmark, the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark, a resolution authority with jurisdiction over the administrator for such Benchmark or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark, announcing or stating that (a) such administrator has
ceased or will cease on a specified date to provide all applicable tenors of such Benchmark, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any applicable tenor of such Benchmark or (b) all applicable tenors of such Benchmark are or will no longer be representative of the underlying market and economic reality that such Benchmark is intended to measure and that representativeness will not be restored. “Breakage Costs” has the meaning assigned thereto in Section 3(i) hereof.
“Breakage Costs” has the meaning assigned thereto in Section 3(i) hereof.
““Business Day” means any day other than (i) a Saturday or Sunday, (ii) a day upon which the New York Stock Exchange or the Federal Reserve Bank of New York is closed or banking and savings and loan institutions in the States of New York, Minnesota, Texas, Michigan or California or the City of New York are closed, (iii) a day on which trading in securities on the New York Stock Exchange or any other major securities exchange in the United States is not conducted or (iv) with respect to any day on which the parties hereto have obligations to Custodian or on which Custodian has obligations to any party hereto, a day upon which Custodian’s offices are closed. “Cash Equivalents” has the meaning assigned thereto in the Pricing Side Letter.
“Certification” has the meaning assigned thereto in the Custodial and Disbursement Agreement.
“Change in Control” means, with respect to Seller, Home Point Capital Inc. ceasing to own directly or indirectly more than 50% of the Equity Interests in and to Seller. For purposes of this definition, “Equity Interests” means, with respect to the Seller, all shares, interests, participations or other equivalents in the equity of the Seller, including common stock, preferred stock, warrants, membership interests, partnership interests, limited partnership interests, convertible debentures, other debt securities which include voting rights in the Seller referred to, and any and all agreements, instruments and documents convertible, in whole or in part, into any one or more of the foregoing.
“Change in Law” means (a) the adoption of any Requirement of Law, rule or regulation after the date of this Agreement, (b) any change in any Requirement of Law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by Purchaser (or any Affiliate thereof) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.
“Closing Protection Letter” means, with respect to any Wet-Ink Mortgage Loan that becomes subject to a Transaction (other than any such Mortgage Loan originated in the State of New York), a letter of indemnification from the Settlement Agent, in any jurisdiction where insured closing letters are permitted under applicable law and regulation, addressed to Seller, which is fully assignable to Purchaser, in which the Settlement Agent identified thereon agrees to indemnify the Seller for actual losses caused by certain kinds of misconduct by the Settlement Agent that is customarily acceptable to Persons engaged in the origination of mortgage loans, which may be in the form of a blanket letter.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Collection Account” means the following account established by the Seller in accordance with Section 16(e) for the benefit of Purchaser, Account Number: [***].
“Collection Account Control Agreement” means that certain Collection Account Control Agreement, dated as of August 14, 2020, by and among Purchaser, Seller and Bank, in form and substance acceptable to Purchaser to be entered into with respect to the Collection Account, as the same may be amended, modified or supplemented from time to time.
“Committed Amount” has the meaning assigned thereto in the Pricing Side Letter.
“Confirmation” has the meaning assigned thereto in Section 4 hereof.
“Contract” means an agreement between an Originator and any Obligor, pursuant to or under which such Obligor shall be obligated to pay for merchandise, insurance or services from time to time.
“Correspondent Loan” means a Mortgage Loan that is (i) originated by a Correspondent Seller and underwritten in accordance with Seller’s underwriting guidelines and (ii) acquired by Seller from a Correspondent Seller in the ordinary course of business.
“Correspondent Seller” means a mortgage loan originator that sells Mortgage Loans originated by it to Seller as a “correspondent” or “private label” client.
“Custodial and Disbursement Agreement” means that certain Custodial and Disbursement Agreement, dated as of August 14, 2020, among Seller, Purchaser, Disbursement Agent and Custodian, entered into in connection with this Agreement, as the same may be amended, modified or supplemented from time to time.
“Custodian” means U.S. Bank National Association, and its successors and permitted assigns, or such other entity as mutually agreed upon by Agent and Seller.
“Daily Compounded SOFR” means, for any day, SOFR, with interest accruing on a compounded daily basis, with the methodology and conventions for this rate (which will include compounding in arrears with a lookback) being established by the Agent in accordance with a methodology and the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Compounded SOFR” for syndicated or bilateral business loans; provided that, if the Agent decides that any such convention is not administratively feasible for the Agent, then the Agent may establish another convention in its reasonable discretion.
“Default” means any event that, with the giving of notice or the passage of time or both, would constitute an Event of Default.
“Default Rate” has the meaning assigned thereto in the Pricing Side Letter.
“Disbursement Account” means that certain deposit account established pursuant to the Custodial and Disbursement Agreement and subject to the Disbursement Account Control Agreement.
“Disbursement Account Control Agreement” shall mean a blocked account control agreement entered into among Purchaser, the Disbursement Agent and Seller with respect to the Disbursement Account.
“Disbursement Agent” means U.S. Bank National Association and its successors and permitted assigns, or such other entity as mutually agreed upon by Agent and Seller.
“Dollars” or “$” means, unless otherwise expressly stated, lawful money of the United States of America.
“Due Date” means the day of the month on which the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.
“Early Opt-in Effective Date” means, with respect to any Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to Purchaser and Seller, so long as the Agent has not received, by [***] (New York City time) on the [***] after the date notice of such Early Opt-in Election is provided to Purchaser and Seller, written notice of objection to such Early Opt-in Election from Purchaser.
“Early Opt-in Election” means the occurrence of:
(1) (a) a determination by the Agent or (b) a notification by Purchaser to the Agent (with a copy to the Seller) that Purchaser has determined that U.S. dollar-denominated syndicated or bilateral credit facilities being executed at such time, contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based on SOFR) as a benchmark rate, and
(2) (a) the election by Agent or (b) the election by Purchaser to declare that an Early Opt-in Election has occurred and the provision, as applicable, by Agent of written notice of such election to the Seller and Purchaser or by Purchaser of written notice of such election to Agent.
“E-SIGN” means the federal Electronic Signatures in Global and National Commerce Act, as amended from time to time.
“Economic and Trade Sanctions and Anti-Terrorism Laws” means any U.S. laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering, or bribery, all as amended, supplemented or replaced from time to time.
“Effective Date” means August 14, 2020.
“Electronic Tracking Agreement” means the electronic tracking agreement in form and substance acceptable to Purchaser and Seller, dated as of August 14, 2020, among Purchaser, Seller, MERSCORP Holdings, Inc. and MERS, entered into in connection with this Agreement, as the same may be amended, modified or supplemented from time to time.
“Electronic Transmission” means the delivery of information in an electronic format reasonably acceptable to the applicable recipient thereof. An Electronic Transmission shall be considered written notice for all purposes hereof (except when a request or notice by its terms requires execution).
“Eligible Mortgage Loan” means a Mortgage Loan that (i) satisfies each of the representations and warranties in Exhibit B to this Agreement in all material respects, (ii) if such Mortgage Loan is (a) a Fannie Mae Mortgage Loan, a Freddie Mac Mortgage Loan, or a Ginnie Mae Mortgage Loan, it is in Strict Compliance with the eligibility requirements of the Ginnie Mae Program, Fannie Mae Program or Freddie Mac Program, as applicable, (b) a Jumbo Mortgage Loan, it was underwritten and originated in accordance with Seller’s underwriting guidelines, (iii) with respect to all Mortgage Loans other than Wet-Ink Mortgage Loans, contains all required documents in the Mortgage File without exceptions unless otherwise waived by Purchaser or permitted pursuant to the terms of this Agreement or the Custodial and Disbursement Agreement, and (iv) satisfies the Additional Eligible Loan Criteria.
“ERISA” means, with respect to any Person, the Employee Retirement Income Security Act of 1974, as amended from time to time and any successor thereto, and the regulations promulgated and rulings issued thereunder.
“Escrow Instruction Letter” means the Escrow Instruction Letter from Seller to the Settlement Agent, in the form provided by Seller, which shall include the instructions to the Settlement Agent substantially in the form of Exhibit G hereto, as the same may be modified, supplemented and in effect from time to time.
“Escrow Payments” means, with respect to a Mortgage Loan, the amounts constituting ground rents, taxes, assessments, water charges, sewer rents, municipal charges, mortgage insurance premiums, fire and hazard insurance premiums, condominium charges and other payments as may be required to be escrowed by the Mortgagor with the Mortgagee pursuant to the terms of the Mortgage or any other document.
“Event of Default” has the meaning assigned thereto in Section 18 hereof.
“Event of Insolvency” means, with respect to any Person,
(i)the filing of a voluntary petition (or the consent by such Person to the filing of any such petition against it), commencing, or authorizing the commencement of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law relating to the protection of creditors, or suffering any such petition or proceeding to be commenced by another; or such Person shall consent or seek to the appointment of or taking possession by a custodian, receiver, conservator, trustee, liquidator, sequestrator or similar official of such Person, or for any substantial part of its Property, or any general assignment for the benefit of creditors;
(i) a proceeding shall have been instituted against such Person under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution, moratorium, delinquency or liquidation law of any jurisdiction, whether now or subsequently in effect, or a custodian, receiver, conservator, liquidator, trustee, sequestrator or similar official for such Person or such Person’s Property (as a debtor or creditor protection procedure) is appointed by any Governmental Authority having the jurisdiction to do so or takes possession of such Property and any such proceeding is not dismissed within [***] of filing;
(ii)that such Person or any Affiliate shall become insolvent;
(iii)that such Person shall (a) admit in writing its inability to pay or discharge its debts or obligations generally as they become due or mature, (b) admit in writing its inability to, or intention not to, perform any of its material obligations, or (c) generally fail to pay any of its debts or obligations as they become due or mature; or
(iv)any Governmental Authority shall have seized or appropriated, or assumed custody or control of, all or any substantial part of the Property of such Person, or shall have taken any action to displace the management of such Person.
“Fannie Mae” means the Federal National Mortgage Association or any successor thereto.
“Fannie Mae Guide” means the Fannie Mae MBS Selling and Servicing Guide, as such Guide may hereafter from time to time be amended.
“Fannie Mae HomeStyle Loan” means a Mortgage Loan that fully conforms to Fannie Mae’s HomeStyle Renovation mortgage loan program and is referred to as a “HomeStyle® Renovation Mortgage” by Fannie Mae.
“Fannie Mae Mortgage Loan” means a mortgage loan that is in Strict Compliance on the related Purchase Date with the eligibility requirements specified for the applicable Fannie Mae Program described in the Fannie Mae Guide.
“Fannie Mae Program” means the Fannie Mae Guaranteed Mortgage-Backed Securities Programs, as described in the Fannie Mae Guide.
“Fannie Mae Security” means an ownership interest in a pool of Fannie Mae Mortgage Loans, evidenced by a book-entry account in a depository institution having book-entry accounts at the Federal Reserve Bank of New York, issued and guaranteed, with respect to timely payment of interest and ultimate payment of principal, by Fannie Mae and backed by a pool of Fannie Mae Mortgage Loans, in substantially the principal amount and with substantially the other terms as specified with respect to such Fannie Mae Security in the related Takeout Commitment, if any.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.
“FHA” means the Federal Housing Administration, an agency within HUD, or any successor thereto, and including the Federal Housing Commissioner and the Secretary of Housing and Urban Development where appropriate under the FHA regulations.
“FHA 203k Mortgage Loan” means a Mortgage Loan that is eligible for FHA’s 203(k) loan program.
“FHA Buyout Loan” means an Eligible Mortgage Loan that (a) is insured by FHA, (b) is a Ginnie Mae Mortgage Loan, (c) has been purchased out of a Ginnie Mae Security, and (d) is not a Modified Loan.
“FICO Score” means the credit score of the Mortgagor provided by Fair, Isaac & Company, Inc. or such other organization providing credit scores on or immediately prior to the Origination Date of a Mortgage Loan.
“Floor” has the meaning assigned thereto in the Pricing Side Letter.
“Foreign Purchaser” has the meaning assigned thereto in Section 8(d).
“Freddie Mac” means the Federal Home Loan Mortgage Corporation, and its successors in interest.
“Freddie Mac Guide” means the Freddie Mac Sellers’ and Servicers’ Guide, as such Guide may hereafter from time to time be amended.
“Freddie Mac Mortgage Loan” means a mortgage loan that is in Strict Compliance on the related Purchase Date with the eligibility requirements specified for the applicable Freddie Mac Program described in the Freddie Mac Guide.
“Freddie Mac Program” means the Freddie Mac Home Mortgage Guarantor Program or the Freddie Mac FHA/VA Home Mortgage Guarantor Program, as described in the Freddie Mac Guide.
“Freddie Mac Security” means a modified pass-through mortgage-backed participation certificate, evidenced by a book-entry account in a depository institution having book-entry accounts at the Federal Reserve Bank of New York, issued and guaranteed, with respect to timely payment of interest and ultimate payment of principal, by Freddie Mac and backed by a pool of Freddie Mac Mortgage Loans in substantially the principal amount and with substantially the other terms as specified with respect to such Freddie Mac Security in the related Takeout Commitment, if any.
“GAAP” means generally accepted accounting principles as in effect from time to time in the United States of America.
“Ginnie Mae” means the Government National Mortgage Association and its successors in interest, a wholly-owned corporate instrumentality of the government of the United States of America.
“Ginnie Mae Guide” means the Ginnie Mae Mortgage-Backed Securities Guide, as such Guide may hereafter from time to time be amended.
““Ginnie Mae Mortgage Loan” means a mortgage loan that is in Strict Compliance on the related Purchase Date with the eligibility requirements specified for the applicable Ginnie Mae Program in the applicable Ginnie Mae Guide.
“Ginnie Mae Program” means the Ginnie Mae Mortgage-Backed Securities Programs, as described in the Ginnie Mae Guide.
“Ginnie Mae Security” means a fully modified pass-through mortgage-backed certificate guaranteed by Ginnie Mae, evidenced by a book-entry account in a depository institution having
book-entry accounts at the Federal Reserve Bank of New York and backed by a pool of Ginnie Mae Mortgage Loans, in substantially the principal amount and with substantially the other terms as specified with respect to such Ginnie Mae Security in the related Takeout Commitment.
“Governmental Authority” means any nation or government, any state or other political subdivision, agency or instrumentality thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator having jurisdiction over Seller any of its Subsidiaries or any of their Property.
“Hedge Instrument” means any interest rate cap agreement, interest rate floor agreement, interest rate swap agreement or other interest rate hedging agreement entered into by Seller with a counterparty reasonably acceptable to Agent, in each case with respect to the Mortgage Loans.
“High Cost Mortgage Loan” means a Mortgage Loan that is (a) subject to, covered by or in violation of the provisions of the Homeownership and Equity Protection Act of 1994, as amended, (b) a “high cost,” “covered,” “threshold,” “abusive,” “predatory” or “high risk” mortgage loan under any federal, state or local law, or any similarly classified loan using different terminology under any law imposing heightened regulation, scrutiny or additional legal liability for residential mortgage loans having high interest rates, points and/or fees, or any other state or other regulation providing assignee liability to holders of such mortgage loans, (c) subject to or in violation of any such or comparable federal, state or local statutes or regulations, or (d) a “High Cost Loan” or “Covered Loan,” as applicable, as such terms are defined in the current version of the Standard & Poor’s LEVELS® Glossary Revised, Appendix E.
“High LTV Mortgage Loan” means a (a) first-lien Mortgage Loan for which the loan-to-value ratio is greater than (i) [***] for a government insured first-lien Mortgage Loan; or (ii) [***] for a first-lien Mortgage Loan that is not government insured; or (b) second-lien Mortgage Loan with a combined loan-to-value ratio of greater than [***].
“HUD” means the Department of Housing and Urban Development, or any federal agency or official thereof which may from time to time succeed to the functions thereof with regard to FHA mortgage insurance. The term “HUD,” for purposes of this Agreement, is also deemed to include subdivisions thereof such as the FHA and Ginnie Mae.
“IBA” means the ICE Benchmark Administration.
“Income” means, with respect to any Purchased Asset at any time, any principal and/or interest thereon and all dividends, sale proceeds and all other proceeds as defined in Section 9-102(a)(64) of the Uniform Commercial Code and all other collections and distributions thereon (including, without limitation, any proceeds received in respect of mortgage insurance) but excluding any Escrow Payments and any and all fees, reimbursements and income entitled to be retained by a Servicer pursuant to the related Servicing Agreement.
“Indebtedness” has the meaning assigned thereto in the Pricing Side Letter.
“Indemnified Party” has the meaning assigned thereto in Section 22(a).
“Initial Purchase Price” has the meaning assigned thereto in the Pricing Side Letter.
“Intercreditor Agreement” means that certain Amended and Restated Intercreditor Agreement, dated as of February 27, 2015, by and among Seller, Purchaser and the other parties thereto, as same may be amended from time to time.
“Investment Company Act” means the Investment Company Act of 1940, as amended, including all rules and regulations promulgated thereunder.
“Joint Securities Account Control Agreement” means that certain Amended and Restated Joint Securities Account Control Agreement, dated as of February 27, 2015, by and among Seller, Purchaser and the other parties thereto, as same may be amended from time to time.
“Jumbo Mortgage Loan” means a first lien Mortgage Loan which (i) conforms with all requirements of Seller’s underwriting guidelines, which are subject to Purchaser’s approval in its sole discretion, as the same may be amended, supplemented or otherwise modified from time to time and (ii) has the benefit of the safe harbor from liability under the ATR Rules or a rebuttable presumption for such liability.
“LIBOR” means for each day, the rate (adjusted for statutory reserve requirements for eurocurrency liabilities) for eurodollar deposits for a period equal to one month appearing on Bloomberg Screen US 0001M Page or if such rate ceases to appear on Bloomberg Screen US 0001M Page, or any other service providing comparable rate quotations as selected by Purchaser or Agent on behalf of Purchaser in good faith from time to time for purposes of providing quotations of interest rates applicable to U.S. dollar deposits in the London interbank market for deposits in Dollars with a term equivalent to such Accrual Period, determined as of approximately 11:00 a.m., (London time, on the applicable date of determination, or such interpolated rate as determined by the Agent) two (2) Business Days prior to the first day of such Accrual Period.
“LIBOR Floor” has the meaning assigned thereto in the Pricing Side Letter.
“Lien” means any mortgage, deed of trust, lien, claim, pledge, charge, security interest or similar encumbrance.
“Margin Call” has the meaning assigned thereto in Section 7(b) hereof.
“Margin Deficit” has the meaning assigned thereto in Section 7(b) hereof.
“Market Value” means, with respect to any Transaction and as of any date of determination, (i) the value ascribed to a Purchased Asset or a Mortgage Loan by Agent in its sole discretion, and (ii) zero, with respect to any Mortgage Loan that is a Purchased Asset but is not an Eligible Mortgage Loan.
“Master Netting Agreement” means that certain Global Netting and Security Agreement, dated as of August 14, 2020, among Purchaser, Seller, and certain Affiliates and Subsidiaries of Purchaser, entered into in connection with this Agreement, as the same shall be amended, supplemented or otherwise modified from time to time.
“Material Adverse Change” means, with respect to a Person, any material adverse change in the business, financial condition, operations, performance or Property of such Person including the insolvency of such Person or its Parent Company, if applicable.
“Material Adverse Effect” means (a) a Material Adverse Change with respect to Seller or any of its Affiliates; (b) a material impairment of the ability of Seller or any of its Affiliates that is a party to any Program Document to perform under any Program Document to which it is a party; (c) a material adverse effect upon the legality, validity, binding effect or enforceability of any Program Document against Seller or any of their respective Affiliates that is a party to any Program Document; (d) a material adverse effect on the Market Value of the Purchased Assets taken as a whole; or (e) a material adverse effect on the Approvals of Seller.
“Maturity Date” has the meaning assigned thereto in the Pricing Side Letter.
“Maximum Age Since Origination” has the meaning assigned thereto in the Pricing Side Letter.
“Maximum Aggregate Purchase Price” has the meaning assigned thereto in the Pricing Side Letter.
“MBA Methodology” means a method of calculating delinquency of a Mortgage Loan based upon the Mortgage Banker Association method, under which method a Mortgage Loan is considered delinquent if the Monthly Payment related to such Mortgage Loan has not been received by the end of the day immediately preceding the loan’s next Due Date.
“MERS” means Mortgage Electronic Registration Systems, Inc., a Delaware corporation, or any successor in interest thereto.
“MERS Designated Mortgage Loan” means any Mortgage Loan as to which the related Mortgage or Assignment of Mortgage, has been recorded in the name of MERS, as agent for the holder from time to time of the Mortgage Note.
“MIN” means the mortgage identification number of Mortgage Loans registered with MERS on the MERS system.
“Minimum Transfer Amount” means [***]; provided that if an Event of Default has occurred and is continuing, the Minimum Transfer Amount shall be [***].
“Modified Loan” means an Eligible Mortgage Loan that (a) is insured by FHA or guaranteed by the VA, (b) (1) was purchased out of a Ginnie Mae Security or from a third-party whole loan investor solely as a result of modifications to such Eligible Mortgage Loan, or (2) was purchased out of a Ginnie Mae Security or from a third-party whole loan investor as a result of delinquent mortgage payments, but, without any loan modifications, subsequently became reperforming and (c) is a Ginnie Mae Mortgage Loan.
“Monthly Payment” means the scheduled monthly payment of principal and interest on a Mortgage Loan as adjusted in accordance with changes in the Mortgage Interest Rate pursuant to the provisions of the Mortgage Note for an Adjustable Rate Mortgage Loan.
“Monthly Payment Date” means the tenth (10th) day of each calendar month beginning with September 2020; provided that if such day is not a Business Day, the next succeeding Business Day.
“Mortgage” means a mortgage, deed of trust, or other security instrument, securing a Mortgage Note.
“Mortgage File” has the meaning assigned thereto in the Custodial and Disbursement Agreement.
“Mortgage Interest Rate” means, with respect to each Mortgage Loan, the annual rate at which interest accrues on such Mortgage Loan from time to time in accordance with the provisions of the related Mortgage Note.
“Mortgage Loan” means a Ginnie Mae Mortgage Loan, a Fannie Mae Mortgage Loan, a Freddie Mac Mortgage Loan, a Jumbo Mortgage Loan, an FHA Buyout Loan, a Modified Loan, or a Wet-Ink Mortgage Loan.
“Mortgage Note” means a promissory note or other evidence of indebtedness of the obligor thereunder, evidencing a Mortgage Loan, and secured by the related Mortgage.
“Mortgaged Property” means the real property (or leasehold estate, if applicable) securing repayment of the debt evidenced by a Mortgage Note.
“Mortgagee” means the record holder of a Mortgage Note secured by a Mortgage.
“Mortgagor” means the obligor or obligors on a Mortgage Note, including any person who has assumed or guaranteed the obligations of the obligor thereunder.
“Negative Amortization” means the portion of interest accrued at the Mortgage Interest Rate in any month which exceeds the Monthly Payment on the related Mortgage Loan for such month and which, pursuant to the terms of the Mortgage Note, is added to the principal balance of such Mortgage Loan.
“Notice Date” has the meaning assigned thereto in Section 3(c) hereof.
“Non-Utilization Fee” has the meaning assigned thereto in the Pricing Side Letter.
“Obligations” means (a) all amounts due and payable by Seller to Purchaser in connection with a Transaction hereunder, together with interest thereon (including interest which would be payable as post-petition interest in connection with any bankruptcy or similar proceeding) and other obligations and liabilities of Seller to Purchaser arising under, or in connection with, the Program Documents or directly related to the Purchased Assets, whether
now existing or hereafter arising; (b) any and all sums paid by Purchaser or on behalf of Purchaser pursuant to the Program Documents in order to preserve any Purchased Asset or its interest therein; (c) in the event of any proceeding for the collection or enforcement of any of Seller’s indebtedness, obligations or liabilities referred to in clause (a), the reasonable expenses of retaking, holding, collecting, preparing for sale, selling or otherwise disposing of or realizing on any Purchased Asset, or of any exercise by Purchaser of its rights under the Program Documents, including without limitation, reasonable attorneys’ fees and disbursements and court costs; and (d) all of Seller’s indemnity obligations to Purchaser pursuant to the Program Documents.
“Obligor” means a Person obligated to make payments pursuant to a Contract; provided that in the event that any payments in respect of a Contract are made by any other Person, such other Person shall also be deemed to be an Obligor.
“OFAC” means the Office of Foreign Assets Control of the United States Department of Treasury.
“OFAC Lists” has the meaning ascribed to it in Section 37(a).
“OFSI” means the Office of Financial Sanctions Implementation of the United Kingdom’s HM Treasury.
“Origination Date” has the meaning ascribed to it in the Pricing Side Letter.
“Originator” means Seller or any other third party originator as mutually agreed upon by Agent and Seller.
“Other Agreement” means any (i) warehouse, credit, repurchase, line of credit, financing or hedging agreements or other similar agreement relating to any Indebtedness in an amount greater than [***] between Seller or any of its Affiliates or Subsidiaries, on the one hand, and any Person, on the other hand, (ii) other agreement relating to any Indebtedness in an amount greater than [***] between Seller or any of its Affiliates or Subsidiaries, on the one hand, and any Person, on the other hand, or (iii) other agreement (including, without limitation, the Program Documents) in any amount entered into between Seller or any of its Affiliates or any of its Subsidiaries and Purchaser or any of its Affiliates. “Other Taxes” has the meaning assigned thereto in Section 8(b).
“Outstanding Purchase Price” means, for any Purchased Asset, as of any date of determination, the Initial Purchase Price thereof, as reduced by any amount thereof repaid to the Purchaser pursuant to the terms of the Agreement and as increased by any Incremental Purchase Price related to such Purchased Asset.
“Parent Company” means a corporation or other entity owning at least 50% of the outstanding shares of voting stock of Seller.
“Participant Register” has the meaning assigned thereto in Section 28(b).
“Person” means any legal person, including any individual, corporation, partnership, association, joint stock company, trust, limited liability company, unincorporated organization, governmental entity or other entity of similar nature.
“Prefunding Request” means a written request, which request may be sent via Electronic Transmission, of Seller that Purchaser prefund Transactions expected to occur on the following Business Day, which request shall be substantially in the form of Exhibit I hereto or such other
form as shall be mutually agreed upon between Seller and Purchaser, which shall be delivered to the Purchaser in accordance with Section 3(c) herein.
“Price Differential” means, with respect to any Purchased Mortgage LoanAsset or Transaction as of any date of determination, an amount equal to the product of (A) the Pricing Rate (or during the occurrence and continuation of an Event of Default, by daily application of the Default Rate) and (B) the unpaid Outstanding Purchase Price for such Purchased Mortgage Loan Asset or Transaction and (C) 1/360. Price Differential will be calculated in accordance with Section 3(f) herein for the actual number of days elapsed during sucha given Accrual Period on a 360-day basis.
“Price Differential Determination Date” means, with respect to any Monthly Payment Date, the second (2nd) Business Day preceding such date.
“Pricing Rate” means, as of any date of determination and with respect to an Accrual Period for any Purchased Mortgage Loan or Transaction, an amount equal to the sum of (i) (A) the greater of LIBOR(a) the Benchmark and the LIBOR Floor, or (b) the Benchmark Replacement pursuant to Section 43 hereof,Floor plus (ii) the Applicable Margin.
“Pricing Side Letter” means that certain Pricing Side Letter, dated as of August 14, 2020, between Seller and Purchaser, entered into in connection with this Agreement, as the same may be amended, modified or supplemented from time to time.
“Principal Balance” means the unpaid principal balance of a Mortgage Loan.
“Program Documents” means this Agreement, the Pricing Side Letter, the Custodial and Disbursement Agreement, the Servicer Side Letter, the Collection Account Control Agreement, Disbursement Account Control Agreement, any assignment of Hedge Instrument, the Electronic Tracking Agreement, the Master Netting Agreement, the Intercreditor Agreement, the Joint Securities Account Control Agreement and all other agreements, documents and instruments entered into by Seller on the one hand, and Purchaser or one of its Affiliates (or Custodian on its behalf) and/or Agent or one of its Affiliates on the other, in connection herewith or therewith with respect to the Transactions contemplated hereunder or thereunder and all amendments, restatements, modifications or supplements thereto.
“Property” means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.
“Purchase Date” means, with respect to each Transaction, the date on which Purchased Assets, are sold by Seller to the Purchaser or its designee hereunder; provided, that a Purchase Date for any FHA Buyout Loan or Modified Loan may occur no more than four (4) times within a calendar month and, without the prior written consent of Agent, shall not occur within the final four (4) Business Days of such calendar month.
“Purchase Price” has the meaning assigned thereto in the Pricing Side Letter.
“Purchase Price Percentage” has the meaning assigned thereto in the Pricing Side Letter.
“Purchased Assets” means with respect to each Purchased Mortgage Loan, whether now existing or hereafter acquired: (i) the Mortgage Loans, (ii) the related Servicing Rights, (iii) Seller’s rights under any related Hedge Instruments to the extent related to the Mortgage Loans, if assignable, (iv) such other property, rights, titles or interest as are specified on the related Transaction Notice, (v) all all mortgage guarantees and insurance relating to such individual Mortgage Loans (issued by governmental agencies or otherwise) or the related
Mortgaged Property and any mortgage insurance certificate or other document evidencing such mortgage guarantees or insurance and all claims and payments related to such Mortgage Loans, (viv) all guarantees or other support for such Mortgage Loans, (viivi) all rights to Income and the rights to enforce such payments arising from such Mortgage Loans and any other contract rights, payments, rights to payment (including payments of interest or finance charges) with respect thereto, (viiivii) all Takeout MBS, Takeout Commitments, and Trade Assignments (including the rights to receive the related purchase price related therefor) related to the Purchased Mortgage Loans, if assignable, (ixviii) the Collection Account and the Disbursement Account and all amounts on deposit in the Collection Account and the Disbursement Account, (xix) all Additional Purchased Mortgage Loans, (xix) to the extent related to the Purchased Mortgage Loans, all “accounts,” “deposit accounts,” “securities accounts,” “chattel paper,” “commercial tort claims,” “deposit accounts,” “documents,” “general intangibles,” “instruments,” “investment property,” and “securities accounts,” relating to the foregoing as each of those terms is defined in the Uniform Commercial Code and all cash and Cash Equivalents and all products and proceeds relating to or constituting any or all of the foregoing, (xi) any purchase agreements or other agreements or contracts relating to or constituting any or all of the foregoing, (xii) any other collateral pledged or otherwise relating to any or all of the foregoing, together with all files, material documents, instruments, surveys (if available), certificates, correspondence, appraisals, computer records, computer storage media, accounting records and other books and records relating to the foregoing, and (xiii) any and all replacements, substitutions, distributions on, or proceeds with respect to, any of the foregoing. The term “Purchased Assets” with respect to any Transaction at any time also shall include Additional Purchased Mortgage Loans delivered pursuant to Section 7(b) hereof.
“Purchased Mortgage Loan” means a Mortgage Loan sold by Seller to Purchaser in a Transaction hereunder and not yet repurchased by Seller.
“Purchaser” has the meaning set forth in the preamble hereof.
“Purchaser’s Wire Instructions” has the meaning set forth in the Pricing Side Letter.
“Qualified Insurer” means, with respect to any Mortgaged Property, any insurer duly qualified as such under the laws of the states in which such Mortgaged Property is located, duly authorized and licensed in such state to transact the applicable insurance business and to write the insurance provided by the insurance policy issued by it.
“Records” means all instruments, agreements and other books, records, and reports and data generated by other media for the storage of information maintained by Seller or any other person or entity with respect to a Purchased Asset. Records shall include, without limitation, the Mortgage Notes, any Mortgages, the Mortgage Files, the Servicing Files, and any other instruments necessary to document or service a Purchased Mortgage Loan, including, without limitation, the complete payment and modification history of each Purchased Mortgage Loan.
“Register” has the meaning specified in Section 4243 hereof.
“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System and/or the Federal Reserve Bank of New York or any successor thereto.
“Repurchase Date” means, with respect to any Transaction involving Eligible Mortgage Loans, the earliest of (a) the Termination Date, (b) the Business Day following Seller’s written notice to Purchaser requesting a repurchase of such Transaction or such shorter time as permitted by the Purchaser, (c) at the conclusion of the Maximum Age Since Origination for any Eligible
Mortgage Loan purchased hereunder, or (d) with respect to FHA Buyout Loans, the date that is 364 days after such FHA Buyout Loans become subject to a Transaction hereunder, or if any such day is not a Business Day, the immediately following Business Day.
“Repurchase Price” means the price at which Purchased Assets are to be transferred from Purchaser or its designee to Seller upon termination of a Transaction, which will be determined in each case as the sum of: (i) any portion of the Outstanding Purchase Price not yet repaid to Purchaser, (ii) the Price Differential accrued and unpaid thereon, (iii) Breakage Costs, if any, and (iv) any accrued and unpaid fees or expenses or indemnity amounts and any other outstanding amounts owing and invoiced under the Program Documents from Seller to Purchaser.
“Request for Release of Documents” means the Request for Release of Documents set forth in the Custodial and Disbursement Agreement, as applicable.
“Requirement of Law” means as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject.
“Responsible Officer” means (i) as to any Person, the chief executive officer or, with respect to financial matters, the chief financial officer of such Person and (ii) as to Seller, President, Chief Administrative Officer, Treasurer, Senior Managing Counsel or any other executive managing member.
“Restricted Mortgage Loan” means (i) a “Growing Equity Loan,” “Graduated Payment Loan,” “Buydown Loan,” “Project Loan,” “Construction Loan” or “HECM Loan,” each as defined in the applicable Agency Guide, (ii) a 30+ Day Delinquent Mortgage Loan, (iii) a Mortgage Loan for which the related Escrow Payments have not been made by the next succeeding Due Date, or (iv) a High Cost Mortgage Loan.
“Sanctions Lists” has the meaning ascribed to it in Section 39(a).
“SEC” has the meaning ascribed thereto in Section 3536.
“Section 404 Notice” means the notice required pursuant to Section 404 of the Helping Families Save Their Homes Act of 2009 (P.L. 111-22), which amends 15 U.S.C. Section 1641 et seq., to be delivered by a creditor that is an owner or an assignee of a Mortgage Loan to the related Mortgagor within thirty (30) days after the date on which such Mortgage Loan is sold or assigned to such creditor.
“Security” means a Ginnie Mae Security, a Fannie Mae Security or a Freddie Mac Security, as applicable.
“Seller” has the meaning set forth in the preamble hereof.
“Seller Mortgage Loan Schedule” means the list of Purchased Mortgage Loans proposed to be purchased by Purchaser, in the form of Exhibit H hereto, that will be delivered in an excelExcel spreadsheet format by Seller to Purchaser and Custodian and attached by the Custodian to the related Certification.
“Servicer” means any servicer or subservicer approved by Agent in its sole discretion, which may be Seller.
“Servicer Side Letter” means, if Mortgage Loans are serviced by a third party servicer pursuant to a servicing agreementServicing Agreement, the side letter agreement related to such servicing agreementServicing Agreement among the Seller, the Servicer and the Purchaser, which is substantially in the form as mutually agreed upon by the parties hereto.
“Servicing Agreement” means, if Mortgage Loans are serviced by a third party servicer, the servicing agreement between such servicer and Seller.
“Servicing File” means with respect to each Mortgage Loan, the file retained by Seller or its designee consisting of all documents that a prudent originator and servicer would include (including copies of the Mortgage File), all documents necessary to document and service the Mortgage Loans and any and all documents required to be delivered in connection with any transfer of servicing pursuant to the Program Documents.
“Servicing Records” means with respect to a Mortgage Loan, the related servicing records, including but not limited to any and all servicing agreementsServicing Agreements, files, documents, records, data bases, computer tapes, copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records, and any other records relating to or evidencing the servicing of such Mortgage Loan.
“Servicing Rights” means contractual, possessory or other rights of Seller or any other Person to administer or service a Mortgage Loan or to possess the Servicing File.
“Servicing Term” has the meaning assigned thereto in Section 1617(b).
“Settlement Agent” means, with respect to any Transaction the subject of which is a Wet-Ink Mortgage Loan, the entity approved by Agent, in its sole good-faith discretion, which may be a title company, escrow company or attorney in accordance with local law and practice in the jurisdiction where the related Wet-Ink Mortgage Loan is being originated.
“SOFR” means a rate per annum equal to, with respect to any day, the secured overnight financing rate for such Business Day published by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate) on the website of the Federal Reserve Bank of New Yorkpublished for such day by the SOFR Administrator on the SOFR Administrator’s website, currently at http://www.newyorkfed.org (, or any successor source for the secured overnight financing rate identified as such by the administrator of the secured overnight financing rateSOFR Administrator from time to time).
“SOFR Administrator” means the Federal Reserve Bank of New York, as administrator of SOFR (or a successor administrator).
“Strict Compliance” means compliance of Seller and the Mortgage Loans with the requirements of the Agency Guide as amended by any agreements between Seller or a Takeout Investor, on the one hand, and the Applicable Agency, on the other hand, sufficient to enable Seller to issue and to service and Ginnie Mae to guarantee or Fannie Mae or Freddie Mac to issue and guarantee a Security.
“Structuring Fee” has the meaning assigned thereto in the Pricing Side Letter.
“Subsidiary” means, with respect to any Person, any corporation, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.
“Takeout Commitment” means (i) a fully executed trade confirmation from the related Takeout Investor to Seller confirming the details of a forward trade between the Takeout Investor and Seller with respect to one or more Purchased Assets, which trade confirmation shall be enforceable and in full force and effect, and relate to pools of Mortgage Loans that satisfy the “good delivery standards” of the Securities Industry and Financial Markets Association as set forth in the Securities Industry and Financial Markets Association Uniform Practices Manual, as amended from time to time or (ii) a commitment (a) to swap one or more identified Purchased Mortgage Loans with a Takeout Investor that is an Agency for a Security and (b) to sell the related Security or Takeout MBS to a Takeout Investor.
“Takeout Investor” means (x) for non-Jumbo Mortgage Loans, either (i) Barclays Capital, Inc., or any successor thereto, (ii) any member of the Mortgage Backed Securities Division of the Fixed Income Clearing Corporation, unless such member is disapproved by Agent in its sole discretion or (iii) any other Person approved by Agent in its reasonable discretion and (y) for Jumbo Mortgage Loans, either (i) Barclays Bank PLC or (ii) any other Person approved by Agent in its sole discretion.
“Takeout MBS” means to the extent any Purchased Mortgage Loans are pooled into Securities, and such Securities do not settle on the date they are issued, partial interests in such Securities backed by such Purchased Mortgage Loans and subject to the Intercreditor Agreement and to the related control agreements .
“Taxes” has the meaning assigned thereto in Section 8(a).
“Term SOFR” means, with respect to any date of determination, the forward-looking term rate based on SOFR, for a corresponding tenor of one month, as of two (2) Business Days prior to the first day of the corresponding Accrual Period containing such date of determination, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any such date Term SOFR has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to Term SOFR has not occurred, then Term SOFR will be the Term SOFR as published by the Term SOFR Administrator on the first preceding Business Day for which such Term SOFR was published by the Term SOFR Administrator so long as such first preceding Business Day is not more than three (3) Business Days prior to such determination date.
“Term SOFR” means the Administrator” means CME Group Benchmark Administration Limited (or any successor administrator of a forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Bodyrate approved by Purchaser in its sole discretion).
“Termination Date” means the earliest to occur of (i) the Maturity Date and (ii) at the option of Purchaser, the occurrence and continuation of an Event of Default under this Agreement after the expiration of any applicable grace period.
“Trade Assignment” means an assignment to Purchaser of a forward trade between the Takeout Investor and Seller with respect to one or more Purchased Mortgage Loans, together with the related trade confirmation from the Takeout Investor to Seller that has been fully
executed, is enforceable and is in full force and effect and confirms the details of such forward trade.
“Transaction” has the meaning assigned thereto in Section 1 hereof.
“Transaction Fee” has the meaning assigned thereto in the Pricing Side Letter.
“Transaction Notice” means a written request of Seller to enter into a Transaction in a form attached as Exhibit C hereto or such other form as shall be mutually agreed upon between Seller and Purchaser, which is deemed to be delivered to the Purchaser in accordance with Section 3(d) herein.
“UETA” means the Official Text of the Uniform Electronic Transactions Act as approved by the National Conference of Commissioners on Uniform State Laws at its Annual Conference on July 29, 1999.
“Uncommitted Amount” has the meaning assigned thereto in the Pricing Side Letter.
“Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided that if by reason of mandatory provisions of law, the perfection or the effect of perfection or non-perfection of the security interest in any Purchased Assets or the continuation, renewal or enforcement thereof is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, “Uniform Commercial Code” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection.
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the U.S. Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“Warehouse Lender” means any lender providing financing to Seller for the purpose of warehousing, originating or purchasing a Mortgage Loan, which lender has a security interest in such Mortgage Loan to be purchased by Purchaser.
“Warehouse Lender’s Release” means a letter, in the form of Exhibit E, from a Warehouse Lender to Purchaser, unconditionally releasing all of Warehouse Lender’s right, title and interest in certain Mortgage Loans identified therein upon payment to the Warehouse Lender.
“Wet-Ink Mortgage Loan” means a Mortgage Loan that Seller is selling to Purchaser simultaneously with the origination thereof that is funded as part, either directly or indirectly, with the Initial Purchase Price paid by Purchaser hereunder and for which the Custodian shall not have received a complete Mortgage File.
“Wet-Ink Mortgage Loan Document Receipt Date” means for any Wet-Ink Mortgage Loan, the date that the Custodian executes an original trust receipt without exceptions.
(a)Interpretation.
Headings are for convenience only and do not affect interpretation. The following rules of this subsection (b) apply unless the context requires otherwise. The singular includes the plural and conversely. A gender includes all genders. Where a word or phrase is defined, its
other grammatical forms have a corresponding meaning. A reference to a subsection, Section, Annex or Exhibit is, unless otherwise specified, a reference to a section of, or annex or exhibit to, this Agreement. A reference to a party to this Agreement or another agreement or document includes the party’s successors and permitted substitutes or assigns. A reference to an agreement or document is to the agreement or document as amended, modified, novated, supplemented or replaced, except to the extent prohibited by any Program Document. A reference to legislation or to a provision of legislation includes any modification or re-enactment of it, a legislative provision substituted for it and a regulation or statutory instrument issued under it. A reference to writing includes a facsimile transmission and any means of reproducing words in a tangible and permanently visible form. A reference to conduct includes, without limitation, an omission, statement or undertaking, whether or not in writing. An Event of Default exists until it has been waived in writing by Purchaser or has been timely cured. The words “hereof,” “herein,” “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement. The term “including” is not limiting and means “including without limitation.” In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including,” the words “to” and “until” each mean “to but excluding,” and the word “through” means “to and including.” This Agreement may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms. Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP, consistently applied. References herein to “fiscal year” and “fiscal quarter” refer to such fiscal periods of Seller. An Event of Default shall be deemed to be not continuing once waived by the Purchaser or the Agent.
Except where otherwise provided in this Agreement, any determination, consent, approval, statement or certificate made or confirmed in writing with notice to Seller by Purchaser or an authorized officer of Purchaser as required by this Agreement is conclusive in the absence of manifest error. A reference to an agreement includes a security interest, guarantee, agreement or legally enforceable arrangement whether or not in writing related to such agreement.
A reference to a document includes an agreement in writing or a certificate, notice, instrument or document, or any information recorded in electronic form. Where Seller is required to provide any document to Purchaser under the terms of this Agreement, the relevant document shall be provided in writing or printed form unless Purchaser requests otherwise.
This Agreement is the result of negotiations among, and has been reviewed by counsel to, Purchaser and Seller, and is the product of all parties. In the interpretation of this Agreement, no rule of construction shall apply to disadvantage one party on the ground that such party proposed or was involved in the preparation of any particular provision of this Agreement or this Agreement itself. Except where otherwise expressly stated, Purchaser may give or withhold, or give conditionally, approvals and consents and may form opinions and make determinations in its absolute sole discretion. Except as specifically required herein, any requirement of good faith, discretion or judgment by Purchaser or Agent shall not be construed to require Purchaser or Agent to request or await receipt of information or documentation not immediately available from or with respect to Seller, any other Person or the Purchased Assets themselves.
3.THE TRANSACTIONS
(b)It is acknowledged and agreed that, notwithstanding any other provision of this Agreement to the contrary, the facility provided under this Agreement is (i) a committed facility with respect to the Committed Amount and (ii) an uncommitted facility with respect to the Uncommitted Amount, and Purchaser shall have no obligation to enter into any Transactions
hereunder with respect to the Uncommitted Amount. All purchases of Mortgage Loans hereunder shall be first deemed committed up to the Committed Amount and then the remainder, if any, shall be deemed uncommitted up the Uncommitted Amount.
(c)Subject to the terms and conditions of the Program Documents, Purchaser shall, up to the Committed Amount, and may, with respect to the Uncommitted Amount at the sole discretion of Purchaser or Agent, enter into Transactions provided, that the Aggregate MRA Purchase Price shall not exceed, as of any date of determination, the lesser of (i) the Maximum Aggregate Purchase Price and (ii) the Asset Base.
(d)Unless otherwise agreed, if Seller wishes to request that Purchaser enter into a Transaction with respect to one or more Eligible Mortgage Loans, then Seller shall deliver a Prefunding Request to Purchaser and Disbursement Agent no later than [***] (New York City time) on the Business Day prior to the requested Purchase Date, which Prefunding Request shall specify the amount that Seller requests Purchaser to fund on the related Purchase Date (such amount, the “Prefunded Amount”), which Prefunded Amount shall not be less than [***] and shall represent a good faith estimate of the amount needed for the fundings on the next Business Day. By submitting the Prefunding Request, Seller shall be deemed to have represented that no Responsible Officer of Seller has knowledge of any fact or circumstance that would cause such Responsible Officer to reasonably believe Seller could not represent that all conditions precedent to the Transactions expected to occur the following day shall be satisfied and that all Mortgage Loans to be purchased will be Eligible Mortgage Loans. If all such conditions precedent are satisfied, then Purchaser shall make commercially reasonable efforts to remit the Prefunded Amount to the Disbursement Account by [***] (New York City time) on the Purchase Date; provided that if the Prefunded Amount would require the use of the Uncommitted Amount, Purchaser may choose to reduce the Prefunded Amount accordingly. Remitting the Prefunded Amount to the Disbursement Account shall not constitute a purchase or an agreement to purchase any Mortgage Loan.
(e)Once a Prefunding Request has been submitted, Seller may request that Purchaser actually purchase Eligible Mortgage Loans by submitting Seller Mortgage Loan Schedules to Purchaser and Custodian. Seller may submit up to [***] Seller Mortgage Loan Schedules at any time after the submission of the Prefunding Request until [***] (New York City time) on the Purchase Date. By submitting a Seller Mortgage Loan Schedule, Seller hereby agrees that it shall be deemed to have made all of the representations and warranties set forth in the form of Transaction Notice attached as Exhibit C hereto. Upon Seller’s request to enter into a Transaction pursuant to this Section 3(d), if all conditions precedent set forth in this Section 3 and in Sections 10(a) and (b) have been met, if all Mortgage Loans to be purchased are Eligible Mortgage Loans, and if no Default or Event of Default shall have occurred and be continuing, then, on the requested Purchase Date, Purchaser shall, in the case of a Transaction with respect to the Committed Amount, and may, in its sole discretion with respect to the Uncommitted Amount, purchase the Eligible Mortgage Loans included in the related Seller Mortgage Loan Schedule by instructing the Disbursement Agent to disburse the Purchase Price (net of any related Structuring Fee, Non-Utilization Fee, or any other unpaid fees and expense then due and payable by Seller to Purchaser pursuant to this Agreement) in accordance with the Custodial and Disbursement Agreement. No later than [***] (New York City time) on each Purchase Date, Seller shall submit via email to Purchaser and Disbursement Agent the amount offunded by the Seller Funded Portion then-standing to the credit of the Disbursement Account related to rescissions, other unfunded Mortgage Loans or any other unused amounts that Seller has calculated should be returned to Seller (the “Proposed Seller Refund”). No later than [***] (New York City time) on such Purchase Date, Purchaser shall subsequently respond via email to Seller and Disbursement Agent to clearly state confirmation or rejection of Seller’s calculation of the Proposed Seller Refund. If Purchaser confirms Seller’s calculation of the Proposed Seller Refund, then no later than [***] (New York City time) on such Purchase Date, Seller shall
initiate a wire in the amount of such Proposed Seller Refund from the Disbursement Account. Upon Disbursement Agent’s (i) receipt of such email from Purchaser confirming Seller’s calculation of the Proposed Seller Refund and (ii) verification that the amount of such wire initiated by Seller matches the amount of the Proposed Seller Refund reflected in such Purchaser’s email confirmation, Disbursement Agent shall release the wire to Seller pursuant to the wire instructions Seller provides. To the extent Purchaser rejects or does not otherwise confirm the Proposed Seller Refund, Seller shall not initiate and Disbursement Agent shall not release any wires from the Disbursement Account. With respect to any amounts remaining in the Disbursement Account at [***] (New York City time) on each Purchase Date, the Disbursement Agent shall cause such amounts to be remitted to Purchaser in accordance with the terms of the Custodial and Disbursement Agreement.
(f)Reserved.
(g)On the related Price Differential Determination Date, Agent shall calculate the Price Differential for each outstanding Transaction payable on the Monthly Payment Date utilizing the Pricing Rate. Not less than two (2) Business Days prior to each Monthly Payment Date, Agent shall provide Seller with an invoice for the amount of the Price Differential due and payable with respect to all outstanding Transactions, setting forth the calculations thereof in reasonable detail and all accrued fees and expenses then due and owing to Purchaser. On the earliest of (1) the Monthly Payment Date or (2) the Termination Date, Seller shall pay to Purchaser the Price Differential then due and payable for (x) all outstanding Transactions and (y) Purchased Assets for which Purchaser has received the related Repurchase Price (other than Price Differential)Outstanding Purchase Price pursuant to Section 3(g) during the prior calendar month.
(h)With respect to a Transaction, upon the earliest of (1) the Repurchase Date and (2) the Termination Date, Seller shall pay to Purchaser the related Repurchase Price (other than the related accrued Price Differential)Outstanding Purchase Price together with any other Obligations then due and payable, and shall repurchase all Purchased Assets then subject to such Transaction. The Repurchase Price shall be transferred directly to Purchaser, and Purchaser shall transfer to Seller the related Purchased Assets.
(i)If Agent determines in its sole discretion that any Change in Law (except a Change in Law with regard to Taxes (or taxes expressly excluded from Taxes), which is governed solely by Section 8) or any change in accounting rules regarding capital requirements has the effect of reducing the rate of return on Purchaser’s capital or on the capital of any Affiliate of Purchaser under this Agreement as a consequence of such Change in Law or change in accounting rules, then from time to time Seller will compensate Purchaser or Purchaser’s Affiliate, as applicable, for such reduced rate of return suffered as a consequence of such Change in Law or change in accounting rules on terms similar to those imposed by Purchaser. Further, if due to the introduction of, any change in, or the compliance by Purchaser with (i) any eurocurrency reserve requirement, or (ii) the interpretation of any law, regulation or any guideline or request from any central bank or other Governmental Authority whether or not having the force of law, there shall be an increase in the cost to Purchaser or any Affiliate of Purchaser in engaging in the present or any future Transactions (except a Change in Law with regard to Taxes (or taxes expressly excluded from Taxes), which is governed solely by Section 8), then Seller shall either terminate this Agreement or, from time to time and upon demand by Purchaser, compensate Purchaser or Purchaser’s Affiliate for such increased costs, and such amounts shall be deemed a part of the Obligations hereunder. Purchaser shall provide Seller with notice as to any such Change in Law, change in accounting rules or change in compliance promptly following Purchaser’s receipt of actual knowledge thereof.
(j)Seller shall indemnify the Purchaser and hold the Purchaser harmless from any losses, costs and/or expenses which the Purchaser may sustain or incur as a result of terminating any Transaction on or before a Repurchase Date arising from the reemployment of funds obtained by the Purchaser hereunder or from actual out of pocket fees and expenses payable to terminate the deposits from which such funds were obtained (“Breakage Costs”). The Agent shall deliver to Seller a statement setting forth the amount and basis of determination of any Breakage Costs in such detail as determined in good faith by the Purchaser to be adequate, it being agreed that such statement and the method of its calculation shall be adequate and shall be conclusive and binding upon Seller, absent manifest error. The provisions of this Section 3(i) shall survive termination of this Agreement.
4.CONFIRMATION[Reserved]
In the event that parties hereto desire to enter into a Transaction on terms other than as set forth in this Agreement, the parties shall execute a confirmation prior to entering into such Transaction, which confirmation shall be in a form that is mutually acceptable to Purchaser and Seller and shall specify such terms, including, without limitation, the Purchase Date, the Purchase Price, the Pricing Rate therefor and the approximate Repurchase Date (a “Confirmation”). Any such Confirmation, together with this Agreement, shall constitute conclusive evidence of the terms agreed to between Purchaser and Seller with respect to the Transaction to which the Confirmation relates. In the event of any conflict between this Agreement and a Confirmation, the terms of the Confirmation shall control with respect to the related Transaction.
5.TAKEOUT COMMITMENTS
With respect to each Purchased Mortgage Loan subject to a Takeout Commitment, Seller shall instruct the related Takeout Investor to remit directly to Purchaser or the Bank in accordance with the terms of the Custodial and Disbursement Agreement no later than 4:00 p.m. (New York City time) on a Business Day an amount equal to the Repurchase Price for such Purchased Mortgage Loan in accordance with the Purchaser’s Wire Instructions. Simultaneously with or prior to such payment, Seller shall deliver to Purchaser via facsimile or electronic mail a payoff file in mutually agreeable form (the “Payoff File”) and shall indicate on such Payoff File the Mortgage Loan identification numbers which identified the applicable eligible Mortgage Loans when it was purchased by Purchaser hereunder. Upon receipt by Purchaser of payment of the Repurchase Price in respect of such Purchased Mortgage Loan, Purchaser shall release and remit to Seller any amount in excess of the Repurchase Price (other than the related Price Differential) on the next succeeding Business Day; provided, that both immediately before and after giving effect to such release and remittance, (i) there is no Default or Event of Default under this Agreement or any other Program Document and (ii) there is no Margin Deficit.
Simultaneously upon the transfer of the Takeout MBS to the Purchaser, (i) the Seller shall be construed to have transferred the Repurchase Price to the Purchaser for the related pooled Purchased Mortgage Loans backing such Takeout MBS; (ii) the Seller and Purchaser shall have entered into a new Transaction with respect such Takeout MBS; and (iii) the Purchaser shall be construed to have transferred the Initial Purchase Price for the related Takeout MBS to the Seller. The Takeout MBS will be delivered to the securities account of the securities intermediary, at which time they will be subject to this Agreement. The Seller shall arrange for the sale of the Takeout MBS to a Takeout Investor, the proceeds of such sale to be credited to the account of the paying agent to satisfy the Repurchase Price with respect to the Takeout MBS.
6.PAYMENT AND TRANSFER
(k)Unless otherwise agreed by Seller and Purchaser or as otherwise provided herein or in any other Program Document, all transfers of funds hereunder shall be in Dollars in immediately available funds. Seller shall remit (or, if applicable, shall cause to be remitted) directly to Purchaser all payments required to be made by it to Purchaser hereunder or under any other Program Document in accordance with wire instructions provided by Purchaser. Any payments received by Purchaser after 5:00 p.m. (New York City time) shall be applied on the next succeeding Business Day.
(l)Following Seller’s receipt of the Closing Protection Letter and Seller’s distribution of the Escrow Instruction Letter to the Settlement Agent, the Disbursement Agent will aggregate and disburse funds directly to the loan closing with respect to Wet-Ink Mortgage Loans that are subject to a Transaction hereunder.
7.MARGIN MAINTENANCE
Agent shall determine the Market Value of the Purchased Assets at any time as determined by Agent in its sole discretion. Agent shall have the right to mark to market the Purchased Assets on a daily basis in connection with which the Market Value with respect to one or more of the Purchased Assets may be determined to be zero in accordance with the terms herein.
(m)Agent shall have the right to determine the Market Value of any Purchased Asset on a daily basis in its sole discretion, including the right to determine that the Market Value with respect to one or more of the Purchased Assets may be zero. After making that determination, Agent may determine the Asset Base of any Purchased Asset on such day.
(n)If, as of any date of determination, the lesser of (i) [***] of the Principal Balance of the Purchased Mortgage Loans and face amount of the Takeout MBS and (ii) the aggregate Market Value of all Purchased Assets then subject to all Transactions, taking into account the cash then on deposit in the Collection Account, multiplied by the applicable Purchase Price Percentage is less than the Repurchase Price for all such Transactions by an amount that exceeds [***] (a “Margin Deficit”), then Agent may, by notice to the Seller (as such notice is more particularly set forth below, a “Margin Call”), require Seller to transfer to Purchaser or its designee cash or, at Purchaser’s option (and provided Seller has additional Eligible Mortgage Loans), additional Eligible Mortgage Loans to Purchaser (“Additional Purchased Mortgage Loans”) to cure the Margin Deficit. If the Agent delivers a Margin Call to the Seller on or prior to [***] (New York City time) on any Business Day, then the Seller shall transfer cash or Additional Purchased Mortgage Loans to Purchaser or its designee no later than [***] (New York City time) on the same Business Day. In the event the Agent delivers a Margin Call to Seller after [***] (New York City time) on any Business Day, Seller shall be required to transfer cash or Additional Purchased Mortgage Loans no later than [***] (New York City time) on the next succeeding Business Day..
(o)Any cash transferred to Purchaser or its designee in satisfaction of a Margin Call or pursuant to Section 1617(f)(ii) herein shall reduce the RepurchaseOutstanding Purchase Price of the related Transactions.
(p)The failure of Purchaser, on any one or more occasions, to exercise its rights hereunder, shall not change or alter the terms and conditions of this Agreement or limit the right of the Purchaser to do so at a later date. Seller and Purchaser each agree that a failure or delay by a Purchaser to exercise its rights hereunder shall not limit or waive Purchaser’s rights under this Agreement or otherwise existing by law or in any way create additional rights for Seller.
For the avoidance of doubt, it is hereby understood and agreed that Seller shall be responsible for satisfying any Margin Deficit existing as a result of any reduction of the Principal Balance of any Purchased Mortgage Loan pursuant to any action by any bankruptcy court.
8.TAXES; TAX TREATMENT
(q)All payments made by Seller under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities (including penalties, interest and additions to tax) with respect thereto imposed by any Governmental Authority therewith or thereon, excluding income taxes, branch profits taxes, franchise taxes or any other tax imposed on net income by the United States, a state or a foreign jurisdiction under the laws of which Purchaser is organized or of its applicable lending office, or a state or foreign jurisdiction with respect to which Purchaser has a present or former connection (other than any connection arising from executing, delivering, being party to, engaging in any transaction pursuant to, performing its obligations under or enforcing any Program Document), or any political subdivision thereof, U.S. federal withholding taxes imposed on amounts payable to or for the account of such Purchaser with respect to an applicable interest in a Transaction pursuant to a law in effect on the date on which (i) such Purchaser acquires such interest in the Transaction or (ii) such Purchaser changes its lending office, Taxes attributable to such Purchaser’s failure to comply with Section 8(d) and 8(e) (except to the extent such Taxes were payable under this Section 8 by Seller to such Purchaser’s assignor immediately before such Purchaser became a party hereto or to such Purchaser immediately before it changed its lending office), and taxes imposed under FATCA (collectively, such non-excluded taxes are hereinafter called “Taxes”), all of which shall be paid by Seller for its own account not later than the date when due. If Seller is required by law or regulation to deduct or withhold any Taxes from or in respect of any amount payable hereunder, it shall: (a) make such deduction or withholding, (b) pay the amount so deducted or withheld to the appropriate Governmental Authority not later than the date when due, (c) deliver to the Purchaser, promptly, original tax receipts and other evidence satisfactory to the Purchaser of the payment when due of the full amount of such Taxes; and (d) except as otherwise expressly provided in Section 8(d) below, pay to the Purchaser such additional amounts (including all Taxes imposed by any Governmental Authority on such additional amounts) as may be necessary so that after such deduction or withholding on account of Taxes has been made (including such deductions and withholding applicable to additional amounts payable under this Section) the Purchaser receives, free and clear of all Taxes, a net amount equal to the amount it would have received under this Agreement, as if no such deduction or withholding had been made.
(r)In addition, Seller agrees to pay to the relevant Governmental Authority in accordance with applicable law any current or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies (including, without limitation, mortgage recording taxes, transfer taxes and similar fees) imposed by any taxing authority that arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement except such taxes imposed with respect to an assignment as a result of a present or former connection between Purchaser and the jurisdiction imposing such taxes (other than connections arising from Purchaser having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Program Document, or sold or assigned any Purchased Asset or Program Document) (“Other Taxes”).
(s)Seller agrees to indemnify Purchaser for the full amount of Taxes (including additional amounts with respect thereto) and Other Taxes, and the full amount of Taxes of any kind imposed by any jurisdiction on amounts payable under this Section 8, and any liability (including penalties, interest and expenses arising thereon or with respect thereto) arising
therefrom or with respect thereto, provided, that the Purchaser shall have provided Seller with evidence, reasonably satisfactory to Seller, of payment of Taxes or Other Taxes, as the case may be.
(t)Any Purchaser that is either (i) not incorporated under the laws of the United States, any State thereof, or the District of Columbia or (ii) not otherwise treated as a “United States person” under the Code (a “Foreign Purchaser”) shall provide Seller and Agent with original properly completed and duly executed United States Internal Revenue Service (“IRS”) Forms W-8BEN-E or W-8ECI or any successor form prescribed by the IRS (or IRS Form W-8IMY, with IRS Form W-8BEN-E or W-8ECI attached), certifying that such Person is either (1) entitled to benefits under an income tax treaty to which the United States is a party which eliminates United States withholding tax under Sections 1441 through 1442 of the Code on payments to it or (2) otherwise fully exempt from United States withholding tax under Sections 1441 through 1442 of the Code on payments to it or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States in either case, on or prior to the date upon which each such Foreign Purchaser becomes a Purchaser. Each Foreign Purchaser will resubmit the appropriate form eliminating withholding tax on payments to it on the earliest of (A) the third anniversary of the prior submission, or (B) on or before the expiration of thirty (30) days after there is a “change in circumstances” with respect to such Person as defined in Treas. Reg. Section 1.1441-1(e)(4)(ii)(D). Upon the execution of this Agreement, each Purchaser that is a “United States person” within the meaning of the Code shall deliver to Seller a duly executed original of Internal Revenue Service Form W-9 or such other documentation or information prescribed by applicable laws or reasonably requested by Seller as will enable Seller to determine whether or not Purchaser is subject to backup withholding or information reporting requirements. Unless Seller has received such forms or other documents or information as required by this Section 8(d) to establish Purchaser’s exception from backup withholding tax, Seller shall not be required to pay additional sums or indemnify Purchaser for any backup amount withheld.
(u)If a payment made to Purchaser under this Agreement would be subject to any withholding tax imposed by FATCA if Agent or Purchaser 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), Purchaser shall deliver to Seller 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 its obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (e), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. Solely for purposes of this clause (e), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
(v)Without prejudice to the survival of any other agreement of Seller hereunder, the agreements and obligations of Seller contained in this Section 8 shall survive the termination of this Agreement. Nothing contained in this Section 8 shall require Purchaser to make available any of its tax returns or other information that it deems to be confidential or proprietary.
(w)Each party to this Agreement acknowledges that it is its intent solely for purposes of U.S. federal, state and local income and franchise taxes to treat each Transaction as indebtedness of the Seller that is secured by the Purchased Assets and that the Purchased Assets are owned by Seller in the absence of an Event of Default by the Seller. All parties to this Agreement agree to such treatment and agree to take no action inconsistent with this treatment, unless required by law.
9.BENCHMARK REPLACEMENT
(x)Upon the occurrence of a Benchmark Transition Event, the Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder and under any Program Document in respect of any Benchmark setting at or after 5:00 p.m. on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided by Agent to Purchaser and Seller without any amendment to, or further action or consent of any other party to, this Agreement or any other Program Document, so long as Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Purchaser. At any time that the administrator of the then-current Benchmark has permanently or indefinitely ceased to provide such Benchmark or such Benchmark has been announced by the regulatory supervisor for the administrator of such Benchmark pursuant to public statement or publication of information to be no longer representative of the underlying market and economic reality that such Benchmark is intended to measure and that representativeness will not be restored, Seller may revoke any request for a Transaction to be made or continued that would bear interest by reference to such then-current Benchmark until Seller’s receipt of notice from Agent that a Benchmark Replacement has replaced such Benchmark.
(y)In connection with the implementation and administration of a Benchmark Replacement, Agent shall have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Program Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement.
(z)The Agent shall promptly notify Seller and Purchaser of (i) the implementation of any Benchmark Replacement and (ii) the effectiveness of any Benchmark Replacement Conforming Changes.
(aa)Any determination, decision or election that may be made by Agent or Purchaser pursuant to this Section 9, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section 9.
10.9. SECURITY INTEREST; PURCHASER’S APPOINTMENT AS ATTORNEY-IN-FACT
(ab)Seller and Purchaser intend that (other than for tax and accounting purposes) the Transactions hereunder be sales to Purchaser of the Purchased Assets and not loans from Purchaser to Seller secured by the Purchased Assets. However, in order to preserve Purchaser’s rights under this Agreement in the event that a court or other forum recharacterizes the Transactions hereunder as other than sales, and as security for Seller’s performance of all of its Obligations, Seller hereby grants to Agent for benefit of Purchaser a first priority security interest in the Purchased Assets. Seller acknowledges and agrees that its rights with respect to the Purchased Assets are and shall continue to be at all times junior and subordinate to the rights of Purchaser hereunder.
(ac)Seller hereby irrevocably constitutes and appoints Agent for benefit of Purchaser and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Seller and in the name of Seller, in the name of Purchaser or in its own name for benefit of Purchaser, from time to time in Purchaser’sAgent’s discretion, to file such financing statement or statements relating to the Purchased Assets as PurchaserAgent at its option may deem appropriate, and if an Event of Default shall have occurred and be continuing, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be reasonably necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, Seller hereby gives Agent for benefit of Purchaser the power and right, on behalf of Seller, without assent by, but with notice to, Seller, to do the following if an Event of Default shall have occurred and be continuing and Agent for benefit of Purchaser has elected to exercise its remedies pursuant to Section 1819 hereof:
(i)in the name of Seller, in the name of Purchaser or in its own name for benefit of Purchaser, or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due with respect to any Purchased Assets and to file any claim or to take any other action or initiate and maintain any appropriate proceeding in any appropriate court of law or equity or otherwise deemed appropriate by PurchaserAgent for the purpose of collecting any and all such moneys due with respect to any Purchased Assets whenever payable;
(ii)to pay or discharge taxes and Liens levied or placed on or threatened against the Purchased Assets;
(iii)(A) to direct any party liable for any payment under any Purchased Assets to make payment of any and all moneys due or to become due thereunder directly to Agent, Purchaser or as PurchaserAgent shall direct, (B) in the name of Seller, in the name of Purchaser or in its own name for benefit of Purchaser, or otherwise as appropriate, to directly send or cause the applicable servicer to send “hello” letters, “goodbye” letters in the form of Exhibit D, and Section 404 Notices; (C) to ask or demand for, collect, receive payment of and receipt for any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Purchased Assets; (D) to sign and endorse any invoices, assignments, verifications, notices and other documents in connection with any Purchased Assets; (E) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Purchased Assets or any proceeds thereof and to enforce any other right in respect of any Purchased Assets; (F) to defend any suit, action or proceeding brought against Seller with respect to any Purchased Assets; (G) to settle, compromise or adjust any suit, action or proceeding described in clause (F) above and, in connection therewith, to give such discharges or releases as Purchaser may deem appropriate; and (H) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any Purchased Assets as fully and completely as though Purchaser was the absolute owner thereof for all purposes, and to do, at Purchaser’sAgent’s option and Seller’s expense, at any time, and from time to time, all acts and things which PurchaserAgent deems necessary to protect, preserve or realize upon the Purchased Assets and Purchaser’s Liens thereon and to effect the intent of this Agreement, all as fully and effectively as Seller might do.
Seller hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable.
Seller also authorizes Purchaser, from time to time if an Event of Default shall have occurred and be continuing, to execute any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Purchased Assets in connection with any sale provided for in Section 1819 hereof.
The powers conferred on Purchaser hereunder are solely to protect Purchaser’s interests in the Purchased Assets and shall not impose any duty upon it to exercise any such powers. Purchaser shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither Purchaser nor any of its officers, directors, employees or agents shall be responsible to Seller for any act or failure to act hereunder.
11.10. CONDITIONS PRECEDENT
(ad)As conditions precedent to the effectiveness of this Agreement, Purchaser shall have received on or before the Effective Date the following, in form and substance satisfactory to Purchaser and duly executed by each party thereto (as applicable):
(iv)Each of the Program Documents duly executed and delivered by the parties thereto and being in full force and effect, free of any modification, breach or waiver;
(v)A certificate of an officer of Seller attaching certified copies of Seller’s consents or charter, bylaws and corporate resolutions, as applicable, approving the Program Documents and Transactions thereunder (either specifically or by general resolution), and all documents evidencing other necessary corporate action or governmental approvals as may be required in connection with the Program Documents;
(vi)A certified copy of a good standing certificate from the jurisdiction of organization of Seller, dated as of no earlier than the date which is ten (10) Business Days prior to the Effective Date;
(vii)An incumbency certificate of the secretary of Seller certifying the names, true signatures and titles of Seller’s representatives who are duly authorized to request Transactions hereunder and to execute the Program Documents and the other documents to be delivered thereunder;
(viii)An opinion of Seller’s counsel as to such matters as Purchaser may reasonably request (including, without limitation, with respect to Purchaser’s perfected security interest in the Purchased Assets, a non-contravention, enforceability and corporate opinion with respect to Seller, an opinion with respect to the inapplicability of the Investment Company Act to Seller, an opinion that this Agreement constitutes a “repurchase agreement”, a “securities contract” and a “master netting agreement” within the meaning of the Bankruptcy Code and an opinion that no Transaction constitutes an avoidable transfer under Sections 546(e), 546(f), and 546(j) of the Bankruptcy Code, each in form and substance acceptable to Purchaser);
(ix)Seller shall have paid to Purchaser and Purchaser shall have received all accrued and unpaid fees and expenses owed to Purchaser in accordance with the Program Documents, including without limitation, the Structuring Fee, the Non-Utilization Fee, and any Transaction Fees then due and owing pursuant to Section 2 of the Pricing Side Letter, in immediately available funds, and without deduction, set-off or counterclaim;
(x)A copy of the insurance policies required by Section 1415(q) of this Agreement;
(xi)Duly completed and filed Uniform Commercial Code financing statements acceptable to Purchaser and covering the Purchased Assets on Form UCC1;
(xii)Purchaser or Agent shall have completed the due diligence review pursuant to Section 3637, and such review shall be satisfactory to Purchaser and Agent in their sole discretion;
(xiii)Seller shall have provided evidence, satisfactory to Purchaser and Agent, that Servicer’s and Seller’s Approvals are in good standing; and
(xiv)Any other documents reasonably requested by Purchaser or Agent.
(ae)As conditions precedent to each Transaction pursuant to this Agreement (including the initial Transaction), each of the following conditions precedent must have been satisfied:
(i)Purchaser or its designee shall have received on or before the Purchase Date with respect to Eligible Mortgage Loans that are to be the subject of such Transaction (unless otherwise specified in this Agreement) the following, in form and substance satisfactory to Purchaser and (if applicable) duly executed:
(1)Seller shall have paid to Purchaser and Purchaser shall have received all accrued and unpaid fees and expenses owed to Purchaser in accordance with the Program Documents, including without limitation, the Structuring Fee, the Non-Utilization Fee and any Transaction Fee then due and owing pursuant to Section 2 of the Pricing Side Letter, in immediately available funds, and without deduction, set-off or counterclaim;
(2)The Seller Mortgage Loan Schedule with respect to such Purchased Assets, delivered pursuant to Section 3(c);
(3)[Reserved];
(4)Purchaser shall have received the Structuring Fee, the Non-Utilization Fee, and the Transaction Fees in respect of such Transaction then due and owing pursuant to Section 2 of the Pricing Side Letter, in immediately available funds, and without deduction, set-off or counterclaim;
(5)With respect to Mortgage Loans that are not Wet-Ink Mortgage Loans, an original trust receipt executed by the Custodian without exceptions and with respect to Wet-Ink Mortgage Loans, an original trust receipt executed by the Wet-Ink Mortgage Loan Document Receipt Date by the Custodian, without exceptions other than those exceptions acceptable to Purchaser in its sole discretion;
(6)Such other certifications of Custodian as are required under Sections 2 and 4 of the Custodial and Disbursement Agreement;
(7)[Reserved];
(8)A duly executed Warehouse Lender’s Release from any Warehouse Lender (including any party that has a precautionary security interest in a Mortgage Loan) having a security interest in any Mortgage Loans subject to such Transaction, substantially in the form of Exhibit E, addressed to Purchaser, releasing any and all of its right, title and interest in, to and under such Mortgage Loan (including, without limitation, any security interest that such secured party or secured party’s agent may have by virtue of its possession, custody or control thereof) and, to the extent applicable, has filed Uniform Commercial Code termination statements in respect of any Uniform Commercial Code filings made in respect of such Mortgage Loan, and each such Warehouse Lender’s Release and Uniform Commercial Code termination
statement has been delivered to Purchaser prior to such Transaction and to the Custodian as part of the Mortgage File.
(xv)No Default or Event of Default shall have occurred and be continuing;
(xvi)Purchaser shall not have determined that the introduction of or a change in any Requirement of Law or in the interpretation or administration of any requirement of law applicable to Purchaser has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for Purchaser to enter into Transactions with the applicable Pricing Rate, and, if applicable, Purchaser shall have made a similar determination with respect to similarly situated sellers;
(xvii)Both immediately prior to the related Transaction and also after giving effect thereto and to the intended use thereof, all representations and warranties in the Program Documents shall be true and correct on the date of such Transaction (with the same force and effect as if made on such date) and Seller is in compliance with the terms and conditions of the Program Documents, other than as may be expressly waived by the Purchaser;
(xviii)The then Aggregate MRA Purchase Price when added to the Initial Purchase Price for the requested Transaction, shall not exceed, as of any date of determination, the lesser of (a) the Maximum Aggregate Purchase Price and (b) the Asset Base;
(xix)The Initial Purchase Price for the requested Transaction shall not be less than [***];
(xx)Satisfaction of any conditions precedent to the initial Transaction as set forth in clause (a) of this Section 1011 that were not satisfied prior to such initial Purchase Date;
(xxi)Purchaser shall have determined that all actions necessary to establish or maintain Purchaser’s perfected security interest in the Purchased Assets have been taken;
(xxii)Purchaser or its designee shall have received any other documents reasonably requested by Purchaser pursuant to a request specifying the reasons for such request, reasonable information, and/or written responses to such requests, regarding the financial well-being of Seller;
(xxiii)There is no Margin Deficit at the time immediately prior to entering into a new Transaction (other than a Margin Deficit that will be cured contemporaneous with such Transaction in accordance with the provisions of Section 7 hereof) and no Margin Deficit will exist immediately after giving effect thereto; and
(xxiv)None of the following shall have occurred and/or be continuing:
(9)an event or events shall have occurred in the good faith determination of Purchaser resulting in the effective absence of a “repo market” or comparable “lending market” for financing debt obligations secured by mortgage loans or securities or an event or events shall have occurred resulting in Purchaser not being able to finance Eligible Mortgage Loans through the “repo market” or “lending market” with traditional counterparties at rates which would have been reasonable prior to the occurrence of such event or events; or
(10)an event or events shall have occurred resulting in the effective absence of a “securities market” for securities backed by mortgage loans or an event or events shall have occurred resulting in Purchaser not being able to sell securities backed by mortgage loans at prices which would have been reasonable prior to such event or events; or
(11)there shall have occurred a material adverse change in the financial condition of Purchaser which affects (or can reasonably be expected to affect) materially and adversely the ability of Purchaser to fund its obligations under this Agreement.
(i)Delivery of all due diligence results to the extent diligence is performed by Purchaser or Agent with respect to such Transaction;
(ii)All Mortgage Loans referenced on the related Seller Mortgage Loan Schedule are Eligible Mortgage Loans; and
(iii)The Seller’s, or its Affiliate as Servicer’s, HUD ranking is not below “Tier 2” lender.
12.11. RELEASE OF PURCHASED ASSETS
Upon timely payment in full of the Repurchase Price and all other Obligations (if any) then owing with respect to a Purchased Asset pursuant to Section 3(f) hereof, unless a Margin Deficit or an Event of Default shall have occurred and be continuing: (a) Purchaser shall automatically and without any further action terminate any security interest that Purchaser may have in such Purchased Asset, (b) the Purchaser shall automatically and without further action sell and release to the Seller or the applicable Takeout Investor, as the case may be, such Purchased Asset, and (c) with respect to such Purchased Asset, Purchaser shall or shall direct Custodian to release such Purchased Asset to Seller or the applicable Takeout Investor, as the case may be. Except as set forth in Section 1617(f)(ii) and Section 1516, Seller shall give at least two (2) Business Days prior written notice to Purchaser if such repurchase shall occur on any date other than the Repurchase Date.
If such a Margin Deficit is applicable, Purchaser shall notify Seller of the amount thereof and Seller may thereupon satisfy the Margin Call in the manner specified in Section 7.
13.12. RELIANCE
With respect to any Transaction, Purchaser may conclusively rely upon, and shall incur no liability to Seller in acting upon, any request or other communication that Purchaser reasonably believes to have been given or made by a person authorized to enter into a Transaction on Seller’s behalf.
14.13. REPRESENTATIONS AND WARRANTIES
Seller hereby represents and warrants to Purchaser and Agent, and shall on and as of the Purchase Date for any Transaction and on and as of each date thereafter through and including the related Repurchase Date be deemed to represent and warrant to Purchaser and Agent that:
(af)Due Organization, Qualification, Power, Authority and Due Authorization. Seller is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and it has qualified to do business in each jurisdiction in which it is legally required to do, provided that if Seller subsequently fails to so qualify, it rectifies the failure to qualify within one (1) Business Day of notice or knowledge of such failure. Seller has the power and authority under its certificate of formation, operating agreement and applicable law to enter into this Agreement and the Program Documents and to perform all acts contemplated hereby and thereby or in connection herewith and therewith; this Agreement and the Program Documents and the transactions contemplated hereby and thereby have been duly authorized by all necessary action and do not require any additional approvals or consents or other action by, or any notice to or filing with, any Person other than any that have heretofore been obtained, given or made.
(ag)Noncontravention. The consummation of the transactions contemplated by this Agreement and Program Documents are in the ordinary course of business of Seller and will not conflict with, result in the breach of or violate any provision of the certificate of formation and operating agreement of Seller or result in the breach of any provision of, or conflict with or constitute a default under or result in the acceleration of any obligation under, any agreement, indenture, loan or credit agreement or other instrument to which Seller, the Purchased Assets or any of Seller’s Property is or may be subject to, or result in the violation of any law, rule, regulation, order, judgment or decree to which Seller, the Purchased Assets or Seller’s Property is subject. Without limiting the generality of the foregoing, the consummation of the Transactions will not violate any policy, regulation or guideline of the FHA or VA or result in the voiding or reduction of the FHA insurance, VA guarantee or any other insurance or guarantee in respect of any Purchased Mortgage Loan, and such FHA insurance or VA guarantee is in full force and effect or shall be in full force and effect as required by the applicable Agency Guide.
(ah)Legal Proceeding. There is no action, suit, proceeding, inquiry or investigation, at law or in equity, or before or by any court, public board or body pending or, to the knowledge of a Responsible Officer of Seller, threatened (in writing) against or affecting Seller (or, to the knowledge of a Responsible Officer of Seller, any basis therefor) (i) that, if it involves a claim that would be considered frivolous by industry standards or where the claimed amount in controversy is clearly excessive given the circumstances, is likely to succeed, and (ii) with respect to which an unfavorable decision, ruling or finding could reasonably be expected to adversely affect the validity of the Purchased Assets or the validity or enforceability of this Agreement or the Program Documents, would adversely affect the proceedings of Seller in connection herewith, or would or could reasonably be expected to materially and adversely affect Seller’s ability to carry out its obligations hereunder.
(ai)Valid and Binding Obligations. This Agreement, the Program Documents and every other document to be executed by Seller in connection with this Agreement is and will be the legal, valid, binding and subsisting obligations of Seller, enforceable in accordance with their respective terms, except that (A) the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors’ rights generally and (B) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
(aj)Financial Statements. The financial statements of Seller, copies of which have been furnished to Purchaser, (i) are, as of the dates and for the periods referred to therein, complete and correct in all material respects, (ii) present fairly the financial condition and results of operations of Seller as of the dates and for the periods indicated and (iii) have been prepared in accordance with GAAP consistently applied, except as noted therein (subject as to interim statements to normal year-end adjustments). Since the date of the most recent financial statements, there has been no Material Adverse Change with respect to Seller. Except as disclosed in such financial statements or pursuant to Section 1415(i) hereof, Seller is not subject to any contingent liabilities or commitments that, individually or in the aggregate, have a reasonable possibility of causing a Material Adverse Change with respect to Seller.
(ak)Accuracy of Information. Neither this Agreement nor any representations and warranties or information relating to Seller that Seller has delivered or caused to be delivered to Purchaser, including, but not limited to, all documents related to this Agreement, the Program Documents or Seller’s financial statements, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements made therein or herein in light of the circumstances under which they were made, not misleading. Since the furnishing of such documents or information, there has been no change, nor any development or event involving a prospective change that would render any of such documents or information untrue or misleading
in any material respect, unless Seller delivered such other documents or information informing Purchaser or Agent of such change.
(al)No Consents. No consent, license, approval or authorization from, or registration, filing or declaration with, any regulatory body, administrative agency or other governmental instrumentality, nor any consent, approval, waiver or notification of any creditor, lessor or other non-governmental Person, is required in connection with the execution, delivery and performance by Seller or its Parent Company, if any, of this Agreement or any other Program Document to which it is a party, other than any that have heretofore been obtained, given or made.
(am)Compliance With Law, Etc. No practice, procedure or policy employed by Seller in the conduct of its businesses violates any law, regulation, judgment, agreement, regulatory consent, order or decree applicable to it which, if enforced, would result in a Material Adverse Effect.
(an)Solvency. Seller is solvent and will not be rendered insolvent by any Transaction and, after giving effect to each such Transaction, Seller will not be left with an unreasonably small amount of capital with which to engage in its business. Seller does not intend to incur, nor believes that it has incurred, debts beyond its ability to pay such debts as they mature. Seller is not contemplating the commencement of insolvency, bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official in respect of Seller or any of its assets. The audited annual financial statements of Seller or the notes thereto or other opinions or conclusions stated therein have not been qualified or limited by reference to the status of such Person as a “going concern” or a reference of similar import or indicate that Seller has a negative net worth or is insolvent.
(ao)Fraudulent Conveyance. The amount of consideration being received by Seller in respect of each Transaction, taken as a whole, constitutes reasonably equivalent value and fair consideration for the related Purchased Assets. Seller is not transferring any Purchased Assets with any intent to hinder, delay or defraud any of its creditors. The Agreement and the Program Documents, any other document contemplated hereby or thereby and each Transaction have not been entered into fraudulently by Seller hereunder, or with the intent to hinder, delay or defraud any creditor or Purchaser.
(ap)Investment Company Act Compliance. Seller is not required to be registered as an “investment company” as defined under the Investment Company Act nor is an entity “controlled by” an entity required to be registered as an “investment company” as defined under the Investment Company Act.
(aq)Taxes. Seller has timely filed all federal and state income and other material tax returns that are required to be filed by it and has paid all taxes, including any assessments received by it, to the extent that such taxes are reflected on such returns and have become due or otherwise are federal, state income or other material taxes (other than for taxes that are being contested in good faith or for which it has established adequate reserves). Any taxes, fees and other governmental charges payable by Seller in connection with a Transaction and the execution and delivery of the Program Documents have been paid.
(ar)Additional Representations. With respect to each Purchased Asset to be sold hereunder by Seller to Purchaser, Seller hereby makes all of the applicable representations and warranties set forth in Exhibit B as of the date the related Mortgage File is delivered to Purchaser or the Custodian with respect to the Purchased Assets and continuously while such Purchased Asset is subject to a Transaction. Further, as of each Purchase Date, Seller shall be deemed to have represented and warranted in like manner that Seller has no knowledge that any such
representation or warranty may have ceased to be true in a material respect as of such date, except as otherwise stated in a written notice to the Purchaser, any such exception to identify the applicable representation or warranty and specify in reasonable detail the related knowledge of Seller.
(as)No Broker. Seller has not dealt with any broker, investment banker, agent, or other person, except for Purchaser, who may be entitled to any commission or compensation in connection with the sale of Purchased Assets pursuant to this Agreement; provided, that if Seller has dealt with any broker, investment banker, agent, or other person, except for Purchaser, who may be entitled to any commission or compensation in connection with the sale of Purchased Assets pursuant to this Agreement, such commission or compensation shall have been paid in full by Seller.
(at)[Reserved].
(au)Approvals. Seller has all requisite Approvals.
(av)[Reserved].
(aw)No Adverse Actions. Seller has not received from any Agency a notice of extinguishment or a notice indicating material breach, default or material non-compliance which the Agent reasonably determines may entitle an Agency to terminate, suspend, sanction or levy penalties against the Seller, or a notice from any Agency, HUD, FHA or VA indicating any adverse fact or circumstance in respect of Seller which the Agent reasonably determines may entitle such Agency, HUD, FHA or VA, as the case may be, to revoke any Approval or otherwise terminate, suspend Seller as an Agency approved issuer or servicer, or with respect to which such adverse fact or circumstance has caused any Agency, HUD, FHA or VA, as the case may be, to terminate Seller, without any subsequent rescission thereof in such notice.
(ax)Chief Executive Office/Jurisdiction of Organization. On the Effective Date, Seller’s chief executive office and chief place of business is located at 2211 Old Earhart Road, Suite 250, Ann Arbor, Michigan 48105. On the Effective Date, Seller is a New Jersey corporation, Seller is not organized under any jurisdiction other than New Jersey, and Seller’s federal tax identification number is [***].
(ay)Affiliated Parties. Seller is not an Affiliate of the Custodian, Disbursement Agent, Settlement Agent or any other party to a Program Document hereunder.
The representations and warranties set forth in this Agreement shall survive transfer of the Purchased Assets to Purchaser and shall continue for so long as the Purchased Assets are subject to this Agreement.
15.14. COVENANTS OF SELLER
Seller hereby covenants and agrees with Purchaser and Agent as follows:
(az)Defense of Title. Seller warrants and will defend the right, title and interest of Purchaser in and to all Purchased Assets against all adverse claims and demands.
(ba)No Amendment or Compromise. None of Seller or those acting on Seller’s behalf shall amend, modify, or waive any term or condition of, or settle or compromise any claim in respect of, any item of the Purchased Assets, any related rights or any of the Program Documents without the prior written consent of Purchaser, except if such amendment or modification does not (i) affect the amount or timing of any payment of principal or interest payable with respect to
a Purchased Asset, extend its scheduled maturity date, modify its interest rate, or constitute a cancellation or discharge of its outstanding principal balance or (ii) materially and adversely affect the security afforded by the real property, furnishings, fixtures, or equipment securing the Purchased Asset. Notwithstanding the foregoing, the Seller may amend, modify or waive any term or condition of the individual Mortgage Loans in accordance with Accepted Servicing Practices and the Agency Guides; provided, that Seller shall promptly notify Purchaser of any amendment, modification or waiver that causes any Purchased Mortgage Loan to cease to be an Eligible Mortgage Loan.
(bb)No Assignment; No Liens. Except as permitted herein, Seller shall not sell, assign, transfer or otherwise dispose of, or grant any option with respect to, or pledge, hypothecate or grant a security interest in, or Lien on or otherwise encumber (except pursuant to the Program Documents) any of the Purchased Assets or any interest therein,; provided that this Section 1415(c) shall not prevent any of the following: any contribution, sale, assignment, transfer or conveyance of Purchased Assets in accordance with the Program Documents and any forward purchase commitment or other type of take out commitment for the Purchased Assets (without vesting rights in the related purchasers as against Purchaser).
(bc)No Economic Interest. Neither Seller nor any Affiliate thereof will acquire any economic interest in or obligation with respect to any Purchased Mortgage Loan except for record title to the Mortgage relating to such Purchased Mortgage Loan and the right and obligation to repurchase the Mortgage Loan hereunder and the right to receive amounts pursuant to Section 1617.
(bd)Preservation of Purchased Assets. Seller shall take all actions necessary or, in the reasonable opinion of Purchaser, desirable, to preserve the Purchased Assets so that they remain subject to a first priority perfected security interest hereunder and deliver evidence that such actions have been taken, including, without limitation, duly completed and filed Uniform Commercial Code financing statements on Form UCC1. Without limiting the foregoing, Seller will comply with all applicable laws, rules, regulations and other laws of any Governmental Authority applicable to Seller relating to the Purchased Assets and cause the Purchased Assets to comply with all applicable laws, rules, regulations and other laws of any such Governmental Authority. Seller will not allow any default to occur for which Seller is responsible under any Purchased Assets or any Program Documents and Seller shall fully perform or cause to be performed when due all of its obligations under any Purchased Assets or the Program Documents.
(be)Maintenance of Papers, Records and Files.
(i)Seller shall maintain all Records relating to the Purchased Assets not in the possession of Custodian or released in accordance with the Custodial and Disbursement Agreement in good and complete condition in accordance with industry practices and preserve them against loss. Seller shall collect and maintain or cause to be collected and maintained all such Records in accordance with industry custom and practice, and all such Records shall be in Purchaser’s or Custodian’s possession unless Purchaser otherwise approves in writing or in accordance with the Custodial and Disbursement Agreement. Seller will not cause or authorize any such papers, records or files that are an original or an only copy to leave Custodian’s possession, except for individual items removed in connection with servicing a specific Mortgage Loan, in which event Seller will obtain or cause to be obtained a receipt from the Custodian for any such paper, record or file, or as otherwise permitted under the Custodial and Disbursement Agreement.
(ii)For so long as Purchaser has an interest in or Lien on any Purchased Asset, Seller will hold or cause to be held all related Records for the sole benefit of Purchaser.
(iii)Upon reasonable advance notice from Custodian or Purchaser, Seller shall (x) make any and all such Records available to Custodian or Agent for examination, either by its own officers or employees, or by agents or contractors, or both, and make copies of all or any portion thereof, (y) permit Agent or its authorized agents to discuss the affairs, finances and accounts of Seller with its chief operating officer and chief financial officer and to discuss the affairs, finances and accounts of Seller with its independent certified public accountants.
(bf)Financial Statements and Other Information; Financial Covenants.
(i)Seller shall keep or cause to be kept in reasonable detail books and records setting forth an account of its assets and business and, as applicable, shall clearly reflect therein the transfer of Purchased Assets to Purchaser. Seller shall furnish or cause to be furnished to Purchaser the following:
(1)Financial Statements.
(a)Within ninety (90) days after the end of each fiscal year of Seller, the consolidated audited balance sheets of Seller and its consolidated Subsidiaries, which will be in conformity with GAAP, and the related consolidated audited statements of income and changes in equity showing the financial condition of Seller and its consolidated Subsidiaries as of the close of such fiscal year and the results of operations during such year, and consolidated audited statements of cash flows, as of the close of such fiscal year, setting forth, in each case, in comparative form the corresponding figures for the preceding year. The foregoing consolidated financial statements are to be reported on by, and to carry the unqualified report (in a form substantially similar to the form of financial statements attached hereto as Exhibit J, or in a form otherwise acceptable to Purchaser and Agent) of, an independent public accountant of national standing acceptable to Purchaser and Agent, which shall include KPMG LLP, PricewaterhouseCoopers LLP, Deloitte LLP, BDO USA, LLP, and any other similarly situated independent public account;
(b)Within forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of Seller, consolidated unaudited balance sheets and consolidated statements of income, (in a form substantially similar to the form of financial statements attached hereto as Exhibit K, or in a form otherwise acceptable to Purchaser and Agent), showing the financial condition and results of operations of Seller and its consolidated Subsidiaries, each on a consolidated basis as of the end of each such quarter and for the then elapsed portion of the fiscal year, setting forth, in each case, in comparative form the corresponding figures for the corresponding periods of the preceding fiscal year, certified by a financial officer of Seller who is qualified to make such certification as presenting fairly the financial position and results of operations of Seller and its consolidated Subsidiaries and as having been prepared in accordance with GAAP consistently applied, in each case, subject to normal year-end audit adjustments;
(c)As soon as is practicable, but in any event within thirty (30) days after the end of each of the first two months of a fiscal quarter, consolidated unaudited balance sheets and consolidated statements of income (in a form substantially similar to the form of financial statements attached hereto as Exhibit K, or in a form otherwise acceptable to Purchaser and Agent) showing the financial condition and results of operations of Seller and its consolidated Subsidiaries on a consolidated basis as of the end of each such month and for the then elapsed portion of the fiscal year, setting forth, in each case, in comparative form the corresponding figures for the corresponding month of the preceding fiscal year, certified by a financial officer of Seller who is qualified to make such certification as presenting fairly the financial position and results of operations of Seller and its consolidated Subsidiaries and as having been prepared in accordance with GAAP consistently applied, in each case, subject to normal year-end audit adjustments;
(d)Reserved;
(e)Promptly upon becoming available, copies of all financial statements, reports, notices and proxy statements sent by Seller or any of Seller’s consolidated Subsidiaries in a general mailing to their respective stockholders and of all reports and other material (including copies of all registration statements under the Securities Act of 1933, as amended) filed by any of them with any securities exchange or with the SEC or any governmental authority succeeding to any or all of the functions of the SEC;
(f)Promptly upon becoming available, copies of any annual and quarterly financial reports that Seller may be required to file with the SEC or any federal banking agency, or any report which Seller may be required to file with the SEC or any federal banking agency containing such financial statements and other information concerning Seller’s business and affairs as is required to be included in such reports in accordance with the rules and regulations of the SEC or such federal banking agency, as may be promulgated from time to time;
(g)Such supplements to the aforementioned documents and such other information regarding the operations, business, affairs and financial condition of Seller’s Parent Company, Seller or any of Seller’s consolidated Subsidiaries as Purchaser or Agent may reasonably request.
Seller’s obligation to deliver any report or other document under this 14(g)(i)(A)Section 15(g)(i)(A) shall be deemed to have been satisfied if, and as of the date, such report or other document is filed with the SEC pursuant to the SEC’s Electronic Data Gathering & Analysis Recovery system.
(h)The audited annual financial statements of Seller or the notes thereto or other opinions or conclusions stated therein shall not be qualified or limited by reference to the status of Seller as a “going concern” or a reference of similar import nor shall indicate that such Seller has a negative net worth or is insolvent.
(2)Reserved.
(3)Other Information. Upon the request of Purchaser or Agent, such other information or reports as Purchaser or Agent may from time to time reasonably request; provided, however, such request will not cause Seller any undue material expense.
(iv)Seller shall at all times comply with the financial covenants setsset forth in Section 4 of the Pricing Side Letter.
(v)Certifications. Seller shall execute and deliver a certification (A) substantially in the form of Exhibit A-1 attached hereto within thirty (30) days after the end of each of the first two calendar months of each fiscal quarter of Seller, and (B) substantially in the form of Exhibit A-2 attached hereto within (x) forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of Seller, and (y) ninety (90) days after the end of each fiscal year of Seller. Each certification to be executed and delivered hereunder shall be sent via electronic mail to [***] or such other email address as the Agent may furnish to the Seller from time to time by written notice.
(bg)Agency Reporting. Seller shall comply with the applicable reporting requirements of each Agency Guide and HUD.
(bh)Notice of Material Events. To the extent not otherwise prohibited from disclosing, Seller shall promptly inform Purchaser and Agent in writing (via electronic mail to [***] and [***] or such other email address as Agent may furnish to Seller from time to time by written notice) of any of the following of which any Responsible Officer is aware:
(iv)any Default, Event of Default by Seller of any material obligation under any Program Document or any Servicer Termination Event;
(v)any material adverse change in the insurance coverage of Seller as required to be maintained pursuant to Section 1415(q) hereof, with copy of evidence of same attached;
(vi)the commencement of, or any determination in, any material dispute, litigation, investigation, proceeding, sanctions or suspension between Seller, on the one hand, and any Governmental Authority or any other Person, on the other (other than any investigation or proceeding conducted in the ordinary course of business by a state licensing authority) that is reasonably likely to have a Material Adverse Effect;
(vii)any material change in accounting policies or financial reporting practices of Seller which could reasonably be expected to have a Material Adverse Effect;
(viii)any event, circumstance or condition that has resulted, or has a reasonable likelihood of resulting in either a Material Adverse Change or a Material Adverse Effect with respect to Seller;
(ix)any material modifications to Seller’s underwriting or acquisition guidelines that relate to Mortgage Loans that are not Agency Mortgage Loans;
(x)any changes to Seller’s corporate leverage covenant;
(xi)any penalties, sanctions or charges levied, or threatened in writing to be levied, against Seller or any change, or change threatened in writing, in Approval status, or actions taken, or threatened in writing to be taken, against Seller by or disputes in writing between Seller and any Applicable Agency, or any supervisory or regulatory Governmental Authority (including, but not limited to HUD, FHA and VA) supervising or regulating the origination or servicing of mortgage loans by, or the issuer status of, Seller (which, in the event of a Governmental Authority, could reasonably be expected to have a Material Adverse Effect);
(xii)any Change in Control of Seller;
(xiii)upon Seller becoming aware of any termination or threatened termination by an Agency of the Custodian as an eligible custodian; or
(xiv)change in Seller’s name, type of organization or jurisdiction of organization (or the organizational identification number, if any, issued by such jurisdiction to Seller), its chief place of business and chief executive office, as set forth in Section 1314(s) and in the Master Netting Agreement, without at least ten (10) days’ prior written notice to Purchaser.
(bi)Maintenance of Approvals. Seller shall take all commercially reasonable necessary actions to maintain its Approvals at all times during the term of this Agreement. If, for any reason, Seller ceases to maintain any such Approval, Seller shall notify Purchaser and Agent within one (1) Business Day.
(bj)Maintenance of Licenses. Seller shall (i) maintain all licenses, permits or other approvals necessary for Seller to conduct its business and to perform its obligations under the Program Documents, (ii) remain in good standing to the extent required under, and comply in all material respects with, all laws of each state in which it conducts business or any Mortgaged Property related to a Purchased Mortgage Loan is located, and (iii) conduct its business strictly in accordance with applicable law, except in each case as would not be reasonably likely to have a Material Adverse Effect.
(bk)Taxes, Etc. Seller shall pay and discharge or cause to be paid and discharged, when due all federal, state income and other material taxes, assessments and governmental charges or levies imposed upon it or upon its income and profits or upon any of its Property, real, personal or mixed (including without limitation, the Purchased Assets) or upon any part thereof, as well as any other lawful claims which, if unpaid, might become a Lien upon such properties or any part thereof, except for any such taxes, assessments and governmental charges, levies or claims as are appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves are provided. Seller shall file or cause to be filed on a timely basis all federal, state income and other material tax and information returns, reports and any other information statements or schedules required to be filed by or in respect of it.
(bl)Nature of Business. Seller shall not make any material change in the nature of its business as carried on at the date hereof, it being understood that Seller may engage in business lines and transactions related to the mortgage banking and/or lending business or businesses ancillary to the mortgage banking and/or lending business and/or the servicing of Mortgage Loans.
(bm)Limitation on Distributions. Seller shall have the right to pay dividends so long as such dividend distribution does not result in any breach of the financial covenants set forth in Section 4 of the Pricing Side Letter. Notwithstanding the foregoing, if an Event of Default has occurred and is continuing, Seller shall not make any payment of any dividends or make distributions on account of, or set apart assets for a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of, any capital stock, senior or subordinate debt of Seller or other equity interests, respectively, thereof, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or Property or in obligations of Seller.
(bn)Use of Custodian. Without the prior written consent of Purchaser, Seller shall not use a third party custodian as document custodian other than the Custodian for the Mortgage File relating to the Purchased Mortgage Loans.
(bo)Change of Control. Seller shall not, at any time, directly or indirectly (i) be subject to a Change in Control; (ii) form or enter into any partnership, joint venture, syndicate or other combination which would have a Material Adverse Effect with respect to Seller; or (iii) make any Material Adverse Change with respect to Seller.
(bp)Insurance. Seller shall obtain and maintain insurance with responsible companies in such amounts and against such risks as are customarily carried by business entities engaged in similar businesses similarly situated, including without limitation, the insurance required to be obtained and maintained by each Agency pursuant to the Agency Guides, and will furnish Purchaser upon request full information as to all such insurance, and provide within [***] days after receipt of such request the certificates or other documents evidencing renewal of each such policy. Seller shall continue to maintain coverage, for itself and its Subsidiaries, that encompasses employee dishonesty, forgery or alteration, theft, disappearance and destruction, robbery and safe burglary, Property (other than money and securities), and computer fraud in an aggregate amount of at least such amount as is required by each Agency.
(bq)Affiliate Transaction. Seller shall not, at any time, directly or indirectly, sell, lease or otherwise transfer any Property or assets to, or otherwise acquire any Property or assets from, or otherwise engage in any transactions with, any of its Affiliates, if such transaction is material to such parties in the aggregate, unless the terms thereof are no less favorable to Seller, than those that could be obtained at the time of such transaction in an arm’s length transaction with a Person who is not such an Affiliate.
(br)Change of Fiscal Year. Seller shall not, at any time, directly or indirectly, except upon ninety (90) days’ prior written notice to Purchaser, change the date on which its fiscal year begins from its current fiscal year beginning date.
(bs)Transfer of Servicing Rights, Servicing Files and Servicing. With respect to the Servicing Rights of each Purchased Mortgage Loan, Seller shall transfer such Servicing Rights to Purchaser or its designee on the related Purchase Date. With respect to the Servicing Files and the physical and contractual servicing of each Purchased Mortgage Loan to the extent in the possession of Seller, Seller shall deliver such Servicing Files and the physical and contractual servicing to Purchaser or its designee upon the expiration of the Servicing Term unless either such Servicing Term is renewed by Purchaser or the termination of the Seller as servicer pursuant to Section 1617. Seller’s transfer of the Servicing Rights, Servicing Files and the physical and contractual servicing under this Section shall be in accordance with customary standards in the industry including the transfer of the gross amount of all escrows, if any, held for the related Mortgagors (without reduction for unreimbursed advances or “negative escrows”).
(bt)Audit and Approval Maintenance. Seller shall (i) at all times maintain copies of relevant portions of all final written Agency audits, examinations, evaluations, monitoring reviews and reports of its origination and servicing operations (including those prepared on a contract basis for any such agency) in which there are material adverse findings, including without limitation notices of defaults, notices of termination of approved status, notices of imposition of supervisory agreements or interim servicing agreementsServicing Agreements, and notices of probation, suspension, or non-renewal, and all necessary approvals from each Agency, (ii) unless prohibited from disclosing, promptly upon request provide Agent with copies of such audits, examinations, evaluations, monitoring reviews and reports promptly upon receipt from any Agency or agent of any Agency, and (iii) take all actions necessary to maintain its respective Approvals.
(bu)MERS. The Seller is a member of MERS in good standing and current in the payment of all fees and assessments imposed by MERS, and has complied with all rules and procedures of MERS. In connection with the assignment of any Purchased Mortgage Loan registered on the MERS system, the Seller agrees that at the Seller’s own cost and expense, it shall (i) with respect to any Correspondent Loan, identify Purchaser in the field “interim funder” on the MERS system within ten (10) calendar days of the related Purchase Date and (ii) with respect to all Purchased Mortgage Loans, promptly cause the MERS system to indicate that such Mortgage Loan has been transferred to the Purchaser in accordance with the terms of this Agreement by including in MERS’ computer files (A) the code in the field which identifies the specific owner of the Purchased Mortgage Loans and (B) the code in the field “Pool Field” which identifies the series in which such Mortgage Loans were sold. The Seller further agrees that it will not alter codes referenced in this paragraph with respect to any Purchased Mortgage Loan at any time that such Mortgage Loan is subject to this Agreement, and the Seller shall retain its membership in MERS at all times during the term of this Agreement.
(bv)Fees and Expenses. Seller shall timely pay to Purchaser all fees and actual out of pocket expenses as set forth in the Pricing Side Letter.
(bw)Agency Status. Once the Seller or any of its subservicers has obtained any status with an Agency’s mortgage loan pool for which Seller is issuer or servicer, Seller shall not take or omit to take any action that (i) would result in the suspension or loss of any of such status, or (ii) after which Seller or any such relevant subservicer would no longer be in good standing with respect to such status, or (iii) after which Seller or any such relevant subservicer would no longer satisfy all applicable Agency net worth requirements, if both (x) all of the material effects of such act or omission shall not have been cured by Seller or waived by the applicable Agency
before termination of such status and (y) the termination of such status could reasonably be expected to have a Material Adverse Effect.
(bx)Further Documents. Seller shall, upon request of Purchaser or Agent, promptly execute and deliver to Purchaser or Agent all such other and further documents and instruments of transfer, conveyance and assignment, and shall take such other action as Purchaser or Agent may require in good faith to more effectively transfer, convey, assign to and vest in Purchaser and to put Purchaser in possession of the Property to be transferred, conveyed, assigned and delivered hereunder and otherwise to carry out more effectively the intent of the provisions under this Agreement.
(by)Due Diligence. Seller will permit Purchaser, Agent or their respective agents or designees to perform due diligence reviews on the Mortgage Loans subject to each Transaction hereunder within thirty (30) days following the related Purchase Date. Seller shall cooperate in all respects with such diligence and shall provide Purchaser, Agent or their respective agents or designees with all loan files and other information (including, without limitation, Seller’s quality control procedures and results) reasonably requested by Purchaser, Agent or their respective agents or designees and shall bear all costs and expenses associated with such due diligence.
(bz)Event of Insolvency. Neither Seller nor any of its Affiliates or Subsidiaries, shall take any corporate action in furtherance of, or any action which would result in any an Event of Insolvency.
(ca)Non-Utilization Fee. Seller shall pay to Purchaser the due and owing portion of the Non-Utilization Fee if and as required under Section 2 of the Pricing Side Letter; provided that Purchaser may, in its sole discretion, net any Non-Utilization Fee from the proceeds of any Purchase Price paid by Purchaser to Seller to the extent such amounts were not otherwise received by Purchaser in accordance with this clause (bb).
16.15. REPURCHASE OF PURCHASED ASSETS
Upon discovery by Seller of a breach of any of the representations and warranties set forth on Exhibit B to this Agreement, Seller shall give prompt written notice thereof to Purchaser. Upon any such discovery by Purchaser, Purchaser will notify Seller. It is understood and agreed that the representations and warranties set forth in Exhibit B to this Agreement with respect to the Purchased Assets shall survive delivery of the respective Mortgage Files to the Purchaser or Custodian with respect to the Purchased Assets and shall inure to the benefit of Purchaser. The fact that Purchaser has conducted or has failed to conduct any partial or complete due diligence investigation in connection with its purchase of any Purchased Asset shall not affect Purchaser’s right to demand repurchase or any other remedy as provided under this Agreement. Seller shall, within five (5) Business Days of the earlier of Seller’s discovery or receipt of notice by a Responsible Officer of Seller with respect to any Purchased Asset of (i) any breach of a representation or warranty contained in Exhibit B of this Agreement or (ii) any failure to deliver any of the items required to be delivered as part of the Mortgage File within the time period required for delivery pursuant to the Custodial and Disbursement Agreement, promptly cure such breach or delivery failure in all material respects. If within five (5) Business Days after the earlier of Seller’s discovery of such breach or delivery failure or receipt of notice thereof that such breach or delivery failure has not been remedied by Seller, Seller shall promptly upon receipt of written instructions from Purchaser, at Purchaser’s option, repurchase such Purchased Asset at a purchase price equal to the Repurchase Price with respect to such Purchased Asset by wire transfer to the account designated by Purchaser.
17.16. SERVICING OF THE MORTGAGE LOANS; SERVICER TERMINATION
(cb)Subservicing.
(i)Upon payment of the Initial Purchase Price, Purchaser shall own the servicing rightsServicing Rights related to the Purchased Mortgage Loans including the Mortgage File related to such Purchased Mortgage Loans. Seller and Purchaser each agrees and acknowledges that the Mortgage Loans sold hereunder shall be sold to Purchaser on a servicing released basis, and that Purchaser is engaging and hereby does engage Seller to provide subservicing of each such Mortgage Loan for the benefit of Purchaser; provided that with respect to one or more Purchased Mortgage Loans, a Servicer other than the Seller may subservice the Mortgage Loans for the benefit of Purchaser.
(ii)So long as a Purchased Mortgage Loan is outstanding, Seller shall neither assign, encumber or pledge its obligation to subservice such Mortgage Loans in whole or in part, nor delegate its rights or duties under this Agreement (to other than a subservicer) without the prior written consent of Purchaser, the granting of which consent shall be in the sole discretion of Purchaser. Seller hereby acknowledges and agrees that (i) Purchaser is entering into this Agreement in reliance upon Seller’s representations as to the adequacy of its financial standing, servicing facilities, personnel, records, procedures, reputation and integrity, and the continuance thereof; and (ii) Seller’s engagement hereunder to provide mortgage servicing for the benefit of Purchaser is intended by the parties to be a “personal service contract” and Seller is hereunder intended by the parties to be an “independent contractor”.”
(iii)Servicer shall subservice and administer the Mortgage Loans it is subservicing on behalf of Purchaser in accordance with Accepted Servicing Practices. Servicer shall have no right to modify or alter the terms of any such Mortgage Loan or consent to the modification or alteration of the terms of any such Mortgage Loan except in Strict Compliance with the related Agency Program. Servicer shall at all times maintain accurate and complete records of its servicing of the Mortgage Loans it is subservicing on behalf of Purchaser, and Agent may, at any time during Servicer’s business hours on reasonable notice, examine and make copies of such Servicing Records. Seller agrees that Purchaser is the 100% beneficial owner of all Servicing Records relating to the Mortgage Loans. Seller covenants to hold or cause to be held such Servicing Records for the benefit of Purchaser and to safeguard such Servicing Records and to deliver them promptly to Agent or its designee (including the Custodian) at Agent’s request or otherwise as required by operation of this Section 1617.
(cc)Servicing Term. Servicer shall subservice such Mortgage Loans on behalf of Purchaser for a term commencing as of the related Purchase Date and ending on the last day of the calendar month following the calendar month in which such Purchase Date occurs, which term may be extended in writing on a monthly basis by the Purchaser in its sole discretion, for an additional calendar month period (each, a “Servicing Term”); provided, that Purchaser shall have the right to immediately terminate the Servicer at any time following the occurrence of any event described in Section 1617(i) hereof (a “Servicer Termination Event”) that is continuing. If such Servicing Term is not extended by Purchaser or if Purchaser has terminated Servicer as a result of a Servicer Termination Event, Servicer shall transfer such servicing to Purchaser or its designee at no cost or expense to Purchaser as provided in Section 1415(t). Servicer shall hold or cause to be held all Escrow Payments collected with respect to the Mortgage Loans it is subservicing on behalf of Purchaser in segregated accounts for the sole benefit of the Mortgagors and shall apply the same for the purposes for which such funds were collected. If Servicer should discover that, for any reason whatsoever, it has failed to perform fully its servicing obligations in any material respect with respect to the Mortgage Loans it is subservicing on behalf of Purchaser, Seller shall promptly notify Purchaser.
(cd)Servicing Reports. As requested by Purchaser from time to time, Seller shall furnish to Purchaser reports in form and scope satisfactory to Purchaser, setting forth (i) data
regarding the performance of the individual Purchased Mortgage Loans, (ii) a summary report of all Mortgage Loans serviced by the Seller and originated pursuant to an Agency Guide, HUD and/or FHA guidelines (on a portfolio basis), in each case, for the immediately preceding month, including, without limitation, all collections, delinquencies, defaults, defects, claim rates, losses and recoveries, and (iii) any other information reasonably requested by Purchaser.
(ce)Backup Servicer. The Agent, in its sole discretion, may appoint a backup servicer at any time during the term of this Agreement. In such event, Seller shall commence monthly delivery to such backup servicer of the servicing information required to be delivered to Purchaser pursuant to Section 1617(c) hereof and any other information reasonably requested by backup servicer, all in a format that is reasonably acceptable to such backup servicer. All costs and expenses of such backup servicer, including, but not limited to all fees of such backup servicer in connection with the processing of such information and the maintenance of a servicing file with respect to the Purchased Mortgage Loans, shall be an expense of (i) the Purchaser, prior to the occurrence and continuance of an Event of Default and (ii) the Seller, upon the occurrence and during the continuation of an Event of Default. Seller shall cooperate fully with such backup servicer in the event of a transfer of servicing hereunder and will provide such backup servicer with all documents and information necessary for such backup servicer to assume the servicing of the Purchased Mortgage Loans.
(cf)Collection Account. Prior to the Effective Date, Seller shall establish and maintain a separate account (the “Collection Account”) with the Bank in the Agent’s name for the sole and exclusive benefit of the Purchaser. Such account shall be subject to the Collection Account Control Agreement. Servicer shall deposit or credit to the Collection Account all amounts collected on account of the Mortgage Loans no more than sixty (60) days after the Effective Date, and thereafter, within two (2) Business Days of receipt, and remit such collections in accordance with Section 1617(f) hereof. Following the occurrence and during the continuance of an Event of Default, such amounts shall be deposited or credited irrespective of any right of setoff or counterclaim arising in favor of Seller (or any third party claiming through it) under any other agreement or arrangement. Amounts on deposit in the Collection Account shall be distributed as provided in Section 1617(f).
(cg)Income Payments.
(i)Where a particular term of a Transaction extends over the date on which Income is paid in respect of any Purchased Asset subject to that Transaction, (i) Seller shall deposit or cause to be deposited such Income into the Collection Account no later than sixty (60) days after the Effective Date and thereafter, no later than two (2) Business Days after receipt thereof, and (ii) such Income shall be the Property of Purchaser subject to subsections 1617(f)(ii) and (iii) below. The Collection Account shall be subject to the terms and conditions of the Collection Account Control Agreement.
(ii)Except as otherwise provided in Section 1617(f)(iii) or (iv), Seller may withdraw amounts from the Collection Account so long as on the Monthly Payment Date after the occurrence and during the continuance of a Default or an Event of Default, Purchaser shall cause amounts deposited in the Collection Account to be released to Seller, which amounts shall be applied by Seller (A) to reduce, Seller ensures there are adequate funds therein or otherwise provides funds to (A) pay outstanding Price Differential due and payable in respect of Purchased Assets then subject to a Transaction, including Purchased Assets for which Purchaser has received the related Repurchase Price (other than Price Differential)Outstanding Purchase Price pursuant to Section 3(g) during the prior calendar month, and (B) to reduce the Repurchase Price for all outstanding Transactions, (C) to pay all other Obligations then due and payable to Purchaser and (D) to pay to Seller any remaining amounts.
(iii)Notwithstanding anything herein or in the Collection Account Control Agreement to the contrary, Purchaser shall in no event cause amounts deposited in the Collection Account to be released to Seller to the extent that such action would result in the creation of a Margin Deficit (unless prior thereto or simultaneously therewith Seller cures such Margin Deficit in accordance with Section 7), or if an Event of Default is then continuing. Further, if an uncured Margin Deficit exists as of such Monthly Payment Date, Purchaser shall cause the Bank to disburse the Income related to the Transaction for which the Margin Deficit exists to Purchaser (up to the amount of such Margin Deficit), which amounts shall be applied by Purchaser to reduce the related RepurchaseOutstanding Purchase Price.
(iv)If a successor servicer takes delivery of such Mortgage Loans either under the circumstances set forth in Section 1617(i) or otherwise, all amounts deposited in the Collection Account shall be paid to Purchaser promptly upon such delivery.
(ch)FHA Buyout Loans. With respect to each FHA Buyout Loan, (i) Seller shall deposit FHA claims payments on such FHA Buyout Loan into the Collection Account within two (2) Business Days of receipt and (ii) Seller shall service such FHA Buyout Loan in Strict Compliance with all FHA requirements.
(ci)Reserved.
(cj)Servicer Termination. Purchaser, in its sole discretion, may terminate Servicer’s rights and obligations as subservicer of the affected Mortgage Loans that it is subservicing on behalf of Purchaser and require Servicer to deliver the related Servicing Records to Purchaser or its designee upon the occurrence of (i) an Event of Default has occurred and is continuing or (ii) upon the expiration of the Servicing Term as set forth in Section 1617(b) by delivering written notice to Seller and Servicer requiring such termination. Such termination shall be effective upon a Responsible Officer of Seller’s receipt of such written notice; provided, that Servicer’s subservicing rights shall be terminated immediately upon the occurrence a Servicer Termination Event, regardless of whether notice of such event shall have been given to or by Purchaser or Seller. Upon any such termination, all authority and power of Servicer respecting its rights to subservice and duties under this Agreement relating thereto, shall pass to and be vested in the successor servicer appointed by Purchaser and Purchaser is hereby authorized and empowered to transfer such rights to subservice the Mortgage Loans for such price and on such terms and conditions as Purchaser shall reasonably determine. Seller shall promptly take such actions and furnish to Purchaser such documents that Purchaser deems necessary or appropriate to enable Purchaser to enforce such Mortgage Loans and shall perform all acts and take all actions so that the Mortgage Loans and all files and documents relating to such Mortgage Loans held by Servicer, together with all escrow amounts relating to such Mortgage Loans, are delivered to successor Servicer, including but not limited to preparing, executing and delivering to the successor Servicer any and all documents and other instruments, placing in the successor Servicer’s possession all Servicing Records pertaining to such Mortgage Loans and doing or causing to be done, all at Seller’s sole expense. To the extent that the approval of the Applicable Agency is required for any such sale or transfer, Seller shall fully cooperate with Purchaser to obtain such approval. All amounts paid by any purchaser of such rights to service or subservice the Mortgage Loans shall be the property of Purchaser. The subservicing rights required to be delivered to successor Servicer in accordance with this Section 1617(i) shall be delivered free of any servicing rights in favor of Seller or any third party (other than Purchaser) and free of any title, interest, lien, encumbrance or claim of any kind of Seller other than record title to the Mortgages relating to the Mortgage Loans and the right and obligation to repurchase the Mortgage Loans hereunder. No exercise by Purchaser of its rights under this Section 1617(i) shall relieve Seller of responsibility or liability for any breach of this Agreement.
(ck)Conflicts. For the avoidance of doubt, if a Servicer Side Letter conflicts with any provision set forth in this Section 1617, the applicable Servicer Side Letter shall control with respect to such provision.
18.17. EVENTS OF DEFAULT
With respect to any Transactions covered by or related to this Agreement, the occurrence of any of the following events shall constitute an “Event of Default”:
(cl)Seller fails to transfer the Purchased Assets to the Purchaser on the applicable Purchase Date (provided the Purchaser has tendered the related Initial Purchase Price and Seller has not repaid such Purchase Price on the same day as such tender);
(cm)Seller either fails to repurchase the Purchased Assets on the applicable Repurchase Date or fails to perform its obligations under Section 7 (including, without limitation, the failure to timely cure a Margin Deficit) or the last sentence of Section 1516;
(cn)Seller shall fail to (i) remit to Purchaser when due any payment required to be made under the terms of this Agreement, any of the other Program Documents or any other contracts or agreements delivered in connection herewith or therewith, or (ii) perform, observe or comply with any material term, condition, covenant or agreement contained in this Agreement or any of the other Program Documents (other than the other “Events of Default” set forth in this Section 18) or any other contracts or agreements delivered in connection herewith or therewith, and such failure is not cured within the time period expressly provided for therein, or, if no such cure period is provided, within [***] of the earlier of (x) a Responsible Officer of Seller’s receipt of written notice from Purchaser or Custodian of such breach or (y) the date on which Seller obtains notice or knowledge of the facts giving rise to such breach;
(co)Any representation or warranty made by Seller (or any of Seller’s officers) in the Program Documents or in any other document delivered in connection therewith, or in any other contract or agreement, shall have been incorrect or untrue in any material respect when made or repeated or deemed by of the terms thereof to have been incorrect or untrue in any material respect when made or repeated and, if curable, is not cured within [***] (other than the representations or warranties in Section 1314(m) or Exhibit B which shall be considered solely for the purpose of determining whether the related Purchased Asset is an Eligible Mortgage Loan, unless (i) Seller shall have made any such representation or warranty with the knowledge that it was materially false or misleading at the time made or repeated or deemed to have been made or repeated, or (ii) any such representation or warranty shall have been determined by Purchaser in its sole discretion to be materially false or misleading on a regular basis);
(cp)Seller or any of its Affiliates or Subsidiaries, as applicable, shall be in default under any Other Agreement beyond any applicable cure period;
(cq)Any Event of Insolvency of Seller or any of its Affiliates;
(cr) Any final judgment or order for the payment of money in excess of [***] in the aggregate (to the extent that it is, in the reasonable determination of Purchaser, uninsured and provided that any insurance or other credit posted in connection with an appeal shall not be deemed insurance for these purposes) shall be rendered against Seller or any of its Affiliates by one or more courts, administrative tribunals or other bodies having jurisdiction over them and the same shall not be discharged (or provisions shall not be made for such discharge) satisfied, or bonded, or a stay of execution thereof shall not be procured, within [***] from the date of entry thereof and Seller or any of its Affiliates, as applicable, shall not, within said period of [***], or
such longer period during which execution of the same shall have been stayed or bonded, appeal therefrom and cause the execution thereof to be stayed during such appeal;
(cs)Any Governmental Authority or any person, agency or entity acting or purporting to act under governmental authority (i) shall have taken any action to condemn, seize or appropriate, or to assume custody or control of, all or any substantial part of the Property of Seller, or shall have taken any action to displace the management of Seller or to curtail its authority in the conduct of the business of Seller, or (ii) takes any action in the nature of enforcement to remove, limit or restrict the approval of Seller as an issuer, purchaser or a seller/servicer of Purchased Mortgage Loans or securities backed thereby;
(ct)Seller, shall fail to comply with any of the financial covenants set forth in Section 4 of the Pricing Side Letter;
(cu)Any Material Adverse Effect shall have occurred and not have been waived;
(cv)Neither of the following is true: This Agreement shall for any reason cease to create a valid first priority security interest or ownership interest upon transfer in any material portion of the Purchased Assets purported to be covered hereby;
(cw)A Change in Control of Seller shall have occurred that has not been approved by Agent;
(cx)Purchaser or Agent shall reasonably request, specifying the reasons for such request, reasonable information, and/or written responses to such requests, regarding the financial well-being of Seller, and such reasonable information and/or responses shall not have been provided within [***] of such request; provided that, for the avoidance of doubt, any requests by Purchaser of documents included in or required to be included in the Mortgage File shall not be subject to this subsection (m);
(cy)A material event of default shall have occurred and be continuing beyond the expiration of any applicable cure periods under any of the Program Documents;
(cz)Seller ceases to be a member of MERS in good standing (unless MERS is no longer acting in such capacity) for any reason at any time Seller is servicing MERS Designated Mortgage Loans;
(da)Change of Servicer without consent of the Agent;
(db)[Reserved];
(dc)Failure of Seller to meet the qualifications to maintain all requisite Approvals, such Approvals are revoked or such Approvals are materially and adversely modified;
(dd)[Reserved]; or
(de)Seller and its Affiliates fail to operate or conduct their business operations or any material portion thereof in the ordinary course.
19.18. REMEDIES
Upon the occurrence of (i) an Event of Default that is continuing (other than that referred to in Section 1718(f)), the Purchaser, at its option, shall have the right to exercise any or all of the following rights and remedies and (ii) an Event of Default referred to in Section 1718(f), the
following rights and remedies shall immediately and automatically take effect without any further action by any Person.
(df)(i) The Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to occur (except that, in the event that the Purchase Date for any Transaction has not yet occurred as of the date of such exercise or deemed exercise, such Transaction shall be deemed immediately canceled). Seller’s Obligations hereunder, to repurchase all Purchased Assets at the Repurchase Price therefor on the Repurchase Date in such Transactions shall thereupon become immediately due and payable; all Income paid after such exercise or deemed exercise shall be remitted to and retained by Purchaser and applied to the aggregate Repurchase Prices and any other amounts owing by Seller hereunder; Seller shall immediately deliver to Purchaser or its designee any and all original papers, records and files relating to the Purchased Assets subject to such Transaction then in its possession and/or control; and all right, title and interest in and entitlement to such Purchased Assets and Servicing Rights thereon shall become property of Purchaser.
(i)Purchaser may (A) sell, on or following the Business Day following the date on which the Repurchase Price becomes due and payable pursuant to Section 1819(a)(i) without notice or demand of any kind, at a public or private sale and at such price or prices as Purchaser may reasonably deem satisfactory, any or all or portions of the Purchased Assets on a servicing-released or servicing-retained basis, as Purchaser may determine in its sole discretion and/or (B) in its sole discretion elect, in lieu of selling all or a portion of such Purchased Assets, to give Seller credit for such Purchased Assets (including credit for the Servicing Rights in respect of sales on a servicing-retained basis) in an amount equal to the Market Value of the Purchased Assets against the aggregate unpaid Repurchase Price and any other amounts owing by Seller hereunder. Seller shall remain liable to Purchaser for any amounts that remain owing to Purchaser following a sale and/or credit under the preceding sentence. The proceeds of any disposition of Purchased Assets shall be applied first to the reasonable costs and expenses including but not limited to legal fees incurred by Purchaser in connection with or as a result of an Event of Default; second to costs of cover and/or related hedging transactions; third to the aggregate Repurchase Prices; fourth to all other Obligations; and fifth to Seller.
(ii)The parties recognize that it may not be possible to purchase or sell all of the Purchased Assets on a particular Business Day, or in a transaction with the same purchaser, or in the same manner because the market for such Purchased Assets may not be liquid. In view of these characteristics of the Purchased Assets, the parties agree that liquidation of a Transaction or the underlying Purchased Assets does not require a public purchase or sale and that a good faith private purchase or sale shall be deemed to have been made in a commercially reasonable manner. Accordingly, Purchaser may elect the time and manner of liquidating any Purchased Asset and nothing contained herein shall obligate Purchaser to liquidate any Purchased Asset upon the occurrence of an Event of Default or to liquidate all Purchased Assets in the same manner or on the same Business Day or shall constitute a waiver of any right or remedy of Purchaser. Notwithstanding the foregoing, the parties to this Agreement agree that the Transactions have been entered into in consideration of and in reliance upon the fact that all Transactions hereunder constitute a single business and contractual obligation and that each Transaction has been entered into in consideration of the other Transactions.
(iii)The Purchaser may terminate the Agreement.
(dg)Seller hereby acknowledges, admits and agrees that Seller’s obligations under this Agreement are recourse obligations of Seller. In addition to its rights hereunder, upon the occurrence and continuation of an Event of Default, Purchaser shall have the right to proceed against any of Seller’s assets or the assets of any of Seller’s Affiliates or Subsidiaries, which may be in the possession of Purchaser, any of Purchaser’s Affiliates or their designee (including the
Custodian), including the right to liquidate such assets and to set-off the proceeds against monies owed by Seller to Purchaser pursuant to this Agreement. Purchaser may set off cash, the proceeds of the liquidation of the Purchased Assets and Additional Purchased Mortgage Loans and all other sums or obligations owed by Purchaser to Seller or against all of Seller’s Obligations to Purchaser, or Seller’s obligations or the obligations of any of Seller’s Affiliates or Subsidiaries to Purchaser under any other agreement between the parties, or otherwise, whether or not such obligations are then due, without prejudice to Purchaser’s right to recover any deficiency.
(dh)Purchaser shall have the right to obtain physical possession of the Records and all other files of Seller relating to the Purchased Assets and all documents relating to the Purchased Assets which are then or may thereafter come into the possession of Seller or any third party acting for Seller and Seller shall deliver to Purchaser such assignments as Purchaser shall request.
(di)Purchaser shall have the right to direct all Persons servicing the Purchased Assets to take such action with respect to the Purchased Assets as Purchaser determines appropriate, including, without limitation, using its rights under a power of attorney granted pursuant to Section 910(b) hereof.
(dj)Purchaser shall, without regard to the adequacy of the security for the Obligations, be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to take possession of and protect, collect, manage, liquidate, and sell the Purchased Assets or any portion thereof, collect the payments due with respect to the Purchased Assets or any portion thereof, and do anything that Purchaser is authorized hereunder to do. Seller shall pay all costs and expenses incurred by Purchaser in connection with the appointment and activities of such receiver, and such shall be deemed part of the Obligations hereunder.
(dk)Purchaser may, at its option, enter into one or more hedging transactions covering all or a portion of the Purchased Assets, and Seller shall be responsible for all damages, judgments, costs and expenses of any kind which may be imposed on, incurred by or asserted against Purchaser relating to or arising out of such hedging transactions; including without limitation any losses resulting from such hedging transactions, and such shall be deemed part of the Obligations hereunder.
(dl)In addition to all the rights and remedies specifically provided herein, Purchaser shall have all other rights and remedies provided by applicable federal, state, foreign and local laws, whether existing at law, in equity or by statute, including, without limitation, all rights and remedies available to a purchaser/secured party under the Uniform Commercial Code.
Except as otherwise expressly provided in this Agreement, Purchaser shall have the right to exercise any of its rights and/or remedies without presentment, demand, protest or further notice of any kind, other than as expressly set forth herein, all of which are hereby expressly waived by Seller.
Purchaser may enforce its rights and remedies hereunder without prior judicial process or hearing, and Seller hereby expressly waives, to the extent permitted by law, any right Seller might otherwise have to require Purchaser to enforce its rights by judicial process. Seller also waives, to the extent permitted by law, any defense Seller might otherwise have to the Obligations, or any guaranty thereof, arising from use of nonjudicial process, enforcement and sale of all or any portion of the Purchased Assets or from any other election of remedies. Seller recognizes that nonjudicial remedies are consistent with the usages of the trade, are responsive to commercial necessity and are the result of a bargain at arm’s length.
(dm)(h) Seller shall cause all sums received by it with respect to the Purchased Assets to be deposited in the Collection Account promptly upon receipt thereof but in no event later than two (2) Business Days thereafter. Seller shall be liable to Purchaser for the amount of all losses, costs and/or expenses (plus interest thereon at a rate equal to the Default Rate) that Purchaser may sustain or incur in connection with hedging transactions relating to the Purchased Assets, conduit advances and payments for mortgage insurance.
20.19. DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE
No failure on the part of Purchaser to exercise, and no delay by Purchaser in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by Purchaser of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All rights and remedies of Purchaser provided for herein are cumulative and in addition to any and all other rights and remedies provided by law, the Program Documents and the other instruments and agreements contemplated hereby and thereby, and are not conditional or contingent on any attempt by Purchaser to exercise any of its rights under any other related document. Purchaser may exercise at any time after the occurrence and during the continuation of an Event of Default one or more remedies permitted hereunder, as it so desires, and may thereafter at any time and from time to time exercise any other remedy or remedies permitted hereunder.
21.20. USE OF EMPLOYEE PLAN ASSETS
No assets of an employee benefit plan subject to any provision of ERISA shall be used by either party hereto in a Transaction.
22.21. INDEMNITY
(dn)Except as otherwise set forth herein to the contrary, Seller agrees to indemnify and hold harmless Purchaser, Agent and their Affiliates and their respective officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against (and will reimburse each Indemnified Party as the same is incurred within thirty (30) days following receipt of an invoice therefor) any and all claims, damages, losses, liabilities, taxes, increased costs and all other expenses including out-of-pocket expenses (including, without limitation, reasonable fees and expenses of outside counsel and audit and due diligence fees) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including without limitation, in connection with) (i) any investigation, litigation or other proceeding (whether or not such Indemnified Party is a party thereto) relating to, resulting from or arising out of any of the Program Documents and all other documents related thereto, any breach by Seller of any representation or warranty or covenant in this Agreement or any other Program Document, and all actions taken pursuant thereto, (ii) the Transactions, the actual or proposed use of the proceeds of the Transactions, this Agreement or any of the transactions contemplated hereby, including, without limitation, any acquisition or proposed acquisition, or any indemnity payable under the servicing agreementServicing Agreement or other servicing arrangement, (iii) the actual or alleged presence of hazardous materials on any Property or any environmental action relating in any way to any Property, (iv) the actual or alleged violation of any federal, state, municipal or local predatory lending laws, or (v) the reduction of the Principal Balance due to a cram down or similar action authorized by any bankruptcy proceeding or other case arising out of or relating to any petition under the Bankruptcy Code, in each case, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted directly from such Indemnified Party’s gross negligence or willful misconduct or is the result of a claim made by Seller against the Indemnified Party, and Seller is ultimately the successful party in any resulting litigation or arbitration. Notwithstanding the foregoing, it is
understood and agreed that any indemnification relating to Taxes (and taxes expressly excluded from Taxes) shall be governed solely by Section 8; provided, however, that any breach by Seller of Section 13(l)14(l) or Section 14(l)15(l) of this Agreement shall be governed by this clause (a).
(do)Seller hereby agrees not to assert any claim against Purchaser or any of its Affiliates, or any of their respective officers, directors, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Program Documents, the actual or proposed use of the proceeds of the Transactions, this Agreement or any of the transactions contemplated thereby. THE FOREGOING INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY APPLIES, WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF THE INDEMNIFIED PARTIES.
(dp)If Seller fails to pay when due any costs, expenses or other amounts payable by it under this Agreement, including, without limitation, reasonable fees and expenses of counsel and indemnities, such amount may be paid on behalf of Seller by Purchaser, in its sole discretion and Seller shall remain liable for any such payments by Purchaser and such amounts shall be deemed part of the Obligations hereunder. No such payment by Purchaser shall be deemed a waiver of any of Purchaser’s rights under the Program Documents.
(dq)Without prejudice to the survival of any other agreement of Seller hereunder, the covenants and obligations of Seller contained in this Section 2122 shall survive the payment in full of the Repurchase Price and all other amounts payable hereunder and delivery of the Purchased Assets by Purchaser against full payment therefor.
23.22. WAIVER OF REDEMPTION AND DEFICIENCY RIGHTS
Seller hereby expressly waives, to the fullest extent permitted by law, every statute of limitation on a deficiency judgment, any reduction in the proceeds of any Purchased Assets as a result of restrictions upon Purchaser or Custodian contained in the Program Documents or any other instrument delivered in connection therewith, and any right that they may have to direct the order in which any of the Purchased Assets shall be disposed of in the event of any disposition pursuant hereto.
24.23. REIMBURSEMENT; SET-OFF
(dr)Seller agrees to pay on demand all reasonable out-of-pocket costs and expenses of Purchaser in connection with the initial and subsequent negotiation, modification, renewal and amendment of the Program Documents (including, without limitation, (A) all collateral review and UCC search and filing fees and expenses and (B) the reasonable fees and expenses of outside counsel for Purchaser with respect to advising Purchaser as to its rights and responsibilities, or the perfection, protection or preservation of rights or interests, under this Agreement and any other Program Document, with respect to negotiations with Seller or with other creditors of Seller arising out of any Default or any events or circumstances that may give rise to a Default and with respect to presenting claims in or otherwise participating in or monitoring any bankruptcy, insolvency or other similar proceeding involving creditors’ rights generally and any proceeding ancillary thereto). Subject to the caveat set forth in Section 3 of the Pricing Side Letter, Seller agrees to pay on demand, with interest at the Default Rate to the extent that an Event of Default has occurred and is continuing, all costs and expenses, including without limitation, reasonable attorneys’ fees and disbursements (and fees and disbursements of Purchaser’s outside counsel) expended or incurred by Purchaser and/or Custodian in connection with the modification, renewal, amendment and enforcement (including any waivers) of the Program Documents (regardless of whether a Transaction is entered into hereunder), the taking of any action, including legal action, required or permitted to be taken by Purchaser (without
duplication to Purchaser) and/or Custodian pursuant thereto or by refinancing or restructuring in the nature of a “workout.” Further, Seller agrees to pay, with interest at the Default Rate to the extent that an Event of Default has occurred and is continuing, all costs and expenses, including without limitation, reasonable attorneys’ fees and disbursements (and fees and disbursements of Purchaser’s outside counsel) expended or incurred by Purchaser in connection with (a) the rendering of legal advice as to Purchaser’s rights, remedies and obligations under any of the Program Documents, (b) the collection of any sum which becomes due to Purchaser under any Program Document, (c) any proceeding for declaratory relief, any counterclaim to any proceeding, or any appeal, or (d) the protection, preservation or enforcement of any rights of Purchaser. For the purposes of this Section 2324(a), attorneys’ fees shall include, without limitation, fees incurred in connection with the following: (1) discovery; (2) any motion, proceeding or other activity of any kind in connection with a bankruptcy proceeding or case arising out of or relating to any petition under the Bankruptcy Code, as the same shall be in effect from time to time, or any similar law; (3) garnishment, levy, and debtor and third party examinations; and (4) post-judgment motions and proceedings of any kind, including without limitation any activity taken to collect or enforce any judgment. Any and all of the foregoing amounts referred to in this Section 2324(a) shall be deemed a part of the Obligations hereunder. Without prejudice to the survival of any other agreement of Seller hereunder, the covenants and obligations of Seller contained in this Section 2324(a) shall survive the payment in full of the Repurchase Price and all other amounts payable hereunder and delivery of the Purchased Assets by Purchaser against full payment therefor.
(ds)In addition to any rights and remedies of Purchaser hereunder and at law, upon the occurrence and continuation of an Event of Default, Purchaser and its Affiliates shall have the right, without prior notice to Seller, any such notice being expressly waived by Seller to the extent permitted by applicable law, upon any amount becoming due and payable (whether at the stated maturity, by acceleration or otherwise) by Seller hereunder or under any other agreement entered into between Seller or any of its Affiliates on the one hand, and Purchaser or any of its Affiliates on the other hand, to set-off and appropriate and apply against such amount any and all Property and deposits (general or special, time or demand, provisional or final), in any currency, or any other credits, indebtedness or claims, in any currency, or any other collateral (in the case of collateral not in the form of cash or such other marketable or negotiable form, by selling such collateral in a recognized market therefor or as otherwise permitted by law or as may be in accordance with custom, usage or trade practice), in each case, whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by Purchaser or any Affiliate thereof to or for the credit or the account of Seller or of any of its Affiliates except and to the extent that any of the same are held by Seller or such Affiliate for the account of another Person. Upon the occurrence and continuation of an Event of Default, Purchaser may also set-off cash and all other sums or obligations owed by Purchaser or its Affiliates to Seller or its Affiliates (whether under this Agreement or under any other agreement between the parties or between Seller or any of its Affiliates, on the one hand, and Purchaser or any of its Affiliates, on the other) against all of Seller’s obligations to Purchaser or its Affiliates (whether under this Agreement or under any other agreement between the parties or between Seller or any of its Affiliates, on the one hand, and Purchaser or any of its Affiliates, on the other), whether or not such obligations are then due. The exercise of any such right of set-off shall be without prejudice to Purchaser’s or its Affiliate’s right to recover any deficiency. Purchaser agrees to promptly notify Seller after any such set-off and application made by Purchaser; provided that the failure to give such notice shall not affect the validity of such set-off and application.
25.24. FURTHER ASSURANCES
Seller agrees to do such further acts and things and to execute and deliver to Purchaser such additional assignments, acknowledgments, agreements, powers and instruments as are reasonably required by Purchaser to carry into effect the intent and purposes of this Agreement,
to perfect the interests of Purchaser in the Purchased Assets or to better assure and confirm unto Purchaser its rights, powers and remedies hereunder.
26.25. ENTIRE AGREEMENT; PRODUCT OF NEGOTIATION
This Agreement supersedes and integrates all previous negotiations, contracts, agreements and understandings between the parties relating to a sale and repurchase of Purchased Assets and Additional Purchased Mortgage Loans, and it, together with the other Program Documents, and the other documents delivered pursuant hereto or thereto, contains the entire final agreement of the parties. No prior negotiation, agreement, understanding or prior contract shall have any validity hereafter.
27.26. TERMINATION
This Agreement shall remain in effect until the Termination Date. However, no such termination shall affect Seller’s outstanding obligations to Purchaser at the time of such termination. Seller’s obligations to indemnify Purchaser pursuant to this Agreement and the other Program Documents shall survive the termination hereof.
28.27. REHYPOTHECATION; ASSIGNMENT
(dt)Purchaser may, in its sole election, and without the consent of the Seller engage in repurchase transactions with the Purchased Assets or otherwise pledge, hypothecate, assign, transfer or otherwise convey the Purchased Assets with a counterparty of Purchaser’s choice, in all cases subject to Purchaser’s obligation to reconvey the Purchased Assets (and not substitutes therefor) on the Repurchase Date, all at no cost to the Seller. In the event Purchaser engages in a repurchase transaction with any of the Purchased Assets or otherwise pledges or hypothecates any of the Purchased Assets, Purchaser shall have the right to assign to Purchaser’s counterparty any of the applicable representations or warranties in Exhibit B to this Agreement and the remedies for breach thereof, as they relate to the Purchased Assets that are subject to such repurchase transaction.
(du)The Program Documents and the Seller’s rights and obligations thereunder are not assignable by Seller without the prior written consent of Purchaser. Any Person into which Seller may be merged or consolidated, or any corporation resulting from any merger, conversion or consolidation to which Seller shall be a party, or any Person succeeding to the business of Seller, shall be the successor of Seller hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. Without any requirement for further consent of the Seller and at no cost or expense to the Seller, each of Purchaser and Agent may, in its sole election, assign or participate all or a portion of its rights and obligations under this Agreement and the Program Documents with a counterparty of Purchaser’s or Agent’s choice. Purchaser or Agent shall notify Seller of any such assignment and participation and shall maintain, for review by Seller upon written request, a register of assignees and participants and a copy of any executed assignment and acceptance by Purchaser or Agent and assignee (“Assignment and Acceptance”), specifying the percentage or portion of such rights and obligations assignedmaintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Purchased Assets or other obligations under the Program Documents (the “Participant Register”); provided that Purchaser shall have no obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant's interest in any commitments, loans, advances, purchases, letters of credit or its other obligations under any Program Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, advance,
purchase, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and Purchaser or Agent shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. The Seller agrees that, for any such permitted assignment, Seller will cooperate with the prompt execution and delivery of documents reasonably necessary for such assignment process to the extent that Seller incurs no cost or expense that is not paid by the Purchaser or Agent, as applicable. Upon such assignment, (a) such assignee shall be a party hereto and to each Program Document to the extent of the percentage or portion set forth in the Assignment and AcceptanceParticipant Register, and shall succeed to the applicable rights and obligations of Purchaser or Agent hereunder, and (b) Purchaser or Agent shall, to the extent that such rights and obligations have been so assigned by it to either (i) an Affiliate of Purchaser or Agent which assumes the obligations of Purchaser or Agent hereunder or (ii) to another Person which assumes the obligations of Purchaser or Agent hereunder, be released from their obligations hereunder accruing thereafter and under the Program Documents.
(dv)Purchaser and Agent may distribute to any prospective assignee, participant or pledgee any document or other information delivered to Purchaser by Seller subject to the confidentiality restrictions contained in Section 3536 hereof; accordingly, such prospective assignee, participant or pledgee shall be required to agree to confidentiality provisions similar to those set forth in Section 3536.
29.28. AMENDMENTS, ETC.
No amendment or waiver of any provision of this Agreement nor any consent to any failure to comply herewith or therewith shall in any event be effective unless the same shall be in writing and signed by Seller, Purchaser and Agent, and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
30.29. SEVERABILITY
If any provision of any Program Document is declared invalid by any court of competent jurisdiction, such invalidity shall not affect any other provision of the Program Documents, and each Program Document shall be enforced to the fullest extent permitted by law.
31.30. BINDING EFFECT; GOVERNING LAW
This Agreement shall be binding and inure to the benefit of the parties hereto and their respective successors and assigns. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF (EXCEPT FOR SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
32.31. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION AND VENUE; SERVICE OF PROCESS
EACH OF SELLER, PURCHASER AND AGENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE PROGRAM DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH OF SELLER, PURCHASER AND AGENT HEREBY IRREVOCABLY AND UNCONDITIONALLY
CONSENTS, ON BEHALF OF ITSELF AND ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE PROGRAM DOCUMENTS IN ANY ACTION OR PROCEEDING. EACH OF SELLER, PURCHASER AND AGENT HEREBY SUBMITS TO, AND WAIVES ANY OBJECTION IT MAY HAVE TO, NON-EXCLUSIVE PERSONAL JURISDICTION AND VENUE IN THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT TO ANY DISPUTES ARISING OUT OF OR RELATING TO THE PROGRAM DOCUMENTS. EACH OF SELLER, PURCHASER AND AGENT HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF A SUMMONS AND COMPLAINT AND OTHER PROCESS IN ANY ACTION, CLAIM OR PROCEEDING BROUGHT BY ANOTHER PARTY IN CONNECTION WITH THIS AGREEMENT OR THE OTHER PROGRAM DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS, ON BEHALF OF ITSELF OR ITS PROPERTY, IN THE MANNER SPECIFIED IN THIS SECTION 3132 AND TO SUCH PARTY’S ADDRESS SPECIFIED IN SECTION 3435 OR SUCH OTHER ADDRESS AS SUCH PARTY SHALL HAVE PROVIDED IN WRITING TO THE OTHER PARTIES HERETO. NOTHING IN THIS SECTION 3132 SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO (I) SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW, OR (II) BRING ANY ACTION OR PROCEEDING AGAINST ANY OTHER PARTY OR ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS.
33.32. SINGLE AGREEMENT
Seller, Purchaser and Agent acknowledge that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual relationship and have been made in consideration of each other. Accordingly, Seller, Purchaser and Agent each agree (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, and (ii) that payments, deliveries and other transfers made by any of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other Transaction hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted.
34.33. INTENT
(dw)(a) Seller, Purchaser and Agent intend and acknowledge that (i) this Agreement and each Transaction hereunder is a “repurchase agreement” as that term is defined in Section 101 of the Bankruptcy Code (except insofar as the type of assets subject to such Transaction or the term of such Transaction would render such definition inapplicable), a “securities contract” as that term is defined in Section 741 of the Bankruptcy Code (except insofar as the type of assets subject to such Transaction or the term of such Transaction would render such definition inapplicable), a “master netting agreement” as that term is defined in Section 101(38A)(A) of the Bankruptcy Code and a “qualified financial contract” as that term is defined in the Federal Deposit Insurance Act, as applicable (except insofar as the type of assets subject to such Transaction or the term of such Transaction would render such definition inapplicable); (ii) any payments or transfers of property made with respect to this Agreement or any Transaction (e.g., to satisfy a for example Margin Deficit) shall be considered a “margin payment” or “settlement payment” as such terms are defined in Bankruptcy Code Sections 741(5) and 741(8); (iii) each Purchased Asset constitutes either a “security,” “mortgage loan” or “an interest in a mortgage” as such terms are used in the Bankruptcy Code; and (iv) each grant of
a security interest/pledge of the Purchased Assets in Section 8 constitutes “a security agreement or other arrangement or other credit enhancement” that is “related to” this Agreement and Transactions hereunder within the meaning of Sections 101(38A)(A), 101(47)(A)(v) and 741(7)(A)(xi) of the Bankruptcy Code. Without limiting the generality of the foregoing, the parties recognize and intend that each Transaction is a “repurchase transaction” or “reverse repurchase transaction” of “mortgage loans” or “interests” in “mortgage loans” (as such terms are used in sectionSection 741(7) of the Bankruptcy Code). Each party hereto further agrees that it shall not challenge, and hereby waives to the fullest extent available under applicable law its right to challenge, the characterization of this Agreement or any Transaction hereunder as a “master netting agreement,” “repurchase agreement” and/or “securities contract” within the meaning of the Bankruptcy Code.
(dx)(b) Seller, Purchaser and Agent further intend and acknowledge that (i)(1) for so long as Purchaser is a “financial institution,” “financial participant” or another entity listed in Sections 555, 559, 561, 362(b)(6), 362(b)(7) or 362(b)(27) of the Bankruptcy Code, Purchaser shall be entitled to, without limitation, the liquidation, termination, acceleration, netting, set-off, and non-avoidability rights afforded to parties such as Purchaser to “repurchase agreements” pursuant to Sections 559, 362(b)(7) and 546(f) of the Bankruptcy Code, “securities contracts” pursuant to Sections 555, 362(b)(6) and 546(e) of the Bankruptcy Code, “master netting agreements” pursuant to Sections 561, 362(b)(27) and 546(j) of the Bankruptcy Code and “qualified financial contracts” pursuant to Section 1821(e)(8)(A)(i) of the Federal Deposit Insurance Act, as applicable, and (2) Purchaser’s right to liquidate the Purchased Assets delivered to it in connection with the Transactions hereunder or to accelerate or terminate this Agreement or otherwise exercise any other remedies pursuant to Section 1819 hereof is a contractual right to liquidate, accelerate or terminate such Transaction as described in Bankruptcy Code Sections 555, 559 and 561 and Section 1821(e)(8)(A)(i) of the Federal Deposit Insurance Act, as amended (“FDIA”), as applicable, and (ii) Purchaser’s right to set-off claims and appropriate and apply any and all deposits of money or property or any other indebtedness at any time held or owing by Purchaser to or for the credit of the account of any Affiliate against and on account of the obligations and liabilities of Seller pursuant to Section 2324 hereof is a contractual right as described in Bankruptcy Code Section 561. The parties hereby intend that any provisions hereof or in any other document, agreement or instrument that is related in any way to the servicing of the individual Mortgage Loans shall be deemed “related to” this Agreement within the meaning of Sections 101(38A)(A) and 101(47)(A)(v) of the Bankruptcy Code and part of the “contract” as such term is used in Section 741 of the Bankruptcy Code.
(dy)(c) The parties further agree that if a party hereto is an “insured depository institution” as such term is defined in the FDIA, then each Transaction hereunder is a “qualified financial contract” as that term is defined in the FDIA, and any rules, orders or policy statement thereunder.
(dz)(d) It is understood and agreed Seller, Purchaser and Agent by 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).
(ea)(e) Seller, Purchaser and Agent agree that this Agreement is intended to create mutuality of obligations among the parties, and as such, the Agreement constitutes a contract which (i) is between all of the parties and (ii) places each party in the same right and capacity.
35.34. NOTICES AND OTHER COMMUNICATIONS
Except as provided herein, all notices required or permitted by this Agreement shall be in writing (including without limitation by Electronic Transmission, email or facsimile) and shall be effective and deemed delivered only when received by the party to which it is sent; provided that notices of Events of Default and exercise of remedies or under Sections 6 or 1819 shall be sent via overnight mail and by Electronic Transmission. Any such notice shall be sent to a party at the address, electronic mail or facsimile transmission number set forth below:
if to Seller: Home Point Financial Corporation
2211 Old Earhart Road, Suite 250
Ann Arbor, MI 48105
Attention: [***]
Telephone: [***]
E-mail: [***]
With copies to:
Home Point Financial Corporation
2211 Old Earhart Road, Suite 250
Ann Arbor, MI 48105
Attention: [***]
E-mail: [***]
if to Purchaser: Barclays Bank PLC
745 Seventh Avenue, 2nd Floor
New York, New York 10019
Attention: [***]
Telephone: [***]
Facsimile: [***]
E-mail[***]
With copies to:
Barclays Bank PLC – Legal Department
745 Seventh Avenue, 5th Floor
New York, New York 10019
Attention: [***]
Telephone: ([***]
Facsimile: [***]
E-mail: [***]
With copies to:
Barclays CapitalBank PLC – Operations US
US-400400 Jefferson Park
Whippany, New Jersey 07981
Attention: [***]
Telephone: [***]E-mail: [***]:
if to Agent: Barclays Bank PLC – Mortgage Finance
745 Seventh Avenue, 4th2nd Floor
New York, New York 10019
Attention: [***]
Telephone: [***]
Facsimile: [***]
E-mail: [***]
With copies to:
Barclays Bank PLC – Legal Department
745 Seventh Avenue, 20th5th Floor
New York, New York 10019
Attention: [***]
Telephone: [***]
Facsimile: [***]
E-mail: [***]
With copies to:
Barclays CapitalBank PLC – Operations US
US-400400 Jefferson Park
Whippany, New Jersey 07981
Attention: [***]
Telephone: [***]
E-mail: [***]
or to such other address, e-mail address or facsimile number as either party may notify to the others in writing from time to time.
36.35. CONFIDENTIALITY
Seller, Purchaser and Agent each hereby acknowledge and agree that all written or computer-readable information provided by one party to the other in connection with the Program Documents or the Transactions contemplated thereby, including without limitation, Seller’s Mortgagor information in the possession of Purchaser (the “Confidential Terms”) shall be kept confidential and shall not be divulged to any party without the prior written consent of such other party except for (i) disclosure to Seller’s or Purchaser’s direct and indirect parent companies, directors, attorneys, auditors, taxing authorities, agents or accountants, provided that such parties likewise agree to be bound by this covenant of confidentiality, or are otherwise subject to confidentiality restrictions or (ii) with prior (if feasible) written notice to Purchaser, disclosure required by law, rule, regulation or order of a court or other regulatory body or (iii) with prior (if feasible) written notice to Purchaser, disclosure to any approved hedge counterparty to the extent necessary to obtain any Hedge Instrument hereunder or (iv) with prior (if feasible) written notice to Purchaser, any disclosures or filing required under Securities and Exchange Commission (“SEC”) or state securities’ laws; provided that in the case of clause (iv), Seller shall not file the Pricing Side Letter. Notwithstanding anything herein to the contrary, except as reasonably necessary to comply with applicable securities laws, each party (and each employee, representative, or other agent of each party) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure. For this purpose, tax treatment and tax structure shall not include (i) the identity of any existing or future party (or any Affiliate of such party) to this Agreement or (ii) any specific pricing information or other commercial terms, including the amount of any fees, expenses, rates or payments arising in connection with the transactions contemplated by this Agreement.
Notwithstanding anything in this Agreement to the contrary, Seller, Purchaser and Agent shall comply with all applicable local, state and federal laws, including, without limitation, all privacy and data protection law, rules and regulations that are applicable to the Purchased Assets and any applicable terms of this Agreement, including information relating to any Mortgage Loan that is not purchased hereunder and information relating to any other Mortgage Loans of Seller that is delivered to Purchaser or Agent by another lender under an intercreditor agreement
or other agreement (the “Confidential Information”). Seller, Purchaser and Agent understand that the Confidential Information may contain “nonpublic personal information”, as that term is defined in Section 509(4) of the Gramm-Leach-Bliley Act (the “GLB Act”), and each agrees to maintain such nonpublic personal information that it receives hereunder in accordance with the GLB Act and other applicable federal and state privacy laws. Seller, Purchaser and Agent shall each implement such physical and other security measures as shall be necessary to (a) ensure the security and confidentiality of the “nonpublic personal information” of the “customers” and “consumers” (as those terms are defined in the GLB Act) of the Mortgagors, (b) protect against any threats or hazards to the security and integrity of such nonpublic personal information, and (c) protect against any unauthorized access to or use of such nonpublic personal information. Seller, Purchaser and Agent shall notify the other party immediately following discovery of any breach or compromise of the security, confidentiality, or integrity of the nonpublic personal information of any Mortgagor by providing notice directly to the other party.
37.36. DUE DILIGENCE
Purchaser, Agent or any of their respective agents, representatives or permitted assigns shall have the right, upon reasonable prior notice and during normal business hours, to conduct inspection and perform continuing due diligence reviews of (x) Seller and its Affiliates, directors, officers, employees and significant shareholders, including, without limitation, their respective financial condition and performance of its obligations under the Program Documents, and (y) the Servicing File and the Purchased Assets. Seller agrees promptly to provide Purchaser, Agent and their respective agents with access to, copies of and extracts from any and all documents, records, agreements, instruments or information (including, without limitation, any of the foregoing in computer data banks and computer software systems) relating to Seller’s respective business, operations, servicing, financial condition, performance of their obligations under the Program Documents, the documents contained in the Servicing Files or the Purchased Assets or assets proposed to be sold hereunder in the possession, or under the control, of Seller. In addition, Seller shall also make available to Purchaser and/or Agent, upon reasonable prior notice and during normal business hours, a knowledgeable financial or accounting officer of Seller for the purpose of answering questions respecting the Purchased Assets. Without limiting the generality of the foregoing, Seller acknowledges that Purchaser shall enter into Transactions with Seller based solely upon the information provided by Seller to Purchaser and/or Agent and the representations, warranties and covenants contained herein, and that Purchaser and/or Agent, at its option, shall have the right at any time to conduct itself or through its agents, or require Seller to conduct quality reviews and underwriting compliance reviews of the individual Mortgage Loans at the expense of Seller. Any such diligence conducted by Purchaser and/or Agent shall not reduce or limit the Seller’s representations, warranties and covenants set forth herein. Seller agrees to reimburse Purchaser and/or Agent for all reasonable out-of-pocket due diligence costs and expenses incurred pursuant to this Section 3637.
38.37. USA PATRIOT ACT; OFACSANCTIONS AND ANTI-TERRORISM
Each of Purchaser and Agent hereby notifies the Seller that pursuant to the requirements of the USA PATRIOT Improvement and Reauthorization Act, Title III of Pub. L. 109-177 (signed into law March 9, 2009) (the “Act”), it is required to obtain, verify, and record information that identifies the Seller, which information includes the name and address of the Seller and other information that will allow each of Purchaser and Agent, as applicable, to identify the Seller in accordance with the Act. Seller hereby represents and warrants to each of Purchaser and Agent, and shall on and as of the Purchase Date for any Transaction and on and as of each date thereafter through and including the related Repurchase Date be deemed to represent and warrant to each of Purchaser and Agent that:
(eb)(a) (i) NeitherNone of the Seller, nor the Parent Company noror, to the Seller’s actual knowledge, any director, officer, or employee of the Seller or any of its subsidiaries is named on the list of Specifically Designated Nationals maintained by OFAC or any similar sanctions list issued by OFAC, OFSI or any other Governmental Authority (collectively, the “OFACSanctions Lists”) or is located, organized, or resident in a country or territory that is, or whose government is, the target of sanctions imposed by OFAC, OFSI or any other Governmental Authority; (ii) no Person or Persons on the OFACSanctions Lists owns an equity interest in, whether individually or in the aggregate, directly or indirectly, a fifty percent or greater interest or otherwise controls, the Seller, the Parent Company or, to the knowledge of Seller, any Originator; and (iii) to the knowledge of the Seller, neither the Purchaser nor Agent is precluded, under the laws and regulations administered by OFAC, by any Economic and Trade Sanctions and Anti-Terrorism Laws from entering into this Agreement or any transactions pursuant to this Agreement with the Seller due to the ownership or control by any person or entity of stocks, shares, bonds, debentures, notes, drafts or other securities or obligations of the Seller.
(ec)(b) (i) Seller will not knowingly conduct business with or engage in any transaction with any Obligor that the Seller of a Purchased Asset knows, after reasonable due diligence, (x) is named on any of the OFACSanctions Lists or is located, organized, or resident in a country or territory that is, or whose government currently is, the target of countrywide sanctions imposed by OFAC, OFSI or any other Governmental Authority; (y) is owned, directly or indirectly, or otherwise controlled, by a Person named on any OFACSanctions List; (ii) if the Seller obtains actual knowledge, after reasonable due diligence, that any Obligor is named on any of the OFACSanctions Lists or that any Person or Persons named on an OFACa Sanctions List owns an equity interest in, whether individually or in the aggregate, directly or indirectly, ora fifty percent or greater interest in or otherwise controls, the Obligor, or the Seller, as applicable, Seller will give prompt written notice to the Purchaser and Agent of such fact or facts; and (iii) the Seller will (x) comply at all times with the requirements of the Economic and Trade Sanctions and Anti-Terrorism Laws applicable to any transactions, dealings or other actions relating to this Agreement, except to the extent such non-compliance does not result in a violation of applicable law by any of the Purchaser or Agent and (y) will, upon the Purchaser’s or Agent’s reasonable request from time to time during the term of this Agreement, deliver a certification confirming its compliance with the covenants set forth in this Section 3738.
39.38. EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. The parties agree that this Agreement, any documents to be delivered pursuant to this Agreement and any notices hereunder may be transmitted between them by email and/or by facsimile. The, and any party hereto may execute this Agreement by signing and delivering one or more counterparts. The parties intend that faxed signatures and electronically imaged signatures such as .pdf files shall constitute original signatures and are binding on all parties. The original documents shall be promptly delivered, if requested. The parties agree that this Agreement, any addendum, exhibit or amendment hereto or any other document necessary for the consummation of the transactions contemplated by this Agreement may be accepted, executed or agreed to through the use of an electronic signature in accordance with E-Sign, UETA and any applicable state law. Any document accepted, executed or agreed to in conformity with such laws will be binding on all parties hereto to the same extent as if it were physically executed and each party hereby consents to the use of any secure third party electronic signature capture service with appropriate document access tracking, electronic signature tracking and document retention as may be reasonably chosen by a signatory hereto, including but not limited to DocuSign.
40.39. CONTRACTUAL RECOGNITION OF BAIL-IN
Seller acknowledges and agrees that notwithstanding any other term of this Agreement or any other agreement, arrangement or understanding with Purchaser, any of Purchaser’s liabilities, as the Bank of England (or any successor resolution authority) may determine, arising under or in connection with this Agreement may be subject to Bail-In Action and Seller accepts to be bound by the effect of:
(ed)(a) any Bail-In Action in relation to such liability, including (without limitation):
(i)(i) a reduction, in full or in part, of any amount due in respect of any such liability;
(ii)(ii) a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, Seller; and
(iii)(iii) a cancellation of any such liability; and
(ee)(b) a variation of any term of this Agreement to the extent necessary to give effect to Bail-In Action in relation to any such liability.
41.40. CONTRACTUAL RECOGNITION OF UK STAY IN RESOLUTION
(ef)Where a resolution measure is taken in relation to any BRRD undertaking or any member of the same group as that BRRD undertaking and that BRRD undertaking or any member of the same group as that BRRD undertaking is a party to this Agreement (any such party to this Agreement being an “Affected Party”), each other party to this Agreement agrees that it shall only be entitled to exercise any termination right under this Agreement against the Affected Party to the extent that it would be entitled to do so under the Special Resolution Regime if this Agreement were governed by the laws of any part of the United Kingdom.
(eg)For the purpose of this Section 4041, “resolution measure” means a ‘crisis prevention measure’, ‘crisis management measure’ or ‘recognised third-country resolution action’, each with the meaning given in the “PRA Rulebook: CRR Firms and Non-Authorised Persons: Stay in Resolution Instrument 2015”, as may be amended from time to time (the “PRA Contractual Stay Rules”),; provided, however, that ‘crisis prevention measure’ shall be interpreted in the manner outlined in Rule 2.3 of the PRA Contractual Stay Rules; “BRRD undertaking”, “group”, “Special Resolution Regime” and “termination right” have the respective meanings given in the PRA Contractual Stay Rules.
42.41. Notice Regarding Client Money Rules.
Purchaser, as a CRD credit institution (as such term is defined in the rules of the Financial Conduit Authority (the “FCA”)), holds all money received and held by it hereunder as banker and not as trustee. Accordingly, money that is received and held by Purchaser from you will not be held in accordance with the provisions of the FCA’s Client Asset Sourcebook relating to client money (the “Client Money Rules”) and will not be subject to the statutory trust provided for under the Client Money Rules.
In particular, Purchaser shall not segregate money received by it from you from Purchaser money and Purchaser shall not be liable to account to you for any profits made by Purchaser use as banker of such cash and upon failure of Purchaser, the client money distribution rules within the Client Asset Sourcebook (the “Client Money Distribution Rules”) will not apply
to these sums and so you will not be entitled to share in any distribution under the Client Money Distribution Rules.
43.42. REGISTER.
The Seller shall maintain at one of its U.S. offices a register for the recordation of the names and address of Purchaser and each assignee from time-to-time in respect of each Transaction and the Initial Purchase Price, Pricing Rate, and RepurchaseOutstanding Purchase Price in respect of such Transaction (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Seller and the Purchaser shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Purchaser hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Seller and any Purchaser, at any reasonable time and from time to time upon reasonable prior notice.
44.43. Benchmark Replacement[RESERVED].
The Pricing Rate used to calculate the Price Differential is determined by reference to LIBOR. LIBOR is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. On March 5, 2021, the FCA, the regulatory supervisor of LIBOR’s administrator, IBA, publicly announced the future cessation or loss of representativeness after June 30, 2023, of LIBOR. There is no assurance that the date announced by the FCA will not change or that the IBA, FCA or other regulators will not take further action that could impact the availability, composition, or characteristics of LIBOR or the currencies and/or tenors for which LIBOR is published. Each party to this Agreement should consult its own advisors to stay informed of any such developments. In light of this eventuality, public and private sector industry initiatives are currently underway to identify new or alternative reference rates to be used in place of LIBOR. Under the circumstances set forth in this Section 43, this Section 43 provides a mechanism for determining the Benchmark Replacement. Agent will notify the Purchaser and the Seller as required by this Section 43. However, Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission or any other matter related to LIBOR or other rates in the definition of LIBOR or with respect to any alternative or successor rate thereto, or replacement rate thereof (including, without limitation, any Benchmark Replacement or Benchmark Replacement Conforming Changes implemented pursuant to this Section 43, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the LIBOR or have the same volume or liquidity as did the LIBOR prior to its discontinuance or unavailability).
If the then-current Benchmark is LIBOR, notwithstanding anything to the contrary herein or in any other Program Document, on the earlier of (i) the date that LIBOR has either permanently or indefinitely ceased to be provided by IBA or has been announced by the FCA pursuant to public statement or publication of information to be no longer representative and (ii) the Early Opt-in Effective Date, the Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Program Document in respect of any setting of such Benchmark on such day and all subsequent settings without any amendment to, or further action or consent of any other party to this Agreement or any other Program Document.
If the then-current Benchmark is a rate other than LIBOR, upon the occurrence of a Benchmark Transition Event, the Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder and under any Program Document in respect of any Benchmark setting at or after 5:00 p.m. on the fifth (5th) Business Day after the date
notice of such Benchmark Replacement is provided to Purchaser and Seller without any amendment to, or further action or consent of any other party to, this Agreement or any other Program Document so long as Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Purchaser. At any time that the administrator of the then-current Benchmark has permanently or indefinitely ceased to provide such Benchmark or such Benchmark has been announced by the regulatory supervisor for the administrator of such Benchmark pursuant to public statement or publication of information to be no longer representative of the underlying market and economic reality that such Benchmark is intended to measure and that representativeness will not be restored, the Seller may revoke any request for a Transaction to be made or continued that would bear interest by reference to such Benchmark until the Seller’s receipt of notice from Agent that a Benchmark Replacement has replaced such Benchmark.
In connection with the implementation and administration of a Benchmark Replacement, Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Program Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement.
Agent will promptly notify Seller and Purchaser of (i) the implementation of any Benchmark Replacement and (ii) the effectiveness of any Benchmark Replacement Conforming Changes.
Any determination, decision or election that may be made by Agent or Purchaser pursuant to this Section 43, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section 43.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Seller, Agent and Purchaser have caused their names to be signed to this Master Repurchase Agreement by their respective officers thereunto duly authorized as of the date first above written.
HOME POINT FINANCIAL CORPORATION,
as Seller
By:
Name:
Title:
BARCLAYS BANK PLC, as Purchaser and Agent
By:
Name:
Title:
Signature Page to Master Repurchase Agreement
EXHIBIT A-1
MONTHLY CERTIFICATION
I, _______________________, _______________________ of Home Point Financial Corporation (the “Seller”), in accordance with that certain Master Repurchase Agreement (“Agreement”), dated as of August 14, 2020, by and between Barclays Bank PLC and Seller do hereby certify that:
(i)(i) To the best of my knowledge, no Default or Event of Default has occurred and is continuing.
[Signature Page Follows]
Capitalized terms used but not defined herein have the meanings assigned thereto in the Agreement.
IN WITNESS WHEREOF, I have signed this certificate.
Date: , 20[ ]
HOME POINT FINANCIAL CORPORATION
By:_________________________
Name:
Title:
EXHIBIT A-2
QUARTERLY CERTIFICATION
I, _______________________, _______________________ of Home Point Financial Corporation (the “Seller”), in accordance with that certain Master Repurchase Agreement (“Agreement”), dated as of August 14, 2020, by and between Barclays Bank PLC and Seller do hereby certify that:
(1)To the best of my knowledge, no Default or Event of Default has occurred and is continuing; and
(2)Seller has complied with each of the covenants set forth in Section 4 of the Pricing Side Letter, as evidenced by the worksheet attached hereto as Schedule One.
[Signature Page Follows]
Capitalized terms used but not defined herein shall have the meanings assigned thereto in the Agreement.
IN WITNESS WHEREOF, I have signed this certificate.
Date: , 20[ ]
HOME POINT FINANCIAL CORPORATION
By:_________________________
Name:
Title:
SCHEDULE ONE TO EXHIBIT A
OTHER FINANCIAL COVENANTS
EXHIBIT B
REPRESENTATIONS AND WARRANTIES
WITH RESPECT TO MORTGAGE LOANS
Capitalized terms used but not defined in this Exhibit B have the meanings assigned to such terms in the Master Repurchase Agreement dated as of August 14, 2020 (the “Agreement”), by and between Barclays Bank PLC (“Purchaser” or “Agent”) and Home Point Financial Corporation (“Seller”). Seller hereby represents and warrants to the Purchaser and Agent that, for each Mortgage Loan as of the related Purchase Date and the related Repurchase Date and on each date that such Mortgage Loan is subject to a Transaction:
(1)(a) All information provided to Purchaser by Seller, including without limitation the information set forth in the Seller Mortgage Loan Schedule, with respect to the Mortgage Loan is true and correct in all material respects;
(2)(b) Such Mortgage Loan is an Eligible Mortgage Loan;
(3)(c) Such Mortgage Loan was owned solely by Seller on the related Purchase Date, is not subject to any lien, claim or encumbrance, including, without limitation, any such interest pursuant to a loan or credit agreement for warehousing mortgage loans, and was originated, underwritten and serviced in either (A) Strict Compliance (with respect to Fannie Mae Mortgage Loans and Freddie Mac Mortgage Loans) or (B) compliance with Seller’s underwriting guidelines (with respect to Jumbo Mortgage Loans) with all applicable law and regulations, including without limitation the Federal Truth-in-Lending Act, the Real Estate Settlement Procedures Act, regulations issued pursuant to any of the aforesaid, and any and all rules, requirements, guidelines and announcements of each Agency, and, as applicable, the FHA, HUD and VA, as the same may be amended from time to time;
(4)(d) The improvements on the land securing such Mortgage Loan are and will be kept insured at all times by responsible insurance companies reasonably acceptable to Purchaser and the Applicable Agency against fire and extended coverage hazards under policies, binders or certificates of insurance with a standard mortgagee clause in favor of Seller and its assigns, providing that such policy may not be canceled without prior notice to Seller. Any proceeds of such insurance shall be held in trust for the benefit of Purchaser. The scope and amount of such insurance shall satisfy the rules, requirements, guidelines and announcements of the Applicable Agency, and shall in all cases be at least equal to the lesser of (A) the principal amount of such Mortgage Loan or (B) the maximum amount permitted by applicable law, and shall not be subject to reduction below such amount through the operation of a coinsurance, reduced rate contribution or similar clause;
(5)(e) Each Mortgage is a valid first lien on the Mortgaged Property and is covered by an attorney’s opinion of title acceptable to the Applicable Agency or by a policy of title insurance on a standard ALTA or similar lender’s form (or a binding commitment therefor) in favor of Seller and its assigns, subject only to exceptions permitted by the applicable Agency Program. Seller shall hold for the benefit of Purchaser such policy of title insurance (or the binding commitment therefor), and, upon request of Purchaser, shall immediately deliver such policy (or such commitment) to Purchaser or to the Custodian on behalf of Purchaser;
(6)(f) Such Mortgage Loan is either (i) insured (or is otherwise eligible to be insured) by the FHA under the National Housing Act, guaranteed by the VA under the Servicemen’s Readjustment Act of 1944 or (ii) with respect to Fannie Mae Mortgage Loans and Freddie Mac Mortgage Loans, is otherwise eligible to be insured or guaranteed in accordance with the requirements of the applicable Agency Program and, in either case, such Mortgage Loan
is not subject to any defect that would prevent recovery in full or in part against the FHA, VA or other insurer or guarantor, as the case may be;
(7)(g) A mortgage identification number (“MIN”) has been assigned by MERS and such MIN is accurately provided on the Seller Mortgage Loan Schedule. Either the Mortgage is in favor of MERS or an Assignment of Mortgage to MERS has been duly and properly recorded;
(8)(h) Seller has not received any notice of liens or legal actions with respect to such Mortgage Loan and no such notices have been electronically posted by MERS;
(9)(i) Each Mortgage Loan (other than a Jumbo Mortgage Loan) is eligible for sale to the Applicable Agency and fully complies with all of the terms and conditions, including any covenants, representations and warranties, in the applicable Agency Guide and eligible for securitization by and/or sale to Fannie Mae or Freddie Mac or eligible for inclusion in a Ginnie Mae MBS pool;
(10)(j) There are no restrictions, contractual or governmental, which would impair the ability of Seller from servicing the Mortgage Loans in any material respect;
(11)(k) Such Mortgage Loan will not result in Negative Amortization;
(12)(l) The Mortgagor is one or more natural persons and/or trustees for an Illinois land trust or a trustee under a “living trust” and such “living trust” is in compliance with Applicable Agency guidelines for such trusts;
(13)(m) Facsimile endorsement, if any, of the related Mortgage Note is permitted by the Applicable Agency and permissible in any applicable jurisdictions;
(14)(n) No predatory, abusive or deceptive lending practices, including but not limited to, the extension of credit to a Mortgagor without regard for the Mortgagor’s ability to repay the Mortgage Loan and the extension of credit to a Mortgagor which has no tangible net benefit to the Mortgagor, were employed in connection with the origination of the Mortgage Loan. Such Mortgage Loan is in compliance with the anti-predatory lending eligibility for purchase requirements of the Fannie Mae Guide;
(15)(o) At origination the related Mortgagor’s FICO Score was equal to or greater than [***] (for this purpose, it being acknowledged that the related Mortgagor shall be deemed to have a FICO Score of zero where no FICO Score is available) unless it is a part of an FHA;
(16)(p) If such Mortgage Loan was pledged to another warehouse, credit, repurchase or other financing facility immediately prior to the related Purchase Date, then (i) such pledge has been released immediately prior to, or concurrently with, the related Purchase Date hereunder and (ii) Purchaser has received a Warehouse Lender’s Release in respect of such Mortgage Loan;
(17)(q) [RESERVED];
(18)(r) [RESERVED];
(19)(s) [RESERVED];
(20)(t) Such Mortgage Loan is a MERS Designated Mortgage Loan;
(21)(u) [RESERVED];
(22)(v) With respect to each Mortgage Loan that is a Wet-Ink Mortgage Loan, the Settlement Agent has been instructed in writing by Seller to hold the related Mortgage File as agent and bailee for Purchaser or Agent and to promptly forward such Mortgage File in accordance with the provisions of the Custodial and Disbursement Agreement and the Escrow Instruction Letter (if applicable);
(23)(w) [RESERVED];
(24)(x) Each Mortgage Loan (other than Agency Renovation Mortgage Loans) has been fully disbursed and is secured by a first lien on an underlying property as a “closed-end” Mortgage Loan with no further disbursements required by any party;
(25)(y) [RESERVED];
(26)(z) The Mortgage Loan is not secured by property located in a state where the Seller is not licensed as a lender/mortgage banker;
(27)(aa) The Mortgage Loan has not been converted to an ownership interest in real property through foreclosure or deed-in-lieu of foreclosure;
(28)(bb) The Mortgage Loan relates to Mortgaged Property that consists of (i) a detached single family dwelling, (ii) a two-to-four family dwelling, (iii) a one-family dwelling unit in a Freddie Mac eligible condominium project, (iv) a townhouse, or (v) a detached single family dwelling in a planned unit development none of which is a cooperative or commercial property; and is not related to Mortgaged Property that consists of (a) mixed use properties, (b) log homes, (c) earthen homes, (d) underground homes, (e) mobile homes (whether or not secured by real property), (f) any dwelling situated on more than ten acres of property or (h) any dwelling situated on a leasehold estate;
(29)(cc) Such Mortgage Loan is not a Restricted Mortgage Loan;
(30)(dd) Other than with respect to any MERS Designated Mortgage Loan, Seller has submitted the original Mortgage in respect of each Mortgage Loan for recordation in the appropriate public recording office in the applicable jurisdictions wherein such recordation is necessary to perfect the lien thereof as against creditors of the Seller;
(31)(ee) Seller has not sold, assigned, transferred, pledged or hypothecated any interest in any individual Mortgage Loan subject to a Transaction to any person other than any sale, assignment, transfer, pledge or hypothecation that is released in conjunction with the sale to Purchaser hereunder, and upon delivery of such Mortgage Loan to Purchaser, Purchaser will be the sole owner thereof (other than for tax and accounting purposes), free and clear of any lien, claim or encumbrance other than those arising under this Agreement; and
(32)(ff) In connection with the assignment of any Mortgage Loan registered on the MERS system, the Seller agrees that it will, at the Seller’s own cost and expense, promptly cause the MERS system to indicate that such Mortgage Loan has been transferred to the Purchaser in accordance with the terms of this Agreement by including in MERS’ computer files (a) the code in the field which identifies the specific owner of the Mortgage Loans and (b) the code in the field “Pool Field” which identifies the series in which such Mortgage Loans were sold. The Seller further agrees that it will not alter codes referenced in this paragraph with respect to any Mortgage Loan at any time that such Mortgage Loan is subject to this Agreement, and the Seller shall retain its membership in MERS at all times during the term of this Agreement.
(33)(gg) Construction or Rehabilitation of Mortgaged Property. Except for FHA 203k Mortgage Loans, no Mortgage Loan was made in connection with the construction or rehabilitation of a Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged Property.
EXHIBIT C
FORM OF TRANSACTION NOTICE
[insert date]
Barclays Bank PLC
745 Seventh Avenue, 4th Floor
New York, New York 10019
Attention: [***]
Re: Master Repurchase Agreement, dated as of August 14, 2020, by and between Barclays Bank PLC (“Purchaser” and “Agent”) and Home Point Financial Corporation (“Seller”)
Ladies/Gentlemen:
Reference is made to the above-referenced Master Repurchase Agreement (the “Repurchase Agreement”; capitalized terms used but not otherwise defined herein have the meaning given them in the Repurchase Agreement).
In accordance with Section 3(d) of the Repurchase Agreement, the undersigned Seller hereby requests, and the Purchaser agrees, to enter into a Transaction with us, in connection with our delivery of Eligible Mortgage Loans and all related Servicing Rights, on ____________________ [insert requested Purchase Date, which must be at least one (1) Business Day following the date of the request] (the “Purchase Date”), in connection with which we shall sell to you such Eligible Mortgage Loans on the Seller Mortgage Loan Schedule attached hereto. The unpaid principal balance of the Eligible Mortgage Loans is $________ and the Purchase Price shall be ______ [insert applicable Purchase Price]. The Purchaser shall transfer to the Seller an amount equal to $ _______ [insert amount which represents the Purchase Price net of any related Structuring Fee, Non-Utilization Fee, or any other fees then due and payable by Seller to Purchaser pursuant to the Agreement]. Seller agrees to repurchase such Purchased Asset on the Repurchase Date(s) at the Repurchase Price(s) set forth in the spreadsheet attached hereto as Schedule 1.
The Eligible Mortgage Loans have the characteristics on the electronic file or computer tape or disc delivered by Seller to the Purchaser with respect thereto in connection with this Transaction Notice.
The Seller hereby certifies, as of such Purchase Date, that:
(1) no Default or Event of Default has occurred and is continuing on the date hereof (or to the extent existing, shall be cured after giving effect to such Transaction) nor will occur after giving effect to such Transaction as a result of such Transaction;
(2) each of the representations and warranties made by the Seller in or pursuant to the Program Documents is true and correct in all material respects on and as of such date as if made on and as of the date hereof (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date);
(3) the Seller is in compliance with all governmental licenses and authorizations and is qualified to do business and is in good standing in all required jurisdictions, except as would not be reasonably likely to have a Material Adverse Effect;
(4) Seller has all requisite Approvals; and
(5) the Seller has satisfied all applicable conditions precedent in Sections 10(a) and (b) of the Repurchase Agreement and all other requirements of the Program Documents to the extent such conditions and requirements are within its control.
The undersigned duly authorized officer of Seller further represents and warrants that (1) (a) with respect to the Eligible Mortgage Loans subject to the Transaction requested herein that are not Wet-Ink Mortgage Loans, the documents constituting the Mortgage Files (as defined in the Custodial and Disbursement Agreement) and (b) with respect to Eligible Mortgage Loans that are Wet-Ink Mortgage Loans, the Transaction Notice and the Seller Mortgage Loan Schedule, in each case as more specifically identified on the Seller Mortgage Loan Schedule delivered to the Purchaser and the Custodian in connection herewith (the “Receipted Assets”), have been or are hereby submitted to Custodian and such required documents are to be held by the Custodian for the Purchaser, (2) all other documents related to such Receipted Assets (including, but not limited to, mortgages, insurance policies, loan applications and appraisals) have been or will be created and held by Seller for Purchaser, (3) all documents related to such Receipted Assets withdrawn from Custodian shall be held by Seller for Purchaser, and (4) upon Purchaser’s wiring of the Initial Purchase Price pursuant to Section 3(b) of the Repurchase Agreement, Purchaser will have agreed to the terms of the Transaction as set forth herein and purchased the Receipted Assets from the Seller.
Seller hereby represents and warrants that (x) the Receipted Assets have a Principal Balance as of the date hereof of $__________ and (y) the number of Receipted Assets is ______.
Very truly yours,
HOME POINT FINANCIAL CORPORATION
By:
Name:
Title:
SCHEDULE 1 TO TRANSACTION NOTICE
LIST OF REPURCHASE PRICES AND REPURCHASE DATES
[***]
EXHIBIT D
FORM OF GOODBYE LETTER
«Primary_Borrower» [_______] [__], 20[ ]
«Mailing_address_line_1»
«Mail_city», «Mail_state» «Mail_zip»
RE: Transfer of Mortgage Loan Servicing
Mortgage Loan «Account_number»
Dear Customer:
Home Point Financial Corporation (“Servicer”) is the present servicer of your mortgage loan. Effective [Date] the servicing of your mortgage will be transferred to _______. This transfer does not affect the terms and conditions of your mortgage, other than those directly related to servicing. Because of the change in servicer, we are required to provide you with this disclosure.
Servicer cannot accept any payments received after [Date]. Effective [Date], all payments are to be made to __________. Any payments received by Servicer after [Date] will be forwarded to _________________. ___________________ will be contacting you shortly with payment instructions. Please make future payments to:
________________________
Attn: ___________
[Address]
If you currently make payments by an automatic checking or savings account deduction, that service will discontinue effective with the transfer date. After the servicing transfer, you may request this service from _____________.
In [Date], you will receive a statement from Servicer reflecting the amount, if any, of the interest and taxes paid on your behalf in 20[ ]. A similar statement will be sent __________________ for the period beginning [Date] through year-end. Both statements must be added together for income tax purposes.
If you have any questions concerning your account through [Date], you should continue to contact Servicer, at <Servicer’s Phone Number>, <HOURS OF OPERATION>. Questions after the transfer date should be directed to ___________________Customer Service Department at 1-800-_____________, Monday – Friday, 7 a.m. – 7 p.m. EST.
Sincerely,
Loan Servicing Department
Home Point Financial Corporation
NOTICE OF ASSIGNMENT, SALE OR TRANSFER
OF SERVICING RIGHTS
You are hereby notified that the servicing of your mortgage loan, that is the right to collect payments from you, is being assigned, sold or transferred.
The assignment, sale or transfer of the servicing of the mortgage loan does not affect any term or condition of the mortgage instruments, other than the terms directly related to the servicing of your loan.
Except in limited circumstances, the law requires that your present servicer send you a notice at least 15 days before the effective date, or at closing. Your new servicer must also send you this notice no later than 15 days after this effective date.
This notification is a requirement of Section 6 of the Real Estate Settlement Procedures Act (RESPA) (12 U.S.C. 2605). You should also be aware of the following information, which is set out in more detail in Section 6 of RESPA (12 U.S.C. 2605).
During the 60 day period following the effective date of the transfer of the loan servicing, a loan payment received by your old servicer before its due date may not be treated by the new loan servicer as late, and a late fee may not be imposed upon you.
Section 6 of RESPA (12 U.S.C. 2605) gives you certain consumer rights. If you send a “qualified written request” to your loan servicer concerning the servicing of your loan, your servicer must provide you with a written acknowledgement within 20 Business Days of receipt of your request. A “qualified written request” is written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, which includes your name and account number and your reasons for the request. If you want to send a “qualified written request” regarding the servicing of your loan, it must be sent to this address:
___________________
[Address]
No later than 60 Business Days after receiving your request, your servicer must make any appropriate corrections to your account, and must provide you with a written clarification regarding any dispute. During this 60 Business Day period, your servicer may not provide information to a consumer reporting agency concerning any overdue payment related to such period or qualified written request. However, this does not prevent the servicer from initiating foreclosure if proper grounds exist under the mortgage documents.
A Business Day is any day excluding legal public holidays (State or federal), Saturday and Sunday.
Section 6 of RESPA also provides for damages and costs for individuals or classes of individuals, in circumstances where servicers are shown to have violated the requirements of that Section. You should seek legal advice if you believe your rights have been violated.
MIRANDA DISCLOSURE – For your protection, please be advised that we are attempting to collect a debt and any information obtained will be used for that purpose. Calls will be monitored and recorded for quality assurance purposes. If you do not wish for your call to be recorded please notify the customer service associate when calling.
BANKRUPTCY INSTRUCTION – Attention to any customer in Bankruptcy or who has received a bankruptcy discharge of this debt. Please be advised that this letter constitutes neither a demand for payment of the captioned debt nor a notice of personal liability to any recipient hereof who might have received a discharge of such debt in accordance with applicable bankruptcy laws or who might be subject to the automatic stay of Section 362 of the United States Bankruptcy Code. However, it may be a notice of possible enforcement of our lien against the collateral property, which has not been discharged in your bankruptcy.
EXHIBIT E
FORM OF WAREHOUSE LENDER’S RELEASE
(Date)
Barclays Bank PLC – Mortgage Finance
745 Seventh Avenue, 4th Floor
New York, New York 10019
Attention: [***]
Barclays Bank PLC – Legal Department
745 Seventh Avenue, 20th Floor
New York, New York 10019
Attention: [***]
Barclays Capital – Operations
1301 Sixth Ave, 8th Floor
New York, New York 10019
Attention: [***]
Telephone: [***]
Email: [***]
Home Point Financial Corporation
2211 Old Earhart Road, Suite 250
Ann Arbor, MI 48105
Re: Certain Mortgage Loans identified on Schedule A hereto and owned by Home Point Financial Corporation
Capitalized terms used herein but not defined herein have the meanings ascribed to such terms in the Master Repurchase Agreement, dated as of August 14, 2020 (the “Repurchase Agreement”), between Barclays Bank PLC and Home Point Financial Corporation.
The undersigned hereby releases all right, interest, lien or claim of any kind with respect to the Mortgage Loans described in the attached Schedule A, such release to be effective automatically without any further action by any party upon receipt in the account identified below in immediately available funds of $__________________, representing a loan count of _________, in accordance with the following wire instructions:
[ ]
Very truly yours,
[WAREHOUSE LENDER]
By:
Name:
Title:
[SCHEDULE A TO EXHIBIT E – LIST OF MORTGAGE LOANS TO BE RELEASED]
EXHIBIT F
LIST OF DISAPPROVED MEMBERS OF THE MORTGAGE BACKED SECURITIES DIVISION OF THE FIXED INCOME CLEARING CORPORATION
[NONE]
EXHIBIT G
FORM OF ESCROW INSTRUCTION LETTER
TO BE PROVIDED BY SELLER BEFORE CLOSING
The escrow instruction letter (the “Escrow Instruction Letter”) shall also include the following instruction to the Settlement Agent (the “Escrow Agent”):
Barclays Bank PLC (the “Purchaser”), has agreed to provide funds (“Escrow Funds”) to Home Point Financial Corporation (the “Seller”) to finance certain mortgage loans (the “Mortgage Loans”) for which you are acting as Escrow Agent. Wells Fargo Bank, N.A., in its capacity as funds disbursement agent (the “Disbursement Agent”), will disburse such funds on behalf of Purchaser.
You hereby agree that (a) you shall receive such Escrow Funds from Purchaser to be disbursed by the Disbursement Agent in connection with this Escrow Instruction Letter, (b) you will hold such Escrow Funds in trust, without deduction, set-off or counterclaim for the sole and exclusive benefit of Purchaser until such Escrow Funds are fully disbursed on behalf of Purchaser in accordance with the instructions set forth herein, and (c) you will disburse such Escrow Funds on the date specified for closing (the “Closing Date”) only after you have followed this Escrow Instruction Letter’s requirements with respect to the Mortgage Loans. In the event that the Escrow Funds cannot be disbursed on the Closing Date in accordance with the Escrow Instruction Letter, you agree to promptly remit the Escrow Funds to the Disbursement Agent by re-routing via wire transfer the Escrow Funds in immediately available funds, without deduction, set-off or counterclaim, back to the account specified in Disbursement Agent’s incoming wire transfer.
You further agree that, upon disbursement of the Escrow Funds, you will hold the Mortgage File as specified in the Escrow Instruction Letter in escrow as agent and bailee for Purchaser, and will forward the Mortgage File and original Escrow Instruction Letter in connection with such Mortgage Loans by overnight courier (y) to the Disbursement Agent within three (3) Business Days following the date of origination.
You agree that all fees, charges and expenses regarding your services to be performed pursuant to this Escrow Instruction Letter are to be paid by Seller or its borrowers, and Purchaser shall have no liability with respect thereto.
The provisions of this Escrow Instruction Letter may not be modified, amended or altered, except by written instrument, executed by the parties hereto and Purchaser. You understand that Purchaser shall act in reliance upon the provisions set forth in this Escrow Instruction Letter, and that Purchaser is an intended third party beneficiary hereof.
Whether or not an Escrow Instruction Letter executed by you is received by the Disbursement Agent, your acceptance of the Escrow Funds shall be deemed to constitute your acceptance of this Escrow Instruction Letter.
[SELLER SIGNATURE BLOCK]
[ESCROW AGENT/SETTLEMENT AGENT SIGNATURE BLOCK]
EXHIBIT H
FORM OF SELLER MORTGAGE LOAN SCHEDULE
[TO BE PROVIDED BY BARCLAYS]
EXHIBIT I
FORM OF PREFUNDING REQUEST
[insert date]
[VIA ELECTRONIC TRANSMISSION]
Barclays Bank PLC
745 Seventh Avenue, 4th Floor
New York, New York 10019
Attention: [***]
U.S. Bank National Association
14255 49th Street North, Building 1
Clearwater, FL 33762
Attention: [***]
[***]
Telephone No: [***]
Email: [***]
With a copy to:
U.S. Bank National Association
1133 Rankin Street Ste 100
Saint Paul, MN 55116
Attention: [***]
[***]
Telephone No: [***]
Email: [***]
Re: Master Repurchase Agreement, dated as of August 14, 2020, by and between Barclays Bank PLC (“Purchaser” and “Agent”) and Home Point Financial Corporation (“Seller”)
Ladies/Gentlemen:
Reference is made to the above-referenced Master Repurchase Agreement (the “Repurchase Agreement”; capitalized terms used but not otherwise defined herein have the meaning given them in the Repurchase Agreement).
In accordance with Section 3(c) of the Repurchase Agreement, the undersigned Seller hereby requests Purchaser to remit to the Disbursement Account an amount equal to $________ [which amount shall not be less than $5,000,000] in connection with our subsequent delivery of one or more Seller Mortgage Loan Schedules requesting Purchaser to purchase certain Eligible Mortgage Loans and all related Servicing Rights, on ____________________ [insert requested Purchase Date, which must be at least one (1) Business Day following the date of the request] (the “Purchase Date”).
By submitting this Prefunding Request, Seller is deemed to have represented that no Responsible Officer of Seller has knowledge of any fact or circumstance that would cause such Responsible Officer to reasonably believe Seller could not represent that all conditions
precedent to the Transactions expected to occur the following day shall be satisfied and that all Mortgage Loans to be purchased will be Eligible Mortgage Loans.
Very truly yours,
HOME POINT FINANCIAL CORPORATION
EXHIBIT J
FORM OF SELLER FINANCIAL STATEMENTS (ANNUAL)
EXHIBIT K
FORM OF SELLER FINANCIAL STATEMENTS (PERIODIC)
RATE AMENDMENT TO MASTER REPURCHASE AGREEMENT
This Amendment (the “Amendment”) to the Master Repurchase Agreement (defined below), is entered into on May 19, 2022 by and among Wells Fargo Bank, N.A. (the “Buyer”) and Home Point Financial Corporation (the “Seller”). The Buyer and the Seller may also be referred to individually as a “Party” or collectively as the “Parties.”
W I T N E S S E T H:
WHEREAS, the Buyer and the Seller have entered into a Master Repurchase Agreement (v5.1), dated as of November 23, 2015, (as such Master Repurchase Agreement may be amended from time to time, the “Master Repurchase Agreement”), along with the related Amended and Restated Addendum, dated as of May 19, 2022, as such Amended and Restated Addendum may be amended and restated from time to time (the “Addendum” and together with the Master Repurchase Agreement and this Amendment, the “Agreement”) pursuant to which the Seller agrees to sell certain mortgage loans and/or securities to the Buyer in exchange for the transfer of funds by the Buyer to the Seller, with a simultaneous agreement by the Buyer to transfer to the Seller such mortgage loans and/or securities at a date certain or on demand, in exchange for the transfer of funds by the Seller to the Buyer.
WHEREAS, the Buyer and the Seller wish to amend certain provisions of the Master Repurchase Agreement in order to tailor the contract.
NOW, THEREFORE, in consideration of the premises and mutual agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Seller and the Buyer agree as follows:
1. Section 2 of the Master Repurchase Agreement is hereby amended by adding the following definitions thereto in the correct alphabetical order:
“Applicable Rate” has the meaning set forth on the Addendum; provided, that if Buyer determines that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the selected Applicable Rate, then Buyer shall provide Seller with prompt notice thereof and Buyer shall use such other comparable rate that is being used in the relevant market until otherwise communicated to Seller. Buyer’s determination of Applicable Rate shall be conclusive, absent manifest error.
“Daily Simple SOFR” means, for any day, 30-day average SOFR, with the conventions for this rate (which will include a lookback) being established by Buyer in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for bilateral business loans plus the
SOFR Adjustment.
“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.
“SOFR” means, with respect to any day, the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark, (or a successor administrator) at http://www.newyorkfed.org, or any successor source.
“SOFR Adjustment” has the meaning set forth on the Addendum; “Term SOFR” means the forward-looking term rate for one-month
SOFR that has been selected or recommended by the Relevant Governmental Body plus the SOFR Adjustment.
2. Section 2 of the Master Repurchase Agreement is hereby amended by deleting the definition of “Pricing Rate” in its entirety and replacing it as follows:
“Pricing Rate” means a rate per annum equal to (x) the greater of
(A) Index Floor or (B) Applicable Rate, plus (y) (1) the applicable Loan Margin for such Purchased Mortgage Loan or (2) the Agency Security Margin with respect to Transactions the subject of which are Purchased Agency Securities. The Pricing Rate shall change in accordance with the Applicable Rate, and shall be reset on the first (1st) Business Day of each week that a Purchased Mortgage Loan or Purchased Agency Security is subject to a Transaction.
3. Any capitalized term used but not defined herein shall have the meaning assigned to such term in the Master Repurchase Agreement.
4. This Amendment only relates to the Master Repurchase Agreement between the Buyer and the Seller. Except as expressly amended above, all of the terms and conditions of the Master Repurchase Agreement remain in full force and effect and are hereby reaffirmed.
5. This Amendment may be executed in one or more counterparts, each of which shall be deemed to be an original, and all such counterparts shall together constitute one and the same instrument. Each counterpart delivered by email or facsimile transmission shall be effective as an original.
IN WITNESS WHEREOF, the Buyer and the Seller have caused their names to be signed to this Amendment to the Master Repurchase Agreement and Securities Contract by their respective officers thereunto duly authorized as of the date first above written.
| | | | | |
| Buyer
WELLS FARGO BANK, N.A.
By: /s/ Pamela E. Messori
Name: Pamela E. Messori
Title: Director |
| | | | | |
| Seller
HOME POINT FINANCIAL CORPORATION
By: /s/ Joseph Ruhlin
Name: Joseph Ruhlin
Title: Treasurer |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
TIAA BANK
301 W. Bay Street
Jacksonville, FL 32202
Home Point Financial Corporation
2211 Old Earhart Road, Suite 250
Ann Arbor MI 48105
Attention: [***]
Email: [***]
Re: Eighth Amendment to the Amended and Restated Master Repurchase Agreement and Amended and Restated Pricing Letter (“Eighth Amendment”).
Ladies and Gentlemen:
This Eighth Amendment, effective as of June 29, 2022 (the “Amendment Effective Date”), amends that certain Amended and Restated Pricing Letter dated September 18, 2020, as amended, (the “Pricing Letter”), and that Amended and Restated Master Repurchase Agreement dated September 18, 2020, as amended (the “Repurchase Agreement”), by and among Home Point Financial Corporation (the “Seller), TIAA, FSB, formerly known as EverBank (as Administrative Agent for the Buyers and as “Buyer”) and Capital One, National Association (as “Buyer”). The Repurchase Agreement and Pricing Letter are sometimes collectively referred to herein as the “Agreement”.
WHEREAS, Seller and Buyers have agreed to amend the Agreement as set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Amendments.
(a) [***].
(b) Section 2 of the Repurchase Agreement is hereby amended to add the following definitions in alphabetical order:
““Minimum Reserve Amount” shall have the meaning specified in the Pricing Letter.”
““Reserve Account” shall mean the account established pursuant to Section 9(c) hereof.”
““Reserve Amount” shall mean all cash and other amounts on deposit in the Reserve Account.”
(c) Section 4(e) of the Repurchase Agreement is hereby amended and restated in its entirety as follows:
“(e) Any cash transferred to Buyer pursuant to Section 4(b) above may be either credited to the Repurchase Price of the related Transactions, or, at Buyer’s option, may be placed in the Reserve Account until such time that Buyer determines, in its sole discretion, that the Margin Deficit has been eliminated, and following elimination of the Margin Deficit Buyer shall deposit the remaining portion of the cash transfer in excess of the Minimum Reserve Amount, if any, into the Haircut Account.”
(d) Section 8(a) of the Repurchase Agreement is hereby amended by amending and restating Section 8(a)(xvi) in its entirety as follows and by adding Section 8(a)(xvii) to the end thereof as follows:
“(xvi) the Reserve Amount and the Reserve Account; and
(xvii) any other property, rights, title or interests as are specified on a Mortgage Loan Schedule and/or Transaction Request and/or in the Warehouse Electronic System.”
(e) Section 9(c) of the Repurchase Agreement is amended and restated in its entirety as follows:
“(c) Reserve Account. Seller shall establish and maintain a Reserve Account, in the form of a deposit account. Buyer shall have exclusive withdrawal rights from such Reserve Account. The Reserve Account shall be established with Buyer. Seller shall deposit an amount equal to the Minimum Reserve Amount or other amount determined by Buyer. Funds deposited in the Reserve Account may be transferred as set forth herein. Any interest or other earnings on the investment of funds held in the Reserve Account shall be deposited in the Reserve Account, subject to withdrawal pursuant hereto. The Reserve Amount shall be held as cash margin and collateral for all Obligations under this Agreement. Without limiting the generality of the foregoing, in the event that a Margin Call or other Default exists, Buyer shall be entitled to use any or all of the Reserve Amount to cure such circumstances or otherwise exercise remedies available to Buyer without prior notice to, or consent from, Seller.”
(f) Section 12 of the Repurchase Agreement is amended to add Section 12(cc) to the end thereof as follows:
“(cc) Minimum Reserve Amount. Seller shall at all times maintain the Minimum Reserve Amount in the Reserve Account or such other amount determined by Buyer at any time and from time to time. In the event Buyer makes any withdrawal from the Reserve Account or determines that a Margin Deficit or other deficiency exists, Buyer shall provide Seller notice of such withdrawal, Margin Deficit or deficiency, and Seller shall have one (1) Business Day following such notice to deposit sufficient funds in the Reserve Account to satisfy the Minimum Reserve Amount, Margin Deficit or other deficiency. Buyer shall have the right, but not the obligation, at any time and from time to time to transfer funds from the Inbound Account or the Haircut Account to the Reserve Account to maintain the Minimum Reserve Amount without notice to Seller.”
(g) Section 13(c) of the Repurchase Agreement is amended by adding Section 12(cc) as follows to the end of the list of Sections therein for which failure to perform would trigger an Immediate Covenant Default:
“12(cc) (Minimum Reserve Amount); or”
SECTION 2. Defined Terms. Any terms capitalized but not otherwise defined herein should have the respective meanings set forth in the Agreement.
SECTION 3. Fees. In addition to the fees contemplated by the Agreement, the Seller shall pay the Warehouse Fees as and when required hereunder.
SECTION 4. Limited Effect. Except as amended hereby, the Agreement shall continue in full force and effect in accordance with its terms. Reference to this Eighth Amendment need not be made in the Agreement or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to, or with respect to, the Agreement, any reference in any of such items to the Agreement being sufficient to refer to the Agreement as amended hereby.
SECTION 5. Representations. In order to induce Buyers to execute and deliver this Eighth Amendment, Seller hereby represents and warrants to Buyers that as of the date hereof, except as otherwise expressly waived by Buyers in writing, Seller is in full compliance with all of the terms and conditions of the Facility Documents, including without limitation all of the representations and warranties and all of the affirmative and negative covenants, and no Default or Event of Default has occurred and is continuing under the Agreement.
SECTION 6. GOVERNING LAW. THIS EIGHTH AMENDMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR IN CONNECTION WITH THIS EIGHTH AMENDMENT, THE RELATIONSHIP OF THE PARTIES, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES WILL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH SHALL GOVERN.
SECTION 7. Counterparts. This Eighth Amendment may be executed in two (2) or more counterparts, each of which shall be deemed an original but all of which together shall constitute but one and the same agreement. This Eighth Amendment, to the extent signed and delivered by facsimile or other electronic means, shall be treated in all manner and respects as an original agreement and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. No signatory to this Eighth Amendment shall raise the use of a facsimile machine or other electronic means to deliver a signature or the fact that any signature or agreement was transmitted or communicated through the use of a facsimile machine or other electronic means as a defense to the formation or enforceability of a contract and each such Person forever waives any such defense.
[Space below intentionally blank; signatures follow on next page.]
IN WITNESS WHEREOF, Administrative Agent, the Buyers and Seller have caused their names to be signed hereto by their respective officers thereunto duly authorized, as of the date first above written.
| | | | | |
| TIAA, FSB, formerly known as EVERBANK, as Administrative Agent and a Buyer
By: /s/ Mark Bucior
Name: Mark Bucior
Title: Vice President |
| | | | | |
| CAPITAL ONE, NATIONAL ASSOCIATION, as a Buyer
By: /s/ Paul Spiridigliozzi
Name: Paul Spiridigliozzi
Title: Managing Director |
| | | | | |
| HOME POINT FINANCIAL CORPORATION, as Seller
By: /s/ Joseph Ruhlin
Name: Joseph Ruhlin
Title: Treasurer |
SCHEDULE 1
WAREHOUSE FEES
[***]
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
AMENDMENT NO. 8 TO MASTER REPURCHASE AGREEMENT
Amendment No. 8 to Master Repurchase Agreement, dated as of June 30, 2022 (this “Amendment”), among CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC (the “Administrative Agent”), CREDIT SUISSE AG, a company incorporated in Switzerland, acting through its Cayman Islands Branch (“CS Cayman”, and a “Buyer”), ALPINE SECURITIZATION LTD (“Alpine” and a “Buyer”) and other Buyers joined thereto from time to time (the “Buyers”) and Home Point Financial Corporation (the “Seller”).
RECITALS
The Administrative Agent, Buyers and Seller are parties to that certain (i) Master Repurchase Agreement, dated as of October 23, 2020 (as amended by Amendment No. 1, dated as of March 2, 2021, Amendment No. 2, dated as of April 30, 2021, Amendment No. 3, dated as of June 16, 2021, Amendment No. 4, dated as of June 30, 2021, Amendment No. 5, dated as of December 29, 2021, Amendment No. 6, dated as of February 28, 2022 and Amendment No. 7, dated as of March 31, 2022, the “Existing Repurchase Agreement”; and as further amended by this Amendment, the “Repurchase Agreement”) and (ii) Pricing Side Letter, dated as of October 23, 2020 (as amended, restated, supplemented or otherwise modified from time to time, the “Pricing Side Letter”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing Repurchase Agreement or the Pricing Side Letter, as applicable.
The Administrative Agent, Buyers and Seller have agreed, subject to the terms and conditions of this Amendment, that the Existing Repurchase Agreement be amended to reflect certain agreed upon revisions to the terms of the Existing Repurchase Agreement.
Accordingly, the Administrative Agent, Buyers and Seller hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, that the Existing Repurchase Agreement are hereby amended as follows:
1.Amendment to the Existing Repurchase Agreement. Effective as of the date hereof, the Existing Repurchase Agreement is hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in Exhibit A hereto. The parties hereto further acknowledge and agree that Exhibit A constitutes the Repurchase Agreement as amended and modified by the terms set forth herein.
2.Conditions Precedent. This Amendment shall become effective as of the date hereof (the “Amendment Effective Date”), subject to the satisfaction of the following conditions precedent:
a.Delivered Documents. On the Amendment Effective Date, the Administrative Agent on behalf of the Buyers shall have received the following documents, each of which shall be satisfactory to the Administrative Agent in form and substance:
(i)this Amendment, executed and delivered by the duly authorized officers of the Administrative Agent, Buyers and Seller; and
(ii)such other documents as the Administrative Agent or counsel to the Administrative Agent may reasonably request.
3.Representations and Warranties. Seller hereby represents and warrants to the Administrative Agent and Buyers that it is in compliance with all the terms and provisions set forth in the Repurchase Agreement on its part to be observed or performed, and that no Event of Default has occurred or is continuing, and Seller hereby confirms and reaffirms the representations and warranties contained in Section 13 of the Repurchase Agreement.
4.Limited Effect. Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms.
5.Severability. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.
6.Counterparts. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Amendment by signing any such counterpart. Delivery of an executed counterpart of a signature page of this Amendment in Portable Document Format (PDF) or by facsimile shall be effective as delivery of a manually executed original counterpart of this Amendment. The parties agree that this Amendment, any addendum or amendment hereto or any other document necessary for the consummation of the transaction contemplated by this Amendment may be accepted, executed or agreed to through the use of an electronic signature in accordance with the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001 et seq, Official Text of the Uniform Electronic Transactions Act as approved by the National Conference of Commissioners on Uniform State Laws at its Annual Conference on July 29, 1999 and any applicable state law. Any document accepted, executed or agreed to in conformity with such laws will be binding on all parties hereto to the same extent as if it were physically executed and each party hereby consents to the use of any secure third party electronic signature capture service providers, as long as such service providers use system logs and audit trails that establish a temporal and process link between the presentation of identity documents and the electronic signing, together with identifying information that can be used to verify the electronic signature and its attribution to the signer’s identity and evidence of the signer’s agreement to conduct the transaction electronically and of the signer’s execution of each electronic signature.
7.GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
[Signature Pages Follow]
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be duly executed as of the date first above written.
| | | | | |
| CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as Administrative Agent |
|
| By: | /s/ Margaret Dellafera |
| Name | Margaret Dellafera |
| Title: | Vice President |
| | | | | |
| CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Buyer |
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| By: | /s/ Margaret Dellafera |
| Name | Margaret Dellafera |
| Title: | Vice President |
| | | | | |
| By: | /s/ Elie Chau |
| Name | Elie Chau |
| Title: | Vice President |
Signature Page to Amendment No. 8 to Master Repurchase Agreement
| | | | | |
ALPINE SECURITIZATION LTD, as a Buyer, by Credit Suisse AG, New York Branch as Attorney-in-Fact |
|
| By: | /s/ Elie Chau |
| Name | Elie Chau |
| Title: | Vice President |
| | | | | |
| By: | /s/ Patrick Duggan |
| Name | Patrick Duggan |
| Title: | Director |
Signature Page to Amendment No. 8 to Master Repurchase Agreement
| | | | | |
HOME POINT FINANCIAL CORPORATION, as Seller |
|
| By: | /s/ Joseph Ruhlin |
| Name | Joseph Ruhlin |
| Title: | Senior Managing Director - Treasurer |
Signature Page to Amendment No. 8 to Master Repurchase Agreement
Exhibit A
REPURCHASE AGREEMENT
(See attached)
| | |
CONFORMED THROUGH AMENDMENT NO. 78 |
MASTER REPURCHASE AGREEMENT
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as administrative agent,
CREDIT SUISSE AG, a company incorporated in Switzerland, acting through its CAYMAN ISLANDS BRANCH, as buyer, ALPINE SECURITIZATION LTD, as buyer and other Buyers from time to time,
HOME POINT FINANCIAL CORPORATION, as seller and
each Underlying Entity joined hereto from time to time.
Dated October 23, 2020
TABLE OF CONTENTS
Page
1. Applicability 1
2. Definitions 1
3. Program; Initiation of Transactions 29
4. Repurchase; Conversion to REO Property 30
5. Price Differential 31
6. Margin Maintenance; Reallocation of Purchase Price 32
7. Income Payments 33
8. Security Interest 35
9. Payment and Transfer 38
10. Conditions Precedent 39
11. Program; Costs 43
12. Servicing 46
13. Representations and Warranties 48
14. Covenants 52
15. Events of Default 58
16. Remedies Upon Default 60
17. Reports 63
18. Repurchase Transactions 66
19. Single Agreement 67
20. Notices and Other Communications 67
21. Entire Agreement; Severability 69
22. Non assignability 69
23. Set-off 70
24. Binding Effect; Governing Law; Jurisdiction 70
25. No Waivers, Etc. 71
26. Intent 71
27. Disclosure Relating to Certain Federal Protections 72
28. Power of Attorney 72
29. Buyers May Act Through Administrative Agent 73
30. Indemnification; Obligations 73
31. Counterparts 74
32. Confidentiality 74
33. Recording of Communications 75
34. Periodic Due Diligence Review 75
35. Authorizations 76
36. Acknowledgment of Assignment and Administration of Repurchase Agreement 76
37. Acknowledgement of Anti-Predatory Lending Policies 77
38. Documents Mutually Drafted 77
39. General Interpretive Principles 77
40. Conflicts 78
41. Pool Subdivisions 78
42. Bankruptcy Non-Petition 78
43. Limited Recourse 78
44. Nominee 79
45. Joint and Several 86
SCHEDULES
Schedule 1-A – Representations and Warranties with Respect to Purchased Mortgage Loans and Contributed Mortgage Loans
Schedule 1-B – Representations and Warranties with Respect to Contributed REO Property
Schedule 1-C – Representations and Warranties with Respect to Purchased Certificates
Schedule 2 – Authorized Representatives
EXHIBITS
Exhibit A Form of Power of Attorney (Seller Parties)
Exhibit B Escrow Instruction Letter
Exhibit C Form of Officer’s Compliance Certificate
Exhibit D Schedule of Indebtedness
This is a MASTER REPURCHASE AGREEMENT, dated as of October 23, 2020, by and among Credit Suisse First Boston Mortgage Capital LLC, (“Administrative Agent”) on behalf of Buyers, including but not limited to Credit Suisse AG, a company incorporated in Switzerland, acting through its Cayman Islands Branch (“CS Cayman” and a “Buyer”) and Alpine Securitization LTD (“Alpine” and a “Buyer”), Home Point Financial Corporation (“Seller”) and each Underlying Entity joined hereto from time to time (each, an “Underlying Entity”, and together with the Seller, each a “Seller Party” and collectively, the “Seller Parties”).
8.Applicability
a.From time to time the parties hereto may enter into transactions in which Seller agrees to transfer to Administrative Agent on behalf of Buyers certain Purchased Assets (including, without limitation, the related Contributed Assets) (as hereinafter defined) on a servicing released basis against the transfer of funds by Administrative Agent, with a simultaneous agreement by Administrative Agent on behalf of Buyers to transfer to Seller such Purchased Assets on a servicing released basis 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 any annexes identified herein, as applicable hereunder. For the avoidance of doubt, and for administrative and tracking purposes, (a) the purchase and sale of each Purchased Asset and each Contributed Asset shall be deemed a separate Transaction and (b) with respect to each Designated Asset, such Designated Asset may, at Buyers’ option, be sold to different Buyers on a pro rata basis, such that one Buyer pays the Purchase Price-Base and other Buyers pay the Purchase Price-Incremental 1 and Purchase Price-Incremental 2, as applicable, and, in which case, the Administrative Agent shall own the Designated Asset, for the benefit of the purchasing Buyers, on a pro rata, pari passu basis subject to the terms set forth herein.
b.From time to time and upon an Underlying Entity’s joinder hereto, the Administrative Agent on behalf of Buyers shall purchase the Purchased Certificates from the Seller in connection with the related Transaction. On and after the Purchase Date of any Purchased Certificate, the Seller may request and Administrative Agent on behalf of Buyers may fund, subject to the terms and conditions of this Agreement, a Purchase Price Increase (as defined hereinafter) for the Transactions in respect of the Purchased Certificate based upon the acquisition of additional Contributed Assets by the Underlying Entity. From time to time, the Seller may make an Optional Prepayment to Administrative Agent on behalf of Buyers in accordance with Section 4.b hereof.
c.To the extent a type of Mortgage Loan or Contributed Asset is referenced in the Program Agreements, those provisions shall only be applicable to the extent the box adjacent to the Approved Product Type is checked on the Asset Matrix.
d.To the extent a provision refers to a Guarantor and/or the Guaranty, such provision shall only be applicable to the extent the parties enter into a Guaranty with a Guarantor in connection with the Program Agreements.
9.Definitions
Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings; provided that any terms used but not otherwise defined herein shall have the meanings given to them in the Pricing Side Letter:
“1933 Act” means the Securities Act of 1933, as amended from time to time.
“1934 Act” means the Securities Exchange Act of 1934, as amended from time to time.
“Acceptable State” means any state acceptable pursuant to Seller’s Asset Guidelines.
“Accepted Servicing Practices” means, with respect to any Purchased Mortgage Loan or Contributed Asset, as applicable, those mortgage servicing practices and REO property management practices of prudent mortgage lending institutions which service mortgage loans or manage real property, as applicable, of the same type as such Purchased Mortgage Loan or Contributed Asset in the jurisdiction where the related Mortgaged Property or Contributed Asset is located in accordance with applicable law.
“Acquisition Guidelines” means, with respect to any Mortgage Loan or Contributed Asset, the standards, procedures and guidelines of the Seller for acquiring Mortgage Loans and Contributed Assets.
“Act” has the meaning set forth in Section 32.b hereof.
“Act of Insolvency” means, with respect to any Person or its Affiliates, (a) the filing of a petition, commencing, or authorizing the commencement of any case or proceeding, or the voluntary joining of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law relating to the protection of creditors, or suffering any such petition or proceeding to be commenced by another which is consented to, not timely contested or results in entry of an order for relief; (b) the seeking of the appointment of a receiver, trustee, custodian or similar official for such party or an Affiliate or any substantial part of the property of either; (c) the appointment of a receiver, conservator, or manager for such party or an Affiliate by any governmental agency or authority having the jurisdiction to do so; (d) the making or offering by such party or an Affiliate of a composition with its creditors or a general assignment for the benefit of creditors; (e) the admission by such party or an Affiliate of such party of its inability to pay its debts or discharge its obligations as they become due or mature; or (f) that any governmental authority or agency or any person, agency or entity acting or purporting to act under governmental authority shall have taken any action to condemn, seize or appropriate, or to assume custody or control of, all or any substantial part of the property of such party or of any of its Affiliates, or shall have taken any action to displace the management of such party or of any of its Affiliates or to curtail its authority in the conduct of the business of such party or of any of its Affiliates; provided, however, with respect to any such involuntary filing, appointment, or proceeding, such filing, appointment or proceeding shall not have been dismissed within forty-five (45) calendar days.
“Additional Buyers” has the meaning set forth in Section 36 hereof.
“Adjusted Daily Simple SOFR” means an interest rate per annum equal to (i) Daily Simple SOFR, plus (ii) the Benchmark Adjustment.
“Adjusted Net Income” means, for any Person, such Person’s Net Income excluding any positive or negative market-to-market adjustments made in connection with mortgage loans held for investment and any mortgage servicing rights, in each instance, on such Person’s balance sheet.
“Adjusted Tangible Net Worth” means, for any Person, Net Worth of such Person plus Subordinated Debt (provided such Subordinated Debt shall be approved by Administrative Agent in writing), minus (a) Restricted Cash (other than any portion of Restricted Cash that has a corresponding offsetting current liability); (b) [***] of investment securities; (c) [***] of all mortgage loans held for investment; (d) [***] of REO Property and (e) all intangible assets, including (without duplication) goodwill, patents, tradenames, trademarks, copyrights, franchises, any organizational expenses, deferred taxes and expenses, prepaid expenses, prepaid assets, deposits, receivables from shareholders, Affiliates or employees, 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).
“Administration Agreement” means that certain Repo Administration and Allocation Agreement, dated as of the date hereof, by and among Seller Parties, Guarantor, if any, CSFBMC as administrative agent and certain Buyers identified therein, as amended, restated, supplemented or otherwise modified from time to time.
“Administrative Agent” means CSFBMC or any successor thereto under the Administration Agreement.
“Affiliate” means, with respect to any Person, any “affiliate” of such Person, as such term is defined in the Bankruptcy Code, which shall also include, for the avoidance of doubt, with respect to Administrative Agent only, any CP Conduit; provided, that, other than the Seller and its Subsidiaries, no other portfolio company of Stone Point Capital LLC or its affiliates shall be deemed an Affiliate of Seller.
“Agency” means Freddie Mac, Fannie Mae or GNMA, as applicable.
“Agency Approvals” has the meaning set forth in Section 13.a(24) hereof.
“Agency Guide” means (a) the Fannie Mae MBS Selling and Servicing Guide, (b) the Freddie Mac Sellers’ and Servicers’ Guide or (c) the Ginnie Mae Mortgage-Backed Securities Guide, in each case, as such Agency Guide may hereafter from time to time be amended, supplemented or modified, as applicable, including, for the avoidance of doubt, any amendments, supplements, waivers or other modifications as between the applicable Agency and Seller.
“Agency Mortgage Loan” means, collectively, Conforming Mortgage Loans, State Agency Program Loans, USDA Loans, FHA Loans, VA Loans and HECM Loans (but not Early Buyout Loans).
“Agency Security” means a mortgage-backed security issued or guaranteed by an Agency.
“Aggregate Purchase Price-Base” means, as of any date of determination, the aggregate outstanding Purchase Price-Base for a Purchased Asset and/or Contributed Asset.
“Aggregate Purchase Price-Incremental 1” means, as of any date of determination, the aggregate outstanding Purchase Price-Incremental 1 for a Purchased Asset and/or Contributed Asset.
“Aggregate Purchase Price-Incremental 2” means, as of any date of determination, the aggregate outstanding Purchase Price-Incremental 2 for a Purchased Asset and/or Contributed Asset.
“Agreement” means this Master Repurchase Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time.
“Allocated Percentage” means, with respect to a Purchased Asset and/or Contributed Asset, the percentage obtained by (a) with respect to the Purchase Price-Base, [***] divided by [***]; (b) with respect to the Purchase Price-Incremental 1, [***] divided by [***]; (c) with respect to the Purchase Price-Incremental 2, [***] divided by [***].
“ALTA” means American Land Title Association.
“Appraised Value” means the “as is” value set forth in an appraisal made in connection with the origination of the related Mortgage Loan as the value of the Mortgaged Property.
“Approved Product Type” has the meaning assigned to such term in the Pricing Side Letter.
“Asset File” means, with respect to a Purchased Mortgage Loan or a Contributed Asset, as applicable, the documents and instruments relating thereto and set forth in an exhibit to the Custodial Agreement.
“Asset Guidelines” means, to the extent the Seller Parties (a) originate Mortgage Loans or Contributed Assets, the Origination Guidelines and (b) purchase Mortgage Loans or Contributed Assets, the Acquisition Guidelines; in each case, other than with respect to any Origination Guidelines or Acquisition Guidelines related to Agency Mortgage Loans, which are set forth in the written policies and procedures of the Seller Parties, a copy of which have been provided to and approved by Administrative Agent in writing.
“Asset Matrix” has the meaning assigned to such term in the Pricing Side Letter.
“Asset Schedule” means, with respect to any Transaction as of any date, an asset schedule in the form of a computer tape or other electronic medium generated by Seller Parties, and delivered to Administrative Agent and Custodian, which provides information required by Administrative Agent to enter into Transactions relating to the Purchased Mortgage Loan and Contributed Asset in a format acceptable to Administrative Agent.
“Asset Value” means with respect to any Purchased Asset or Contributed Asset, the sum of the Asset Value-Base, the Asset Value-Incremental 1 and the Asset Value-Incremental 2.
““Asset Value-Base” means, with respect to any Purchased Asset or Contributed Asset as of any date of determination, an amount equal to the product of [***] and [***].
“Asset Value-Incremental 1” means, with respect to any Purchased Asset or Contributed Asset as of any date of determination, an amount equal to the product of [***] and [***]. “Assignment and Acceptance” has the meaning assigned to such term in Section 22.a hereof.
“Asset Value-Incremental 2” means, with respect to any Purchased Asset or Contributed Asset as of any date of determination, an amount equal to the product of [***] and [***].
“Assignment of Leases and Rents” has the meaning set forth in paragraph (xxx) of Schedule 1-A hereto.
“Assignment of Mortgage” means an assignment of the Mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the sale of the Mortgage.
“Assignment of Proprietary Lease” means the specific agreement creating a first lien on and pledge of the Co-op Shares and the appurtenant Proprietary Lease securing a Co-op Loan.
“Attorney Bailee Letter” has the meaning assigned to such term in the Custodial Agreement.
“Bailee Letter” has the meaning assigned to such term in the Custodial Agreement.
“Bank” means Merchants Bank of Indiana, or as otherwise mutually agreed upon between Seller and Administrative Agent.
“Bankruptcy Code” means Title 11 of the United States Bankruptcy Code of 1978, as amended from time to time.
“Benchmark Adjustment” means, for any day, the spread adjustment for such Pricing Period that has been selected or recommended by the Relevant Governmental Body for the tenor of 1 month. For the avoidance of doubt, the “Benchmark Adjustment” means, for any day, the value as reported on the display designated as “YUS0001M” on Bloomberg, or such other display as may replace “YUS0001M”.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“BPL – Holdback” means a Business Purpose Mortgage Loan with respect to which there exists a Holdback Amount which may be funded and on deposit in the Holdback Account for the related Mortgagor to improve and rehabilitate the related Mortgaged Property.
“BPL – Long” means a Business Purpose Mortgage Loan with respect to which (a) the related Mortgaged Property consists of (i) eight (8) units or less or (ii) between nine (9) and twenty-nine (29) units and with an original outstanding principal amount less than [***] and (b) the related maturity date is [***] or more from the date of the Mortgage Note.
“BPL – Short” means a Business Purpose Mortgage Loan with respect to which (a) the related Mortgaged Property consists of (i) eight (8) units or less or (ii) between nine (9) and twenty-nine (29) units and with an original outstanding principal amount less than [***] and (b) the related maturity date is less than [***] from the date of the Mortgage Note.
“BPO” means an opinion of the fair market value of a Mortgaged Property or an REO Property given by a licensed real estate agent or broker in conformity with customary and usual business practices, which includes comparable sales and comparable listings and complies with the criteria set forth in the Financial Institutions Reform, Recovery and Enforcement Act of 1989 for an “appraisal” or an “evaluation” as applicable.
“Business Day” means any day other than (i) a Saturday or Sunday; (ii) a 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 (iii) a public or bank holiday in New York City, the State of Texas, the State of Michigan or the State of Florida.
“Business Purpose Mortgage Loan” means a Mortgage Loan with respect to which the related Mortgaged Property (a) is non-owner occupied; (b) is primarily used for business or commercial purposes (as referenced in the Truth and Lending Act and its implementing regulation, Regulation Z); and (c) has been originated or acquired in accordance with Asset Guidelines.
“Buyer” means CS Cayman, Alpine and each buyer identified by the Administrative Agent from time to time pursuant to the Administration Agreement and their successors in interest and assigns pursuant to Section 22 hereof and, with respect to Section 11 hereof, its participants.
“Capital Lease Obligations” means, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.
“Capital Stock” means, as to any Person, 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, without limitation, any and all member or other equivalent interests in any limited liability company, limited partnership, trust, and any and all warrants or options to purchase any of the foregoing, in each case, designated as “securities” (as defined in Section 8-102 of the Uniform Commercial Code) in such Person, including, without limitation, all rights to participate in the operation or management of such Person and all rights to such Person’s properties, assets, interests and distributions under the related organizational documents in respect of such Person. “Capital Stock” also includes (i) all accounts receivable arising out of the related organizational documents of such Person; (ii) all general intangibles arising out of the related organizational documents of such Person; and (iii) to the extent not otherwise included, all proceeds of any and all of the foregoing (including within proceeds, whether or not otherwise included therein, any and all contractual rights under any revenue sharing or similar agreement to receive all or any portion of the revenues or profits of such Person).
“Cash Equivalents” means (a) securities with maturities of [***] 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 [***] or less from the date of “Change in Control” means: acquisition and overnight bank deposits of Administrative Agent or of any commercial bank having capital and surplus in excess of [***], (c) repurchase obligations of Administrative Agent or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than seven 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 [***] after the day of acquisition, (e) securities with maturities of [***] 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 [***] or less from the date of acquisition backed by standby letters of credit issued by Administrative Agent 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.
(1)any transaction or event as a result of which Home Point Capital Inc. ceases to directly or indirectly own, beneficially or of record, at least 50% of the Capital Stock of Seller;
(2)any transaction or event as a result of which Seller ceases to directly own 100% of the Capital Stock of any Underlying Entity (other than as set forth herein);
(3)if such Seller Party or Guarantor is a Delaware limited liability company, such Seller Party or Guarantor, as applicable, enters into any transaction or series of transactions to adopt, file, effect or consummate a Division, or otherwise permits any such Division to be adopted, filed, effected or consummated; or
(4)the sale, transfer, or other disposition of all or substantially all of any Seller Party’s or Guarantor’s assets (excluding any such action taken in connection with any securitization transaction).
“Clearing Account” means the account into which HUD, VA and USDA remit all Income (including, without limitation, claims and proceeds) on account of Early Buyout Loans.
“Code” means the Internal Revenue Code of 1986, as amended.
“Confidential Information” has the meaning set forth in Section 32.b hereof.
“Conforming Mortgage Loan” means a first lien Mortgage Loan, including State Agency Program Loans, originated in accordance with the criteria of an Agency for purchase of Mortgage Loans, including, without limitation, conventional Mortgage Loans.
“Contributed Asset” means a Contributed REO Property and/or a Contributed Mortgage Loan.
“Contributed Mortgage Loan” means the individual or collective reference to the Mortgage Loans, legal title of which is held by an Underlying Entity, which are subject to a Transaction hereunder and/or listed on the related Asset Schedule attached to the related Transaction Request, in each case, that satisfies the representations and warranties set forth on Schedule 1-A hereto which such Asset Files the Custodian has been instructed to hold pursuant to the Custodial Agreement.
“Contributed Repurchase Assets” has the meaning assigned thereto in Section 8.a(2) hereof.
“Contributed REO Property” means the individual or collective reference to the REO Property, legal title of which is held by the applicable Underlying Entity, which are subject to a Transaction hereunder and/or listed on the related Asset Schedule attached to the related Transaction Request, in each case, that satisfies the representations and warranties set forth on Schedule 1-B hereto which such Asset Files the Custodian has been instructed to hold pursuant to the Custodial Agreement.
“Co-op Corporation” means, with respect to any Co-op Loan, the cooperative apartment corporation that holds legal title to the related Co-op Project and grants occupancy rights to units therein to stockholders through Proprietary Leases or similar arrangements.
“Co-op Loan” means a Mortgage Loan secured by the pledge of Co-op Shares allocated to a Co-op Unit in a Co-op Corporation and collateral assignment of the related Proprietary Lease.
“Co-op Project” means, with respect to any Co-op Loan, all real property and improvements thereto and rights therein and thereto owned by a Co-op Corporation including without limitation the land, separate dwelling units and all common elements.
“Co-op Shares” means, with respect to any Co-op Loan, the shares of stock issued by a Co-op Corporation and allocated to a Co-op Unit and represented by a Stock Certificate.
“Co-op Unit” means, with respect to any Co-op Loan, a specific unit in a Co-op Project.
“CP Conduit” means a commercial paper conduit, including but not limited to Alpine Securitization LTD, administered, managed or supported by CSFBMC or an Affiliate of CSFBMC.
“Credit Limit” means, with respect to each HELOC, the maximum amount permitted under the terms of the related Credit Line Agreement as identified in the related Asset Schedule.
“Credit Line Agreement” means, with respect to each HELOC, the related home equity line of credit agreement, account agreement and promissory note (if any) executed by the related Mortgagor and any amendment or modification thereof.
“CSFBMC” means Credit Suisse First Boston Mortgage Capital LLC, or any successors or assigns.
“Custodial Account” means the account held by Bank pursuant to the terms of the applicable Custodial Account Control Agreement, if any, in each case, into which any amounts with respect to Early Buyout Loans may be deposited and held. Administrative Agent shall have a perfected security interest in all such accounts and Seller Parties acknowledge that Administrative Agent shall have no obligations of any kind to remit any additional amounts into the related Custodial Account.
“Custodial Account Control Agreement” means that certain account control agreement among Administrative Agent, the Bank and the other parties thereto, providing for the Administrative Agent’s control over the related Custodial Account.
“Custodial Agreement” means the custodial agreement, dated as of the date hereof, among Seller Parties, Administrative Agent, Buyers and Custodian identified therein, as it may be amended, restated, supplemented or otherwise modified from time to time.
“Custodial Asset Schedule” has the meaning assigned to such term in the Custodial Agreement.
“Custodian” means the Person identified as such in the Custodial Agreement or such other party specified by Administrative Agent and agreed to by Seller Parties, which approval shall not be unreasonably withheld, conditioned or delayed.
“Daily Simple SOFR” means, for any day, SOFR, with conventions (including, without limitation, a lookback) established by the Administrative Agent in its sole discretion in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR”; provided that, if the Administrative Agent determines that any such convention is not administratively, operationally, or technically feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its sole discretion.
“DE Compare Ratio” means the Two Year FHA Direct Endorsement Lender Compare Ratio, excluding streamline FHA refinancings, as made publicly available by HUD.
“Debtor Relief Law” means any law, administration, or regulation relating to reorganization, winding up, administration, composition or adjustment of debts or otherwise relating to bankruptcy or insolvency.
“Default” means an Event of Default or an event that with notice or lapse of time or both would become an Event of Default.
“Delinquency Advance” means any advance made by Seller or Servicer pursuant to the Servicing Agreements, to cover due, but uncollected or unavailable as a result of funds not yet being cleared, principal and interest payments on the Early Buyout Loans included in the portfolio of Mortgage Loans serviced by Seller or Servicer pursuant to the Servicing Agreements, including Early Buyout Loans with respect to which the related Mortgaged Property is being held pending liquidation.
“Designated Asset” means a Purchased Asset and/or Contributed Asset that is identified on the Asset Matrix or otherwise by Administrative Agent as eligible for a Purchase Price-Base, a Purchase Price-Incremental 1 and/or a Purchase Price-Incremental 2.
“Disqualification Event” means, with respect to a Designated Asset which has Purchase Price-Incremental 2, the occurrence of any of the following events: (a) a Participant materially breaches the applicable Participation Agreement, (b) an Act of Insolvency occurs with respect to a Participant, (c) the failure of a Participant to purchase the participation interest pursuant to a Participation Agreement with respect to a Designated Asset, (d) the Administrative Agent, a Participant or a Buyer shall have determined that the introduction of or a change in any Requirement of Law or in the interpretation or administration of any Requirement of Law applicable to Administrative Agent, any Participant or any Buyer has made it unlawful, for Administrative Agent, any Participant or any Buyer to purchase Purchased Assets or Contributed Asset or participations in Transactions, or (e) the Administrative Agent determines in its sole discretion, that it will no longer enter into Transactions comprised of Purchase Price-Incremental 2 on account of a Purchased Asset or Contributed Asset.
“Division” means the division of a limited liability company into two or more limited liability companies pursuant to and in accordance with Section 18-217 of Chapter 18 of the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101 et seq., as amended.
“Dollars” and “$” means dollars in lawful currency of the United States of America.
“Draw” means, with respect to each HELOC, an additional borrowing by the Mortgagor in accordance with the related Credit Line Agreement.
“Due Date” means the day of the month on which the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.
“E-Sign” means the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. § 7001 et seq.
“Early Buyout” means the purchase of a defaulted FHA Loan, VA Loan or USDA Loan by Seller from a GNMA Security.
“Early Buyout Loans” means an FHA Loan, USDA Loan or VA Loan which is subject to an Early Buyout and is a Purchased Mortgage Loan or Contributed Mortgage Loan.
“Effective Date” means the date upon which the conditions precedent set forth in Section 10 hereof shall have been satisfied.
“Electronic Tracking Agreement” means an Electronic Tracking Agreement among Administrative Agent, Seller Parties, MERS and MERSCORP Holdings, Inc., to the extent applicable as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time and any successor thereto, and the regulations promulgated and administrative rulings issued thereunder.
“ERISA Affiliate” means any corporation or trade or business that, together with Seller is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as single employer described in Sections 414(b), (c), (m) or (o) of the Code.
“Escrow Instruction Letter” means the Escrow Instruction Letter from Seller to the Settlement Agent, in the form of Exhibit B hereto, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Escrow Payments” means, 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” has the meaning specified in Section 15 hereof.
“Event of Termination” means with respect to any Seller Party or Guarantor (a) with respect to any Plan, a reportable event, as defined in Section 4043 of ERISA, as to which the PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within thirty (30) days of the occurrence of such event; (b) the withdrawal of any Seller Party, Guarantor or any ERISA Affiliate thereof from a Plan during a plan year in which it is a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the failure by any Seller Party, Guarantor or any ERISA Affiliate thereof to meet the minimum funding standard of Section 412 of the Code or Section 302 of ERISA with respect to any Plan, including, without limitation, 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; (d) the distribution under Section 4041 of ERISA of a notice of intent to terminate any Plan or any action taken by any Seller Party, Guarantor or any ERISA Affiliate thereof to terminate any Plan; (e) the failure to meet requirements of Section 436 of the Code resulting in the loss of qualified status under Section 401(a)(29) of the Code; (f) the institution by the PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan; (g) the receipt by any Seller Party, Guarantor or any ERISA Affiliate thereof of a notice from a Multiemployer Plan that action of the type described in the previous clause (f) has been taken by the PBGC with respect to such Multiemployer Plan; or (h) any event or circumstance exists which may reasonably be expected to constitute grounds for any Seller Party, Guarantor or any ERISA Affiliate thereof to incur liability under Title IV of ERISA or under Sections 412 or 430(k) of the Code with respect to any Plan.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Buyer or other recipient of any payment hereunder or required to be withheld or deducted from a payment to such Buyer or such other recipient: (a) Taxes based on (or measured by) net income or net profits, franchise Taxes and branch profits Taxes that are imposed on a Buyer or other recipient of any payment hereunder as a result of (i) 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) that are Other Connection Taxes; (b) any Tax imposed on a 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 11.e(ii) hereof; (c) any U.S. federal withholding Tax that is imposed on amounts payable to or for the account of such 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 in each case to the extent that amounts with respect to Taxes were payable either to such person’s assignor immediately before such person became a party hereto or to such
person immediately before it changed its lending office; and (d) any withholding Taxes imposed under FATCA.
“Fannie Mae” means the Federal National Mortgage Association or any successor thereto.
“FATCA” means 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, and any intergovernmental agreement entered into in connection with the implementation of the foregoing express provisions of the Code and any fiscal or regulatory legislation or rules adopted pursuant to such intergovernmental agreement.
“FDIA” has the meaning set forth in Section 26.d hereof.
“FDICIA” has the meaning set forth in Section 26.e hereof.
“FHA” means the Federal Housing Administration, an agency within the United States Department of Housing and Urban Development, 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 Approved Mortgagee” means a corporation or institution approved as a mortgagee by the FHA under the National Housing Act, as amended from time to time, and applicable FHA Regulations, and eligible to own and service mortgage loans such as the FHA Loans.
“FHA Connection System” means the FHA Connection system, together with any successor FHA electronic access portal.
“FHA Loan” means a Mortgage Loan which is the subject of an FHA Mortgage Insurance Contract.
“FHA Mortgage Insurance” means, mortgage insurance authorized under the National Housing Act, as amended from time to time, and provided by the FHA.
“FHA Mortgage Insurance Contract” means the contractual obligation of the FHA respecting the insurance of a Mortgage Loan.
“FHA Regulations” means the regulations promulgated by the Department of Housing and Urban Development under the National Housing Act, as amended from time to time and codified in 24 Code of Federal Regulations, and other Department of Housing and Urban Development issuances relating to FHA Loans, including the related handbooks, circulars, notices and mortgagee letters.
“FICO” means Fair Isaac & Co., or any successor thereto.
“Fidelity Insurance” means insurance coverage with respect to employee errors, omissions, dishonesty, forgery, theft, disappearance and destruction, robbery and safe burglary, property (other than money and securities) and computer fraud.
“Freddie Mac” means the Federal Home Loan Mortgage Corporation or any successor thereto.
“GAAP” means generally accepted accounting principles in effect from time to time in the United States of America and applied on a consistent basis.
“GNMA” means the Government National Mortgage Association and any successor thereto.
“GNMA Guidelines” means the GNMA Mortgage-Backed Securities Guide, Handbook 5500.3, Rev. 1, as amended from time to time, and any related announcements, directives and correspondence issued by GNMA.
“GNMA Haircut Amount” means, with respect to a Simultaneously Funded Early Buyout Loan, an amount equal to (i) the amount due to GNMA to repurchase such Mortgage Loan from GNMA less (ii) the Purchase Price for such Mortgage Loan.
“GNMA Security” means a mortgage-backed security guaranteed by GNMA pursuant to the GNMA Guidelines.
“Governmental Authority” means any nation or government, any state or other political subdivision thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions over any Seller Party, Guarantor, any Servicer, Administrative Agent or any Buyer, as applicable.
“Gross Margin” means, with respect to each adjustable rate Mortgage Loan, the fixed percentage amount set forth in the related Mortgage Note.
“Guarantee” means, as to any Person, any obligation of such Person directly or indirectly guaranteeing any Indebtedness of any other Person or in any manner providing for the payment of any Indebtedness of any other Person or otherwise protecting the holder of such Indebtedness against loss (whether by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, or to take-or-pay or otherwise); provided that the term “Guarantee” shall not include (a) endorsements for collection or deposit in the ordinary course of business, or (b) obligations to make servicing advances for delinquent taxes and insurance or other obligations in respect of a Mortgage Loan or Mortgaged Property, to the extent required by Administrative Agent. The amount of any Guarantee of a Person shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith. The terms “Guarantee” and “Guaranteed” used as verbs shall have correlative meanings.
“Guarantor” means the Person identified as such in the Guaranty.
“Guaranty” means, if entered into, the guaranty of Guarantor in favor of the Administrative Agent for the benefit of Buyers as the same may be amended, restated, supplemented or otherwise modified from time to time, pursuant to which the Guarantor fully and unconditionally guarantees the obligations of the Seller Parties hereunder.
“HECM Loan” means a home equity conversion Mortgage Loan which is (a) secured by a first lien and (b) is eligible to be insured by FHA.
“HECM Principal Balance” means the principal balance of a HECM Loan (including without limitation all related servicing fees, scheduled payments and/or unscheduled payments, accrued interest and MIP Payments) reduced by all amounts received or collected in respect of principal on such HECM Loan.
“HELOC” means a home equity revolving line of credit secured by a first lien or second lien on the related Mortgaged Property.
“High Cost Mortgage Loan” means a Mortgage Loan (other than an Early Buyout Loa) (a) classified as a “high cost” loan under the Home Ownership and Equity Protection Act of 1994; (b) classified as 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) having a percentage listed under the Indicative Loss Severity Column (the column that appears in the S&P Anti-Predatory Lending Law Update Table, included in the then-current S&P’s LEVELS® Glossary of Terms on Appendix E).
“Holdback Account” means the account held by Servicer pursuant to the terms of the applicable Servicing Agreement, if any, in each case, into which any Holdback Amounts with respect to BPL – Holdback may be deposited and held. Administrative Agent shall have a perfected security interest in all such accounts and Seller Party acknowledges that Administrative Agent shall have no obligations of any kind to remit any additional amounts into the related Holdback Account.
“Holdback Account Control Agreement” means those certain blocked account control agreements among Administrative Agent, the related Servicer, the related depository bank and the other parties thereto, providing for the Administrative Agent’s control over the related Holdback Account.
“Holdback Amount” means, with respect to a BPL – Holdback, such escrow or holdback amounts that are advanced by the related originator but not disbursed to the related Mortgagor at such Mortgage Loan’s origination date, with such undisbursed amounts being held by the applicable Servicer in the related Holdback Account for funding amounts for the related Mortgagor to improve and rehabilitate the related Mortgaged Property in accordance with the related Servicing Agreement and Mortgage Loan Documents.
“HUD” means the United States Department of Housing and Urban Development or any successor thereto.
“Income” means, with respect to any Purchased Asset or Contributed Asset, without duplication, all principal and income or dividends or distributions received with respect thereto, including any sale or liquidation premiums, Liquidation Proceeds, insurance proceeds, dividends or other distributions payable thereon net of any servicing fees, reimbursements and expenses and any escrow payments related to such Purchased Asset or Contributed Asset.
“Indebtedness” means, 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 [***] 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) payment obligations of such Person under repurchase agreements, sale/buy-back agreements or like arrangements, including, without limitation, 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; provided, however, that the foregoing shall exclude Non-Recourse Debt.
“Indemnified Party” has the meaning specified in Section 30.a hereof.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Seller Parties hereunder or under any Program Agreement and (b) to the extent not otherwise described in (a), Other Taxes.
“Independent Manager” means, with respect to each Underlying Entity that is not a trust, the independent manager appointed in accordance with the organizational documents of the Underlying Entity Agreement.
“Index” means, with respect to any adjustable rate Mortgage Loan, the index identified on the Asset Schedule and set forth in the related Mortgage Note for the purpose of calculating the applicable Mortgage Interest Rate.
“Interest Rate Adjustment Date” means the date on which an adjustment to the Mortgage Interest Rate with respect to each Mortgage Loan becomes effective.
“Interest Rate Protection Agreement” means, with respect to any or all of the Purchased Assets, or any short sale of a U.S. Treasury Security, or futures contract, or mortgage related security, or eurodollar futures contract, or options related contract, or interest rate swap, cap or collar agreement or Take-out Commitment, or similar arrangement, if any, providing for protection against fluctuations in interest rates or the exchange of nominal interest obligations, either generally or under specific contingencies, entered into by a Seller Party and an Affiliate of Administrative Agent or such other party acceptable to Administrative Agent in its sole discretion, which agreement is acceptable to Administrative Agent in its sole discretion.
“Investment Company Act” means the Investment Company Act of 1940, as amended.
“IRS” means the United States Internal Revenue Service.
“Lender Insurance Authority” means the permission granted to certain FHA-approved lenders to process single family mortgage applications without first submitting documentation to the United States Department of Housing and Urban Development as set forth in 12 U.S.C. § 1715z-21 and the regulations enacted thereunder set forth in 24 CFR § 203.6.
“Liquidated Asset” means (i) a Purchased Mortgage Loan or Contributed Mortgage Loan that has been sold or refinanced or was subject to a short sale or with respect to which the Mortgaged Property has been sold or (ii) a Contributed REO Property that has been sold.
“Liquidation Proceeds” means, for any Purchased Mortgage Loan or Contributed Asset that becomes a Liquidated Asset, the proceeds received on account of the liquidation thereof.
“Liquidity” means the sum of (a) cash (other than Restricted Cash) and (b) unrestricted and unencumbered Cash Equivalents.
“Loan to Value Ratio” or “LTV” means with respect to any Mortgage Loan, the ratio of the original outstanding principal amount of such Mortgage Loan to the lesser of (a) the Appraised Value of the Mortgaged Property at origination; (b) if the Mortgaged Property was purchased within twelve (12) months of the origination of such Mortgage Loan, the purchase price of the Mortgaged Property and (c) with respect to a HECM Loan, the current HECM Principal Balance.
“Margin Call” has the meaning specified in Section 6.a hereof.
“Margin Deadline” has the meaning specified in Section 6.b hereof.
“Margin Deficit” has the meaning specified in Section 6.a hereof.
“Market Value” has the meaning assigned to such term in the Pricing Side Letter.
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business or financial condition of any Seller Party, Guarantor or any Affiliate that is a party to any Program Agreement taken as a whole; (b) a material impairment of the ability of any Seller Party, Guarantor or any Affiliate that is a party to any Program Agreement to perform under any
Program Agreement and to avoid any Event of Default; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability of any Program Agreement against any Seller Party, Guarantor or any Affiliate that is a party to any Program Agreement, in each case as determined by the Administrative Agent in its good faith discretion.
“Maximum Aggregate Purchase Price” has the meaning assigned to such term in the Pricing Side Letter.
“Maximum Value Amount” means, on each date of determination, an amount equal to (a) with respect to any Purchased Asset or Contributed Asset (other than a Business Purpose Mortgage Loan), as of any date of determination, [***] or [***] and (b) with respect to a Business Purpose Mortgage Loan, an amount equal to the least of [***] and [***]. “MERS” means Mortgage Electronic Registration Systems, Inc., a corporation organized and existing under the laws of the State of Delaware, or any successor thereto.
“MERS System” means the system of recording transfers of mortgages electronically maintained by MERS.
“MIP Payments” means, with respect to a HECM Loan, all mortgage insurance premiums payable to either HUD or a private mortgage insurer, as set forth in the related Asset File.
“Monthly Payment” means the scheduled monthly payment of principal and/or interest on a Mortgage Loan.
“Moody’s” means Moody’s Investors Service, Inc. or any successors thereto.
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“Mortgage” means each mortgage, assignment of rents, security agreement and fixture filing, or deed of trust, assignment of rents, security agreement and fixture filing, deed to secure debt, assignment of rents, security agreement and fixture filing, or similar instrument creating and evidencing a first or second lien on real property and other property and rights incidental thereto, unless such Mortgage is granted in connection with a Co-op Loan, in which case the first lien position is in the Co-op Shares and in the Proprietary Lease relating to such Co-op Shares.
“Mortgage Interest Rate” means the rate of interest borne on a Mortgage Loan from time to time in accordance with the terms of the related Mortgage Note.
“Mortgage Interest Rate Cap” means, with respect to an adjustable rate Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set forth in the related Mortgage Note.
“Mortgage Loan” means any Approved Product Type which is a mortgage loan (including a home equity loan) evidenced by a Mortgage Note and secured by a first or second lien mortgage, which satisfies the requirements set forth in the Asset Guidelines and Section 13.b hereof; provided, however, that, Mortgage Loans shall not include any High Cost Mortgage Loans.
“Mortgage Loan Documents” means, with respect to each Mortgage Loan, the documents in the related Asset File to be delivered to the Custodian.
“Mortgage Note” means the promissory note or other evidence of the indebtedness of a Mortgagor secured by a Mortgage.
“Mortgaged Property” means the real property or other Co-op Loan collateral securing repayment of the debt evidenced by a Mortgage Note.
“Mortgagor” means the obligor or obligors on a Mortgage Note, including any person who has assumed or guaranteed the obligations of the obligor thereunder.
“Multiemployer Plan” means a multiemployer plan defined as such in Section 3(37) of ERISA to which contributions have been or are required to be made by Seller or any ERISA Affiliate and that is subject to Title IV of ERISA.
“Net Income” means, for any period and any Person, the net income of such Person for such period as determined in accordance with GAAP.
“Netting Agreement” means that certain Netting Agreement among Credit Suisse Securities (USA) LLC, CS Group (as such term is defined in the Netting Agreement) and Seller, dated as of the date hereof, as may be amended, restated, supplemented or otherwise modified from time to time.
“Net Worth” means, with respect to any Person, an amount equal to, on a consolidated basis, such Person’s stockholder equity (determined in accordance with GAAP).
“Nominee” means Seller, or any successor Nominee appointed by Administrative Agent following an Event of Default that has occurred and is continuing.
“Non-Agency Mortgage Loan” means a Mortgage Loan other than an Early Buyout Loan that (a) is not a Non-Agency Non-QM Mortgage Loan; (b) either (i) does not meet the criteria for an Agency Mortgage Loan or (ii) is an Agency Mortgage Loan that is aggregated for placement into a private label securitization or for sale to a Take-out Investor other than an Agency; (c) meets all applicable criteria as set forth in the Asset Guidelines and (d) is identified as a Non-Agency Mortgage Loan by Administrative Agent and Seller.
“Non-Agency Non-QM Mortgage Loan” means a Mortgage Loan other than an Early Buyout Loan that (a) does not meet the criteria for a Qualified Mortgage Loan and; (b) meets all applicable criteria as set forth in the Asset Guidelines and (c) is otherwise acceptable to Administrative Agent in its sole discretion.
“Non-Performing Mortgage Loan” means a Mortgage Loan (other than a Second Lien Mortgage Loan, HELOC, HECM Loan or Private Label Reverse Mortgage Loan) that is [***] or more delinquent as determined using the Mortgage Bankers Association method of delinquency.
“Non-Recourse Debt” means, with reference to any Indebtedness for which such Person or any Subsidiary thereof as obligor thereunder, the holder of such Indebtedness may not look to such person personally for repayment other than to the extent of any security therefor, and subject to such usual and customary limited exceptions to the non-recourse nature of such obligation or liability, such as fraud, misappropriation and misapplication.
“Non-QM – Low FICO Mortgage Loan” means a Mortgage Loan (a) that is a Non-Agency Non-QM Mortgage Loan and (b) for which the Mortgagor’s FICO score at the time of origination was at least [***] but not greater than [***].
“Obligations” means (a) all of each Seller Party’s indebtedness, obligations to pay the Repurchase Price on the Repurchase Date, the Price Differential on each Payment Date, and other obligations and liabilities, to Administrative Agent and Buyers or Custodian arising under, or in connection with, the Program Agreements, whether now existing or hereafter arising; (b) any and all sums paid by Administrative Agent, Buyers, or Administrative Agent on behalf of Buyers in order to preserve any Purchased Asset, Contributed Asset or its interest therein; (c) in the event of any proceeding for the collection or enforcement of any of a Seller Party’s indebtedness, obligations or liabilities referred to in clause (a), the reasonable expenses of retaking, holding, collecting, preparing for sale, selling or otherwise disposing of or realizing on any Purchased Asset or Contributed Asset, or of any exercise by Administrative Agent or Buyers of their rights under the Program Agreements, including, without limitation, attorneys’ fees and disbursements and court costs; and (d) all of the Seller Parties’ indemnity obligations to Administrative Agent, Buyers, any Servicer and Custodian pursuant to the Program Agreements.
“OFAC” has the meaning set forth in Section 13.a(27) hereof.
“Officer’s Compliance Certificate” means the certificate attached hereto as Exhibit C.
“Optional Prepayment” has the meaning specified in Section 4.b hereof.
“Optional Prepayment Date” has the meaning specified in Section 4.b hereof.
“Origination Guidelines” means, with respect to any Mortgage Loan, the standards, procedures and guidelines of the Seller Party for originating Mortgage Loans.
“Other Connection Taxes” means, with respect to Administrative Agent, any Buyer or other recipient, Taxes imposed as a result of a present or former connection between Administrative Agent, such Buyer or other recipient and the jurisdiction imposing such Tax (other than connections arising from Administrative Agent, such Buyer or other recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced under this Agreement or any Program Agreement, or sold or assigned an interest in any Purchased Mortgage Loan or Contributed Asset).
“Other Taxes” means any and all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes or any excise, sales, goods and services or transfer taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Program Agreement, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made with Seller’s consent).
“Participant” means any participant as contemplated by Section 22.b of this Agreement which has entered into a Participation Agreement.
“Participant Register” has the meaning assigned to such term in Section 22.b hereof.
“Participation Agreement” means a participation agreement by and among a Participant, the Administrative Agent and the Buyers in form and substance acceptable to Administrative Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Payment Date” means, (a) with respect to the payment of Price Differential, the fifth (5th) day of the month and (b) with respect to the payment of all other amounts due hereunder, the tenth (10th) day of the month; provided, that, in the case of clauses (a) and (b) if any such day is not a Business Day, the Payment Date shall be the next succeeding Business Day and provided, further, the final Payment Date shall be the related Repurchase Date or the Optional Prepayment Date, as applicable.
“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.
“Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.
“Plan” means an employee pension benefit plan as defined in Section 3(2) of ERISA, established or maintained by Seller, Guarantor or any ERISA Affiliate and subject to Title IV of ERISA, other than a Multiemployer Plan.
“Pool” means a subset of Purchased Assets or Contributed Assets subject to Transactions which shall be identified from time to time by the Administrative Agent.
“Pool Subdivision Notice” means a written notice delivered by Administrative Agent to Seller Parties, which shall identify the discrete Purchased Assets or Contributed Assets which shall be allocated to different Pools.
“Post Default Rate” means an annual rate of interest equal to the sum of (a) the Pricing Rate plus (b) an additional [***].
“Power of Attorney” means a Power of Attorney substantially in the form of Exhibit A hereto.
“Price Differential” means, for each Purchased Asset and Contributed Asset, and each Pricing Period, the sum of the Price Differential-Base, Price Differential-Incremental 1 and Price Differential-Incremental 2 for such Pricing Period.
“Price Differential-Base” means, with respect to each Purchased Asset and Contributed Asset as of any date of determination, an amount equal to the product of [***] and [***].
“Price Differential-Incremental 1” means, with respect to each Purchased Asset or Contributed Asset as of any date of determination, an amount equal to the product of [***] and [***].
“Price Differential-Incremental 2” means, with respect to each Purchased Asset or Contributed Asset as of any date of determination, an amount equal to the product of [***] and [***].
“Pricing Floor” has the meaning assigned to such term in the Pricing Side Letter.
“Pricing Period” means, with respect to each Payment Date, the period commencing on (and including) the date that is the first calendar day of the preceding month and terminating on (and including) the last calendar day of the preceding month; provided, that the initial Pricing Period shall commence on the initial Purchase Date; provided, further, that if a Purchased Asset or Contributed Asset was repurchased at the full Repurchase Price during such Pricing Period, the Pricing Period for such Purchased Asset or Contributed Asset shall terminate on (and include) such Repurchase Date.
““Pricing Rate” means with respect to each Purchased Asset and Contributed Asset, the sum of [***]; (b) with respect to the Purchase Price-Incremental 1, if any, [***] and (c) with respect to the Purchase Price-Incremental 2, if any, [***].
“Pricing Rate-Base” means with respect to the Purchase Price-Base, the sum of [***] and [***] plus [***].
“Pricing Rate-Incremental 1” means with respect to the Purchase Price-Incremental 1, the sum of (a) the greater of [***] and [***] plus [***].
“Pricing Rate-Incremental 2” means with respect to the Purchase Price-Incremental 2, the sum of [***] and [***] plus [***].
“Pricing Side Letter” means, the letter agreement dated as of the date hereof, among Administrative Agent, Buyers, Seller Parties and the Guarantor, if any, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
“Private Label Reverse Mortgage Loan” means a reverse mortgage loan which (a) is not a HECM Loan; (b) has been acquired in accordance with the Asset Guidelines and (c) is otherwise acceptable to Administrative Agent in its sole discretion.
“Program Account” means the account set forth in Section 9 hereof.
“Program Agreements” means, collectively, this Agreement, the Guaranty, if any, the Custodial Agreement, the Pricing Side Letter, each Underlying Entity Agreement, if any, the Administration Agreement, the Electronic Tracking Agreement, if any, the Netting Agreement, the Custodial Account Control Agreement, each Holdback Account Control Agreement, if any, each Power of Attorney, each Servicing Agreement, if any, and each Servicer Notice, if any.
“Prohibited Person” has the meaning set forth in Section 13.a(27) hereof.
“Property” means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.
“Proprietary Lease” means the lease on a Co-op Unit evidencing the possessory interest of the owner in the Co-op Shares in such Co-op Unit.
“Protective Advance” means any servicing advance (including, but not limited to, any advance made to pay taxes and insurance premiums; any advance to pay the costs of protecting the value of any real property or other security for a mortgage loan; and any advance to pay the costs of realizing on the value of any such security) made by Seller or Servicer in connection with any Early Buyout Loan that is a Purchased Mortgage Loan.
“Purchase Date” means the date on which Purchased Assets are to be transferred by Seller to Administrative Agent for the benefit of Buyers or a Purchase Price Increase Date, as applicable.
“Purchase Price” means the price at which each Purchased Asset or Contributed Asset is transferred by or contributed to a Seller Party, as applicable, to Administrative Agent for the benefit of Buyers, which shall equal:
(a) on the applicable Purchase Date or Purchase Price Increase Date, the applicable Purchase Price-Base plus the Purchase Price-Incremental 1, if any plus the Purchase Price-Incremental 2, if any;
(b) on any day after the Purchase Date or Purchase Price Increase Date, except where Administrative Agent for the benefit of Buyers and such Seller Party agree otherwise, the amount determined under the immediately preceding clause (a), (i) increased by the amount of any (A) additional Purchase Price-Incremental 1 and additional Purchase Price-Incremental 2 advanced pursuant to this Agreement plus (B) the amount of any Purchase Price Increase since the initial Transaction and (ii) decreased by the amount of any cash transferred by Seller and applied to reduce Seller’s Obligations in accordance with this Agreement.
“Purchase Price-Base” means, with respect to any Purchased Asset or Contributed Asset: (a) on the applicable Purchase Date, the amount remitted by Administrative Agent, on behalf of Buyers, to Seller Parties which shall not exceed the product of [***] and [***] and (b) on any day after the applicable Purchase Date, [***].
“Purchase Price-Incremental 1” means, with respect to any Purchased Asset or Contributed Asset: (a) on the applicable Purchase Date, the amount remitted by Administrative Agent, on behalf of Buyers, to Seller Parties which shall not exceed the product of [***] and [***], and (b) on any day after the applicable Purchase Date, [***].
“Purchase Price-Incremental 2” means, with respect to any Purchased Asset or Contributed Asset: (a) on the applicable Purchase Date, the amount remitted by Administrative Agent, on behalf of Buyers, to Seller Parties which shall not exceed the product of [***] and [***], and (b) on any day after the applicable Purchase Date, [***].
“Purchase Price Increase” means (a) an increase in the Purchase Price for a Purchased Certificate based upon the Underlying Entity acquiring additional Contributed Assets to which such portion of the Purchase Price is allocated, as requested by any Seller pursuant to Section 3.b hereof; (b) an increase in the Purchase Price of a HELOC in connection with a Draw, as requested by any Seller Party pursuant to Section 3.b hereof or (c) to the extent a Seller Party previously requested a Purchase Price less than the Asset Value on such prior Purchase Date, such increased portion of the Purchase Price for such Purchased Asset not to exceed the applicable Asset Value on such subsequent Purchase Date.
“Purchase Price Increase Date” means the date on which a Purchase Price Increase is made.
“Purchase Price Percentage” means (a) with respect to the Purchase Price-Base, the Purchase Price Percentage-Base; (b) with respect to the Purchase Price-Incremental 1, if any, the Purchase Price Percentage-Incremental 1 and (c) with respect to the Purchase Price-Incremental 2, if any, the Purchase Price Percentage-Incremental 2.
“Purchase Price Percentage-Base” has the meaning set forth in the Asset Matrix.
“Purchase Price Percentage-Incremental 1” has the meaning set forth in the Asset Matrix.
“Purchase Price Percentage-Incremental 2” has the meaning set forth in the Asset Matrix.
“Purchase Price Percentage - Total” means, with respect to each Purchased Asset and/or Contributed Asset, the sum of (a) the Purchase Price Percentage-Base, plus (b) the Purchase Price Percentage-Incremental 1 and (c) the Purchase Price Percentage-Incremental 2.
“Purchased Assets” means the Purchased Mortgage Loans and the Purchased Certificates (together with the beneficial ownership interest in the Contributed Assets represented thereby).
“Purchased Certificate” means each Underlying Entity Certificate with respect to each Underlying Entity transferred by Seller to Administrative Agent for the benefit of Buyers in a Transaction hereunder and listed the related Transaction Request.
“Purchased Mortgage Loans” means the collective reference to Mortgage Loans together with the Repurchase Assets related to such Mortgage Loans transferred by Seller to Administrative Agent for the benefit of Buyers in a Transaction hereunder, and/or listed on the related Asset Schedule attached to the related Transaction Request, the Asset File for which such Mortgage Loans the Custodian has been instructed to hold for the benefit of Administrative Agent pursuant to the Custodial Agreement, and which has not been repurchased by the Seller pursuant to the terms of this Agreement.
“Qualified Insurer” means an insurance company duly authorized and licensed where required by law to transact insurance business and approved as an insurer by Fannie Mae or Freddie Mac or GNMA, as applicable.
“Qualified Mortgage Loan” means a Mortgage Loan which is a “Qualified Mortgage” as defined in 12 CFR 1026.43(e).
“Qualified Originator” means an originator of Mortgage Loans which is acceptable under the Asset Guidelines.
“Recognition Agreement” means, an agreement among a Co-op Corporation, a lender and a Mortgagor with respect to a Co-op Loan whereby such parties (i) acknowledge that such lender may make, or intends to make, such Co-op Loan, and (ii) make certain agreements with respect to such Co-op Loan.
“Records” means all instruments, agreements and other books, records, and reports and data generated by other media for the storage of information maintained by any Seller Party, Guarantor, Servicer or any other Person with respect to a Purchased Asset or Contributed Asset, as applicable. Records shall include the Mortgage Notes, any Mortgages, the Asset Files, the credit files related to the Purchased Asset or Contributed Asset, as applicable and any other instruments necessary to document or service or manage a Purchased Asset or Contributed Asset, as applicable.
“Reference Rate” means Adjusted Daily Simple SOFR, or a Successor Rate pursuant to Section 5(c) of this Agreement.
“Register” has the meaning assigned to such term in Section 22 hereof.
“Release Price” means, with respect to each Contributed Asset and on any date of determination, the sum of (a) the outstanding Purchase Price for such Contributed Asset and (b) accrued unpaid Price Differential related to such Contributed Asset, as applicable, in each case, as of the date of such determination.
“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York, or any successor of any of the foregoing.
“Remittance Date” means the date on which each Servicer is required to remit funds to the Program Account in respect of the Purchased Assets pursuant to the applicable Servicing Agreement and Servicer Notice, as applicable.
“REO Property” means real property acquired by or transferred to an Underlying Entity, including a Mortgaged Property acquired through foreclosure of a Purchased Mortgage Loan or Contributed Mortgage Loan or by deed in lieu of such foreclosure, the fee title of which is held by the applicable Underlying Entity.
“REO Repurchase Assets” has the meaning assigned thereto in Section 8.a(3) hereof.
“Re-Performing Mortgage Loan” means a Mortgage Loan (other than a Second Lien Mortgage Loan, HELOC, HECM Loan or Private Label Reverse Mortgage Loan) that was previously a Non-Performing Mortgage Loan that is less than sixty (60) days past due as of the last day of a calendar month immediately preceding such date of determination.
“Repledge Transaction” has the meaning set forth in Section 18 hereof.
“Repledgee” means each Repledgee identified by the Administrative Agent from time to time pursuant to the Administration Agreement and Section 18 hereof.
“Reporting Date” means the Business Day prior to the Payment Date as determined in accordance with clause (b) of the definition thereof.
“Repurchase Assets” has the meaning assigned thereto in Section 8.a(3) hereof.
“Repurchase Date” means the earlier of (a) the Termination Date, (b) the date requested pursuant to Section 4.a hereof or (c) the date determined by application of Section 16 hereof.
“Repurchase Price” means the price at which Purchased Assets are to be transferred from the Administrative Agent for the benefit of Buyers to Seller or its designee upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the outstanding Purchase Price and the accrued but unpaid Price Differential invoiced as of the date of such determination or a portion of which may be repaid in connection with an Optional Prepayment by application of the related proceeds.
“Request for Certification” means a notice sent to the Custodian reflecting the sale or contribution of one (1) or more Purchased Mortgage Loans or Contributed Assets to Administrative Agent for the benefit of Buyers hereunder.
“Requirement of Law” means, with respect to any Person, any law, treaty, rule or regulation or determination of an arbitrator, a court or other Governmental Authority, applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Responsible Officer” means as to any Person, the chief executive officer, treasurer, or, with respect to financial matters, the chief financial officer of such Person.
“Restricted Cash” means for any Person, any amount of cash of such Person that is subject to a lien or other encumbrance or is contractually required to be set aside, segregated or otherwise reserved.
“S&P” means Standard & Poor’s Ratings Services, or any successor thereto.
“Scratch and Dent Mortgage Loan” means a first lien Mortgage Loan that (i) is a Mortgage Loan that is eligible for a Transaction and is eligible for sale to a Take-out Investor (other than the Agencies) at the time it becomes a Purchased Asset; (ii) has never had a delinquent payment; (iii) has never had any compliance defects; and (iv) is acceptable to Buyers or Administrative Agent in their sole discretion.
“SEC” means the Securities and Exchange Commission, or any successor thereto.
“Seasoned Performing Loan” means a Mortgage Loan that (i) is not a Non-Performing Mortgage Loan, Re-Performing Mortgage Loan, Business Purpose Mortgage Loan, HELOC, HECM Loan, Early Buyout Loan or Private Label Reverse Mortgage Loan and (ii) for which no payment of principal or interest has been [***] or more days delinquent (determined using the Mortgage Bankers Association method of delinquency) at any time during the [***] month period preceding any date of determination.
“Second Lien Mortgage Loan” means a closed-end Mortgage Loan or HELOC secured by a second lien on the related Mortgaged Property.
“Seller” means Home Point Financial Corporation or its permitted successors and assigns.
“Seller Party” means each Seller and each Underlying Entity.
“Seller Repurchase Assets” has the meaning assigned thereto in Section 8.a(1) hereof.
“Servicer” means Seller or Subservicer.
“Servicer Account” means with respect to Purchased Mortgage Loans and Contributed Assets serviced by any Subservicer, the account as identified in the related Servicing Agreement into which the Servicer deposits Income and related collections.
“Servicer Advance” means a Delinquency Advance or a Protective Advance.
“Servicer Notice” means any servicer notice and acknowledgement, in form and substance acceptable to Administrative Agent in its sole discretion, executed and delivered to Administrative Agent by a Subservicer as the same may be amended, restated, supplemented, or otherwise modified from time to time.
“Servicer Termination Event” means, with respect to a Subservicer, the occurrence of any of the following conditions or events:
(a)such Subservicer becomes subject to any penalties and/or sanctions by any Governmental Authority that could materially and adversely affect such Subservicer’s ability to service the applicable Purchased Mortgage Loans or Contributed Assets in accordance with the related Servicing Agreement;
(b)such Subservicer fails to service the Purchased Mortgage Loans and Contributed Assets subject to Transactions materially in accordance with the related Servicing Agreement in all material respects or otherwise defaults under the related Servicing Agreement or related Servicer Notice, after giving effect to any applicable notice or grace periods;
(c)such Subservicer fails to maintain all state and federal licenses necessary to do business in any jurisdiction where Mortgaged Property or REO Property is located if such license is required, or to be in material compliance with any licensing laws of any jurisdiction where Mortgaged Property or REO Property is located applicable to such Purchased Mortgage Loans and Contributed Assets;
(d)such Subservicer fails to maintain adequate financial standing, servicing facilities, procedures and experienced personnel necessary for the sound servicing of mortgage loans of the same types as may from time to time constitute Mortgage Loans and in accordance with Accepted Servicing Practices;
(e)an event of default occurs under the related Servicing Agreement with respect to such Subservicer;
(f)an Act of Insolvency shall have occurred with respect to such Subservicer; or
(g)a Material Adverse Effect shall occur with respect to such Subservicer.
“Servicing Agreement” means each subservicing agreement entered into among Seller and a Subservicer in form and substance acceptable to Administrative Agent in its sole discretion, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Servicing Rights” means the rights of any Person to administer, service or subservice, the Purchased Mortgage Loans or Contributed Assets or to possess related Records.
“Settlement Agent” means, with respect to any Transaction the subject of which is a Wet Mortgage Loan, the entity approved by Administrative Agent, in its sole good-faith discretion, which may be a title company, escrow company or attorney in accordance with local law and practice in the jurisdiction where the related Wet Mortgage Loan is being originated. A Settlement Agent is deemed approved unless Administrative Agent notifies Seller otherwise at any time electronically or in writing.
“Severance Notice” has the meaning set forth in Section 19 hereof.
“Simultaneously Funded Early Buyout Loan” means an Early Buyout Loan which Seller intends to be repurchased from GNMA substantially concurrently with the funding of the related Transaction hereunder.
“SIPA” means the Securities Investor Protection Act of 1970, as amended from time to time.
“SOFR” means, with respect to any SOFR Business Day, a rate per annum equal to the secured overnight financing rate for such SOFR Business Day published by the SOFR Administrator on the SOFR Administrator’s Website at approximately 8:00 a.m. (New York City time) on the immediately succeeding SOFR Business Day.
“SOFR Administrator” means the Federal Reserve Bank of New York (or any successor administrator of the secured overnight financing rate).
“SOFR Administrator’s Website” means the SOFR Administrator’s website, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“SOFR Business Day” means a day on which banks are open for dealing in foreign currency and exchange in London, New York City and Washington, D.C.
“State Agency Program Loan” means a mortgage loan originated or acquired by Seller in accordance with the applicable guidelines of, and in anticipation of sale to, the state housing authorities in Acceptable States and as approved by Administrative Agent in writing in its sole discretion.
“Stock Certificate” means, with respect to a Co-op Loan, the certificates evidencing ownership of the Co-op Shares issued by the Co-op Corporation.
“Stock Power” means, with respect to a Co-op Loan, an assignment of the Stock Certificate or an assignment of the Co-op Shares issued by the Co-op Corporation.
“Subordinated Debt” means, for any Person, Indebtedness of such Person which is (a) unsecured, (b) no part of the principal of such Indebtedness is required to be paid (whether by way of mandatory sinking fund, mandatory redemption, mandatory prepayment or otherwise) prior to the date which is one year following the Termination Date and (c) the payment of the principal of and interest on such Indebtedness and other obligations of such Person in respect of such Indebtedness are subordinated to the prior payment in full of the principal of and interest (including post-petition obligations) on the Transactions and all other obligations and liabilities of such Person to Administrative Agent and Buyers hereunder on terms and conditions approved in writing by Administrative Agent and all other terms and conditions of which are satisfactory in form and substance to Administrative Agent.
“Subservicer” means any subservicer engaged by a Seller Party and Servicer and approved by Administrative Agent in its sole discretion.
“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one (1) or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.
“Successor Rate” means a rate determined by Administrative Agent in accordance with Section 5.c hereof.
“Successor Rate Conforming Changes” means with respect to any proposed Successor Rate, any technical, administrative or operational change (including any change to the timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides, in its sole discretion, may be appropriate to reflect the adoption and implementation of such Successor Rate and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Successor Rate exists, in such other manner of administration as the Administrative Agent decides, in its sole discretion, is reasonably necessary in connection with the administration of this Agreement or any other Program Agreement).
“Take-out Commitment” means a commitment of Seller to either (a) sell one (1) or more identified Mortgage Loans to a Take-out Investor or (b) (i) swap one (1) or more identified Mortgage Loans with a Take-out Investor that is an Agency for an Agency Security, and (ii) sell the related Agency Security to a Take-out Investor, and in each case, the corresponding Take-out Investor’s commitment back to Seller to effectuate any of the foregoing, as applicable.
“Take-out Investor” means (a) an Agency or (b) other institution which has made a Take-out Commitment and has been approved by Administrative Agent for the benefit of Buyers.
“Taxes” means any and all present or future taxes (including social security contributions and value added taxes), levies, imposts, duties (including stamp duties), deductions, charges (including ad valorem charges), withholdings (including backup withholding), assessments, fees or other charges of any nature whatsoever imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Termination Date” has the meaning assigned to such term in the Pricing Side Letter.
“Test Period” means any prior calendar quarter.
“Third Party Evaluator” means an appraiser approved by Administrative Agent in its sole good faith discretion.
“TILA-RESPA Integrated Disclosure Rule” means the Truth-in-Lending Act and Real Estate Settlement Procedures Act Integrated Disclosure Rule, adopted by the Bureau of Consumer Financial Protection, which is effective for residential mortgage loan applications received on or after October 3, 2015.
“Transaction” has the meaning set forth in Section 1 hereof.
“Transaction Request” means a request via email from a Seller Party to Administrative Agent notifying Administrative Agent that such Seller Party wishes to enter into a Transaction hereunder that indicates that it is a Transaction Request under this Agreement. For the avoidance of doubt, a Transaction Request may refer to multiple Purchased Assets and Contributed Assets; provided that each Purchased Asset and Contributed Asset shall be deemed to be subject to its own Transaction.
“Trust Receipt” means, with respect to any Transaction as of any date, a receipt in the form attached as an exhibit to the Custodial Agreement.
“UETA” means the Official Text of the Uniform Electronic Transactions Act as approved by the National Conference of Commissioners on Uniform State Laws at its Annual Conference on July 29, 1999.
“Underlying Entity” means any subsidiary of a Seller joined hereto from time to time or its permitted successors or assigns as approved by Administrative Agent in its sole discretion.
“Underlying Entity Agreement” means those certain organizational documents of the applicable Underlying Entity.
“Underlying Entity Assignment Agreement” means any agreement pursuant to which an Underlying Entity acquires Contributed Assets.
“Underlying Entity Certificate” means any certificate evidencing 100% of the Underlying Entity Interests for an Underlying Entity.
“Underlying Entity Interests” means, with respect to each Underlying Entity, any and all of the Capital Stock in such Underlying Entity, including, without limitation, all its rights to participate in the operation or management of such Underlying Entity and all its rights to properties, assets, interests and distributions under the Underlying Entity Agreement in respect of such trust interests. “Underlying Entity Interests” also includes (i) all accounts receivable arising out of the Underlying Entity Agreement; (ii) all general intangibles arising out of the Underlying Entity Agreement; and (iii) to the extent not otherwise included, all proceeds of any and all of the foregoing (including within proceeds, whether or not otherwise included therein, any and all contractual rights of the applicable Seller under any revenue sharing or similar agreement to receive all or any portion of the revenues or profits of the Underlying Entity).
“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as in effect on the date hereof in the State of New York or the Uniform Commercial Code as in effect in the applicable jurisdiction.
“U.S. Person” means any Person that is a “United States person” as defined in section 7701(a)(30) of the Code.
“U.S. Tax Compliance Certificate” has the meaning set forth in Section 11.e(ii)(B) hereof.
“USDA” means the United States Department of Agriculture or any successor thereto.
“USDA Approved Lender” means a lender which is approved by the USDA to act as a lender in connection with the origination of USDA Loans.
“USDA LINC” means the USDA Lender Interactive Network Connection, together with any successor USDA electronic access portal.
“USDA Loan” means a first lien Mortgage Loan guaranteed by and originated in accordance with the criteria established by the USDA pursuant to the USDA Rural Development Guaranteed Housing Loan Program.
“USDA Loan Guaranty Agreement” means the agreement evidencing the contractual obligation of the USDA respecting the guaranty of an USDA Loan.
“VA” means 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 Approved Lender” means a lender which is approved by the VA to act as a lender in connection with the origination of VA Loans.
“VA Loan” means a Mortgage Loan which is the subject of a VA Loan Guaranty Agreement as evidenced by a loan guaranty certificate, or a Mortgage Loan which is a vendor loan sold by the VA.
“VA Loan Guaranty Agreement” means 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.
“Value Reduction Event” has the meaning assigned to such term in the Pricing Side Letter.
“Wet Delivery Date” has the meaning set forth in the Pricing Side Letter.
“Wet Mortgage Loan” means a Mortgage Loan (other than an Early Buyout Loan) that Seller is selling to Administrative Agent for the benefit of Buyers simultaneously with the origination thereof.
10.Program; Initiation of Transactions; Allocation of Purchase Price
a.From time to time, in the sole discretion of Buyers, Administrative Agent (for the benefit of Buyers) may facilitate the purchase by Buyers from Seller of certain Mortgage Loans and Contributed Assets that have been originated and/or purchased by Seller Parties. This Agreement is not a commitment by Administrative Agent on behalf of Buyers to enter into Transactions with Seller but rather sets forth the procedures to be used in connection with periodic requests for Administrative Agent on behalf of Buyers to enter into Transactions with Seller. Seller hereby acknowledges that Administrative Agent on behalf of Buyers is
under no obligation to agree to enter into, or to enter into, any Transaction pursuant to this Agreement. All Purchased Mortgage Loans and Contributed Assets shall exceed or meet the Asset Guidelines, and shall be serviced by Seller or Servicer, as applicable. The sum of the aggregate outstanding Purchase Price-Base, Purchase Price-Incremental 1 and Purchase Price-Incremental 2 shall not exceed the Maximum Aggregate Purchase Price.
b.From time to time Administrative Agent, on behalf of Buyers, may purchase the Underlying Entity Certificates from Seller. From time to time and in accordance with Section 3.c below, (i) any Seller Party may request and Administrative Agent, on behalf of Buyers, may fund additional Purchase Price Increases in connection with the acquisition of additional Contributed Assets by the applicable Underlying Entity and the corresponding increases of the Purchase Price on account of the Purchased Certificates; (ii) any Seller Party may request and Administrative Agent, on behalf of Buyers, may fund additional Purchase Price Increases in connection with a request to fund additional Purchase Price for a Purchased Asset or Contributed Asset that was not purchased at the full Asset Value on the original Purchase Date and (iii) any Seller Party may request and Administrative Agent, on behalf of Buyers, may fund additional Purchase Price Increases with respect to a HELOC in connection with a Draw. The aggregate outstanding Purchase Price of Purchased Assets subject to outstanding Transactions shall not exceed the Maximum Aggregate Purchase Price.
c.Seller shall request that Administrative Agent enter into a Transaction by delivering (i) to Administrative Agent, a Transaction Request by [***] (New York City time) on the proposed Purchase Date for all Mortgage Loans and (ii) to Administrative Agent and Custodian an Asset Schedule, in accordance with the Custodial Agreement. In the event the Asset Schedule provided by a Seller Party contains erroneous computer data, is not formatted properly, or the computer fields are otherwise improperly aligned, Administrative Agent shall provide written or electronic notice to Seller describing such error and Seller shall correct the computer data, reformat, or properly align the computer fields itself and resubmit the Asset Schedule as required herein. Upon transfer of a Purchased Certificate to Administrative Agent for the benefit of Buyers as set forth herein and until termination of such Transaction as set forth herein, ownership of such Purchased Certificate is vested in the Administrative Agent on behalf of Buyers, and record title to each Contributed Asset shall be retained by applicable Underlying Entity.
d.With respect to a Simultaneously Funded Early Buyout Loan for which any Seller Party has submitted a Transaction Request, provided that the GNMA Haircut Amount has been remitted to the Administrative Agent, Administrative Agent shall remit the purchase price due to GNMA for such Simultaneously Funded Early Buyout Loan to Servicer. Such Seller Party shall cause Servicer to repurchase such Simultaneously Funded Early Buyout Loan from GNMA no later than the Business Day following the date of remittance of proceeds by Administrative Agent to Servicer. In the event that Servicer fails to repurchase such Simultaneously Funded Early Buyout Loan, such Seller Party shall cause Servicer to remit the Purchase Price for such Simultaneously Funded Early Buyout Loan to the Program Account within three (3) Business Days following the related Purchase Date. Notwithstanding the foregoing, when a Simultaneously Funded Early Buyout Loan is repurchased, the Purchase Date hereunder shall be deemed the date of remittance of proceeds by Administrative Agent to Servicer.
e.Upon the satisfaction of the applicable conditions precedent set forth in Section 10 hereof, all of Seller Parties’ interest in the Repurchase Assets shall pass to Administrative Agent on behalf of Buyers on the Purchase Date, against the transfer of the Purchase Price to Seller Parties. Upon transfer of the Purchased Assets to Administrative Agent on behalf of Buyers as set forth in this Section and until termination of any related Transactions as set forth in Section 4 or 16 hereof, ownership of each Purchased Asset, including each document in the related Asset File and Records, is vested in the Buyers identified under the Administration Agreement. For the avoidance of doubt, the parties acknowledge and agree that the Purchased Assets shall be held by the Administrative Agent for the benefit of Buyers, as more particularly set forth in the Administration Agreement.
f.On each Purchase Date and Purchase Price Increase Date, the Administrative Agent shall allocate the Purchase Price for such Purchased Asset and/or Contributed Asset among the Purchase Price-Base, Purchase Price-Incremental 1 and Purchase Price Incremental 2 according to the Allocated Percentages attributable thereto.
g.With respect to each Wet Mortgage Loan, by no later than the Wet Delivery Date, Seller shall cause the related Settlement Agent to deliver to the Custodian the remaining documents in the Asset File, as more particularly set forth in the Custodial Agreement.
11.Repurchase; Conversion to REO Property
a.Seller shall repurchase the related Purchased Assets from Administrative Agent for the benefit of Buyers on each related Repurchase Date. In addition, Seller may repurchase Purchased Assets without penalty or premium on any date. If Seller intends to make such a repurchase, Seller shall give same day prior written notice to Administrative Agent, designating the Purchased Assets to be repurchased. Such obligation to repurchase exists without regard to any prior or intervening liquidation or foreclosure with respect to any Purchased Asset or Contributed Asset (but Liquidation Proceeds received by Administrative Agent shall be applied to reduce the Repurchase Price for such Purchased Asset on each Payment Date except as otherwise provided herein). Seller is obligated to repurchase and take physical possession of the Purchased Assets and Contributed Assets from Administrative Agent or its designee (including the Custodian) at Seller’s expense on the related Repurchase Date and Administrative Agent or its designee shall make such Purchased Asset available to Seller for repurchase on the related Repurchase Date to the extent the Repurchase Price is received prior to [***] (New York City time).When the Contributed Assets supporting a portion of the Purchase Price of the Transaction related to a Purchased Certificate is desired to be sold or otherwise liquidated, the Seller shall make payment to Administrative Agent in order to prepay the Repurchase Price (an “Optional Prepayment”) in an amount equal to the Release Price on each date such Contributed Assets are desired to be sold or otherwise liquidated (each, an “Optional Prepayment Date”). Such payment shall serve as a partial prepayment of the Repurchase Price in connection with the Transaction in respect of the related Purchased Certificate. Seller shall pay the Optional Prepayment and take (or cause its designee to take) physical possession of the Contributed Assets from the Underlying Entity or its designee (including the Custodian) at the Seller’s expense on the related Optional Prepayment Date.
b.Provided that no Default shall have occurred and is continuing, and Administrative Agent has received the related Repurchase Price (excluding accrued and unpaid Price Differential, which, for the avoidance of doubt, shall be paid on the next succeeding Payment Date) upon repurchase of the Purchased Assets or Contributed Assets, as applicable, Administrative Agent and Buyers will each be deemed to have released their respective interests hereunder in the Purchased Assets and other Repurchase Assets related thereto, as applicable.
c.With respect to a Liquidated Asset, the related Seller Party agrees to, within one (1) Business Day of such liquidation, (i) provide Administrative Agent with a copy of a report from the applicable Servicer (or Seller Party if Seller Party is the Servicer) indicating that such Purchased Mortgage Loan or Contributed REO Property has been liquidated, (ii) remit or cause the Servicer to remit the Repurchase Price or Optional Prepayment, as applicable in accordance herewith and (iii) provide Administrative Agent a notice specifying each Purchased Mortgage Loan or Contributed Asset that has been liquidated. Provided that no Event of Default shall have occurred and is continuing, Administrative Agent acting on behalf of Buyers agrees to permit the release of the Liquidated Asset to the applicable Seller Party concurrently with receipt of confirmation that proceeds have been received by Seller Party or the applicable Servicer.
d.With respect to a Purchased Mortgage Loan or Contributed Mortgage Loan becoming a REO Property as contemplated by Section 8 hereof, Seller shall, on the next subsequent Reporting Date, (i) notify Administrative Agent in writing that such Purchased Mortgage Loan or Contributed Mortgage Loan has become a REO Property and the value attributed to such Contributed REO Property by Seller; (ii) deliver to Administrative Agent and Custodian an Asset Schedule with respect to such REO Property; (iii) be deemed to make the
representations and warranties listed on Schedule 1-B hereto with respect to such REO Property; and (iv) without limiting the requirements set forth in the definition of Asset Value, deliver to Administrative Agent a true and complete copy of a BPO of such REO Property dated no greater than one hundred eighty (180) days from such date. The acquisition of such Contributed REO Property by the applicable Underlying Entity shall result in an applicable change in the value of the Underlying Entity Certificate (as determined in accordance with the definition of Asset Value) and any Purchase Price Increase or Margin Deficit attributed to any change in category shall be paid by the Seller.
e.With respect to a Purchased Mortgage Loan or Contributed Mortgage Loan becoming a REO Property as contemplated by Section 8 hereof, Seller shall, on the next subsequent Reporting Date, (i) notify Administrative Agent in writing that such Purchased Mortgage Loan or Contributed Mortgage Loan has become a REO Property and the value attributed to such Contributed REO Property by Seller; (ii) deliver to Administrative Agent and Custodian an Asset Schedule with respect to such REO Property; (iii) be deemed to make the representations and warranties listed on Schedule 1-B hereto with respect to such REO Property; and (iv) without limiting the requirements set forth in the definition of Asset Value, deliver to Administrative Agent a true and complete copy of a BPO of such REO Property dated no greater than [***] from such date. The acquisition of such Contributed REO Property by the applicable Underlying Entity shall result in an applicable change in the value of the Underlying Entity Certificate (as determined in accordance with the definition of Asset Value) and any Purchase Price Increase or Margin Deficit attributed to any change in category shall be paid by the Seller.
12.Price Differential
h.On each Business Day that a Transaction is outstanding, the Pricing Rate shall be reset and, unless otherwise agreed, the accrued and unpaid Price Differential for the preceding Pricing Period shall be settled in cash on each related Payment Date. [***] Business Days prior to the Payment Date, Administrative Agent shall give Seller written or electronic notice of the amount of the Price Differential due on such Payment Date. On the Payment Date, Seller shall pay to Administrative Agent the Price Differential for the benefit of Buyers for such Payment Date (along with any other amounts then due and owing pursuant to Section 7 hereof, and Section 3 of the Pricing Side Letter), by wire transfer in immediately available funds. Prior to the occurrence and continuance of an Event of Default, the Administrative Agent shall apply all payments of Price Differential in respect of any Purchased Asset and Contributed Asset pro rata among the Price Differential-Base, the Price Differential-Incremental 1 and the Price Differential-Incremental 2 based upon the Allocated Percentage of each. On and after an Event of Default, any application of Price Differential will first be attributed to the Price Differential-Base then due and owing until reduced to zero, second to the Price Differential-Incremental 1 then due and owning until reduced to zero and third to the Price Differential-Incremental 2 then due and owning until reduced to zero.
i.If Seller fails to pay all or part of the Price Differential by [***] (New York City time) on the related Payment Date, with respect to any Purchased Asset, Seller shall be obligated to pay to Administrative Agent for the benefit of Buyers (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 Post Default Rate until the Price Differential is received in full by Administrative Agent for the benefit of Buyers.
j.If prior to any Payment Date, Administrative Agent determines in its sole discretion that, by reason of circumstances affecting the relevant market, (i) adequate and reasonable means do not exist for ascertaining the Reference Rate; (ii) the Reference Rate is no longer in existence; (iii) continued implementation of the Reference Rate is no longer operationally, administratively or technically feasible or no significant market practice for the administration of the Reference Rate exists, (iv) the Reference Rate will not adequately and fairly reflect the cost to Administrative Agent and Buyers of purchasing or maintaining Transactions or (v) the administrator of the Reference Rate or a Governmental Authority having jurisdiction over Administrative Agent has made a public statement identifying a specific date after which the Reference Rate shall no longer be made available or used for determining the interest rate of loans,
Administrative Agent may give prompt notice thereof to Seller, whereupon the rate for such period that will replace the Reference Rate for such period, and for all subsequent periods until such notice has been withdrawn by Administrative Agent, shall be the greater of (x) an alternative benchmark rate (including any mathematical or other adjustments to the benchmark rate (if any) incorporated therein) and (y) zero, together with any proposed Successor Rate Conforming Changes, as determined by Administrative Agent in its sole discretion (any such rate, a “Successor Rate”). If Administrative Agent shall exercise its rights under this Section 5.c, then Seller shall have the right to terminate this Agreement and all Transactions hereunder upon five (5) Business Days’ prior written notice to Administrative Agent by payment in full to Administrative Agent of the then outstanding Repurchase Price of all Purchased Assets without payment of penalty. For the avoidance of doubt, no Make Whole Amount shall be due for the month in which Seller terminates this Agreement and repurchases all Transactions hereunder pursuant to this this Section 5.c.
k.To the extent Administrative Agent implements a Successor Rate and Successor Rate Conforming Changes it will promptly notify Seller Parties of the effectiveness of any such changes. Any determination of a Successor Rate and the adoption of Successor Rate Conforming Changes shall be made by Administrative Agent in a manner substantially consistent with market practice with respect to similarly situated counterparties with substantially similar assets in similar facilities and any such Successor Rate Conforming Changes will become effective without any further action or consent of Seller Parties to this Agreement or the other Program Agreements.
13.Margin Maintenance
f.If at any time the outstanding Purchase Price of any Purchased Asset and Contributed Asset subject to a Transaction is greater than the Asset Value of such Purchased Asset and Contributed Asset subject to a Transaction (a “Margin Deficit”), then Administrative Agent may by notice to Seller require Seller to transfer to Administrative Agent for the benefit of Buyers cash in an amount at least equal to the Margin Deficit (such requirement, a “Margin Call”).
g.Notice delivered pursuant to Section 6.a above may be given by any written or electronic means. Any notice given (i) before [***] (New York City time) on a Business Day shall be met, and the related Margin Call satisfied, no later than [***] (New York City time) on such Business Day and (ii) after [***] (New York City time) on a Business Day shall be met, and the related Margin Call satisfied, no later than [***] (New York City time) on the following Business Day (the foregoing time requirements for satisfaction of a Margin Call are referred to as the “Margin Deadlines”). The failure of Administrative Agent, 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 Administrative Agent to do so at a later date. Seller and Administrative Agent each agree that a failure or delay by Administrative Agent to exercise its rights hereunder shall not limit or waive Administrative Agent’s or Buyers’ rights under this Agreement or otherwise existing by law or in any way create additional rights for Seller. Any cash transferred to Buyer pursuant to Section 6.b shall be credited to the Repurchase Price of the related Transaction.
h.In the event that a Margin Deficit exists with respect to any Purchased Asset or Contributed Asset, Administrative Agent may retain any funds received by it to which the Seller would otherwise be entitled hereunder, which funds (i) shall be held by Administrative Agent against the related Margin Deficit and (ii) may be applied by Administrative Agent against the Repurchase Price of any such Purchased Asset or Contributed Asset for which the related Margin Deficit remains otherwise unsatisfied. Notwithstanding the foregoing, the Administrative Agent retains the right, in its sole discretion, to make a Margin Call in accordance with the provisions of this Section 6.
14.Income Payments
l.If Income is paid in respect of any Purchased Asset or Contributed Asset during the term of a Transaction, such Income shall be held in trust for the Administrative Agent and
Buyers and shall constitute the property of the applicable Buyers except for tax purposes as to which it shall be treated as income and property of Seller.
m.Seller shall, and to the extent it engages a Subservicer shall cause such Subservicer to, deposit all applicable Income with respect to Purchased Assets and Contributed Assets into the related Custodial Account and Servicer Account, as applicable, in accordance with the applicable Servicing Agreement and Servicer Notice.
n.Provided no Event of Default has occurred and is continuing, and the Price Differential has been paid to Administrative Agent for the benefit of Buyers in accordance with Section 5 hereof, Seller shall be entitled to the remittance of all Income related to Purchased Assets and Contributed Assets that are Agency Mortgage Loans and Non-Agency Mortgage Loans.
o.If any Event of Default has occurred and is continuing, with respect to Agency Mortgage Loans, Non-Agency Mortgage Loans and Early Buyout Loans, Seller shall remit all Income in its possession to the Program Account.
p.Provided no Event of Default has occurred and is continuing other than Agency Mortgage Loans, Non-Agency Mortgage Loans and Early Buyout Loans, Seller shall and to the extent it engages a Subservicer shall cause such Subservicer to deposit all Income (net of any servicing fees and advances then due and owing pursuant to the terms of the applicable Servicing Agreement related to such Subservicer) to the Program Account (x) with respect to any Subservicer, on each Remittance Date and (y) to the extent Seller is the Servicer, within two (2) Business Days of receipt thereof.
q.Notwithstanding any provision to the contrary in this Section 7, within three (3) Business Days of receipt by Seller or any Subservicer of any prepayment of principal in full, with respect to a Purchased Asset or Contributed Asset, Seller shall or shall cause such Subservicer to remit such amount to the Program Account and Administrative Agent shall immediately apply any such amount received by Buyers or the Administrative Agent to reduce the amount of the Repurchase Price due upon termination of the related Transaction.
r.With respect to each Early Buyout Loan, the Nominee shall be listed as the mortgagee of record. All Income (including, without limitation, claims and proceeds) received from HUD, VA or USDA, as applicable, on account of each Early Buyout Loan shall be deposited into the Clearing Account within one (1) Business Day of receipt thereof. Seller shall and shall cause the Nominee to remit all such funds from the Clearing Account to the Custodial Account within two (2) Business Days. To the extent HUD, VA or USDA deducts any amounts owing to it by Seller, any Servicer or Nominee, Seller shall (A) give prompt written notice thereof to Administrative Agent and (B) within one (1) Business Day following settlement date of the claim, deposit such deducted amounts into the Custodial Account.
s.Provided that no Event of Default has occurred and is continuing, on each Repurchase Date, Administrative Agent shall remit all Income received with respect to the Purchased Assets and Contributed Assets to the Program Account as follows:
(i)first, to Administrative Agent, for the benefit of the applicable Buyers, pro rata, in reduction of the Repurchase Price of any liquidation, pay-off or repurchase of any Purchased Asset up to the amount advanced by Administrative Agent on behalf of Buyers as set forth in Section 4(f) hereof;
(ii)second, without limiting the rights of Administrative Agent under Section 6 hereof, to Administrative Agent for the benefit of Buyers, in the amount of any unpaid Margin Deficit; and
(iii)third, to, or at the direction of Sellers, any remaining amounts.
a.Provided that no Event of Default has occurred and is continuing, on each Payment Date, Administrative Agent shall remit all Income received to the Program Account with respect to the Purchased Assets and Contributed Assets as follows:
(iv) first, to Administrative Agent, for the benefit of Buyers, in the order of priority as determined in accordance with Section 5(a) hereof, in payment of any accrued and unpaid Price Differential, to the extent not paid by Seller to Administrative Agent pursuant to Section 5 hereof;
(v)second, to Administrative Agent, for the benefit of the applicable Buyers, in the order of priority as determined in accordance with Section 4(f) in reduction of the Repurchase Price of any liquidation, pay-off or repurchase of any Purchased Asset up to the amount advanced by Administrative Agent on behalf of Buyers;
(vi)third, without limiting the rights of Administrative Agent under Section 6 hereof, to Administrative Agent for the benefit of Buyers, in the amount of any unpaid Margin Deficit;
(vii)fourth, to the payment of all other Obligations then due and owing to Administrative Agent and Buyers in the order of priority set forth in Section 4(f); and
(viii)fifth, to, or at the direction of Seller, any remaining amounts.
t.On the Termination Date or upon the occurrence of an Event of Default that has occurred and is continuing, all Income received with respect to the Purchased Assets and Contributed Assets shall be allocated as directed by Administrative Agent as follows:
(ix)first, to Administrative Agent in payment of any accrued and unpaid Price Differential, to the extent not paid by the Seller to Administrative Agent pursuant to Section 5 and in the order of priority set forth in Section 4(f);
(x)second, to Administrative Agent, for the benefit of the applicable Buyers, in reduction of the Repurchase Price of any liquidation, pay-off or repurchase of any Purchased Asset up to the amount advanced by Administrative Agent on behalf of Buyers and in the order of priority set forth in Section 4(f);
(xi)third, without limiting the rights of Administrative Agent under Section 6 hereof, to Administrative Agent for the benefit of Buyers, in the amount of any unpaid Margin Deficit;
(xii)fourth, to the payment of all other Obligations until paid in full and in the order of priority set forth in Section 4(f); and
(xiii)fifth, to, or at the direction of Seller, any remaining amounts.
i.To the extent that Administrative Agent receives any funds from a Take-out Investor with respect to the purchase by such Take-out Investor of a Purchased Asset or Contributed Asset, the Administrative Agent shall promptly apply such funds to the Repurchase Price of the Purchased Asset or Contributed Asset purchased by such Take-out Investor and shall promptly remit any excess to the applicable Seller.
15.Security Interest
u.Repurchase Assets.
(i)On each Purchase Date, Seller hereby sells, assigns and conveys all rights and interests in the Purchased Assets identified on the related Asset Schedule or delivered to the
Administrative Agent for the benefit of Buyers and Repledgees. 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, and in any event, Seller hereby pledges to Administrative Agent for the benefit of Buyers as security for the performance by Seller of the Obligations and hereby grants, assigns and pledges to Administrative Agent for the benefit of Buyers a fully perfected first priority security interest in the Purchased Assets, any Agency Security or right to receive such Agency Security when issued to the extent backed by any of the Purchased Mortgage Loans, the Records solely to the extent related to such Purchased Assets, and all related Servicing Rights, the rights to reimbursement of Servicer Advances, solely with respect to such Purchased Assets, the Program Agreements (to the extent such Program Agreements and Seller’s right thereunder relate to the Purchased Assets and related Contributed Assets), each Underlying Entity Agreement to the extent assignable and to the extent related to such Purchased Assets, the obligations of Seller to deliver and convey each Contributed Asset to the applicable Underlying Entity, any related Take-out Commitment (to the extent assignable), any Property relating to the Purchased Assets, all insurance policies and insurance proceeds relating to any Purchased Asset or the related Mortgaged Property (to the extent assignable), including, but not limited to, any payments or proceeds under any related primary insurance and hazard insurance and FHA Mortgage Insurance Contracts, VA Loan Guaranty Agreements and USDA Loan Guaranty Agreements (if any, including for the avoidance of doubt all debenture interest payable by HUD on account of any Early Buyout Loan), Income, Interest Rate Protection Agreements (to the extent assignable and related to the Purchased Assets), accounts (including any interest of Seller in escrow accounts) relating solely to any Purchased Asset, the Custodial Account and all amounts deposited therein, each Holdback Account and any amounts deposited therein, instruments, payments, rights to payment (including payments of interest or finance charges), any contract rights, general intangibles and other assets, in each case, relating solely to the Purchased Assets (including, without limitation, any other accounts) or any interest in the Purchased Assets, and any proceeds (including the related securitization proceeds) and distributions with respect to any of the foregoing and any other property, rights, title or interests as are specified on a Transaction Request and/or Trust Receipt, in all instances, whether now owned or hereafter acquired, now existing or hereafter created (collectively, the “Seller Repurchase Assets”).
(ii)On each Purchase Date, the applicable Underlying Entity hereby sells, assigns and conveys all rights and interests in the Contributed Mortgage Loans identified on the related Asset Schedule or delivered to the Administrative Agent for the benefit of Buyers and Repledgees. 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, and in any event, such Underlying Entity hereby pledges to Administrative Agent for the benefit of Buyers as security for the performance by such Underlying Entity of the Obligations and hereby grants, assigns and pledges to Administrative Agent for the benefit of Buyers a fully perfected first priority security interest in the Contributed Mortgage Loans, any Agency Security or right to receive such Agency Security when issued to the extent backed by any of the Contributed Mortgage Loans, the Records, and all related Servicing Rights, the Program Agreements (to the extent such Program Agreements and such Underlying Entity’s right thereunder relate to the related Contributed Mortgage Loans), the applicable Underlying Entity Agreement, any related Take-out Commitment, any Property relating to the Contributed Mortgage Loans, all insurance policies and insurance proceeds relating to any Contributed Mortgage Loan or the related Mortgaged Property, including, but not limited to, any payments or proceeds under any related primary insurance and hazard insurance and FHA Mortgage Insurance Contracts, VA Loan Guaranty Agreements and USDA Loan Guaranty Agreements (if any), Income, Interest Rate Protection Agreements, accounts (including any interest of such Underlying Entity in escrow accounts) relating to any Contributed Mortgage Loan, the Custodial Account and all amounts deposited therein, instruments, payments, rights to payment (including payments of interest or finance charges), any contract rights, general intangibles and other assets, in each case, relating to the Contributed Mortgage Loans (including, without limitation, any other accounts) or any interest in the
Contributed Mortgage Loans, and any proceeds (including the related securitization proceeds) and distributions with respect to any of the foregoing and any other property, rights, title or interests as are specified on a Transaction Request and/or Trust Receipt, in all instances, whether now owned or hereafter acquired, now existing or hereafter created (collectively, the “Contributed Repurchase Assets”).
(iii)In order to further secure the Obligations hereunder, each Underlying Entity hereby grants, assigns and pledges all rights and interests in the Contributed REO Properties identified on the related Asset Schedule or delivered to the Administrative Agent for the benefit of Buyers and Repledgees. 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, and in any event, such Underlying Entity hereby pledges to Administrative Agent for the benefit of Buyers as security for the performance by such Underlying Entity of the Obligations and hereby grants, assigns and pledges to Administrative Agent for the benefit of Buyers a fully perfected first priority security interest in the Contributed REO Properties, the Records, and all related Servicing Rights, the Program Agreements (to the extent such Program Agreements and such Underlying Entity’s right thereunder relate to the Contributed REO Properties), the applicable Underlying Entity Agreement, the obligations of such Underlying Entity to deliver and convey each Contributed REO Property to such Underlying Entity, any related Take-out Commitment, any REO Property relating to the Contributed REO Properties, all insurance policies and insurance proceeds relating to any Contributed REO Property or the related REO Property, including, but not limited to, any payments or proceeds under any related primary insurance and hazard insurance (if any), Income, Interest Rate Protection Agreements, accounts (including any interest of such Underlying Entity in escrow accounts) relating to any Contributed REO Property, the Custodial Account and all amounts deposited therein, instruments, payments, rights to payment (including payments of interest or finance charges), any contract rights, general intangibles and other assets, in each case, relating to the Contributed REO Properties (including, without limitation, any other accounts) or any interest in the Contributed REO Properties, and any proceeds (including the related securitization proceeds) and distributions with respect to any of the foregoing and any other property, rights, title or interests as are specified on a Transaction Request and/or Trust Receipt, in all instances, whether now owned or hereafter acquired, now existing or hereafter created (collectively, the “REO Repurchase Assets” and together with the Seller Repurchase Assets and the Contributed Repurchase Assets, the “Repurchase Assets”).
b.Acquisition of REO Property. If an Underlying Entity acquires any REO Property by acquiring any Mortgage Note in connection with the foreclosure of the related Purchased Mortgage Loan or Contributed Asset, transferring the real property underlying the Mortgage Note in lieu of foreclosure or otherwise transferring of such real property, such Underlying Entity shall cause such real property to be taken by deed, or by means of such instruments as is provided by the Governmental Authority governing the transfer, or right to request transfer and issuance of the deed, or such instrument as is provided by the related Governmental Authority, or to be acquired through foreclosure sale in the jurisdiction in which the REO Property is located.
c.Servicing Rights. Each Seller Party acknowledges that it has no rights to service the Purchased Mortgage Loans or Contributed Assets, but only has rights as a party to the applicable Servicing Agreement. Without limiting the generality of the foregoing and in the event that a Seller Party is deemed to retain any residual Servicing Rights, and for the avoidance of doubt, each Seller Party grants, assigns and pledges to Administrative Agent a security interest in the Servicing Rights and proceeds related thereto and in all instances, whether now owned or hereafter acquired, now existing or hereafter created. The foregoing provision is intended to constitute a security agreement or other arrangement or other credit enhancement related to this Agreement and Transactions hereunder as defined under Sections 101(47)(A)(v) and 741(7)(A)(xi) of the Bankruptcy Code.
d.Additional Interests. If Seller shall, as a result of ownership of the Underlying Entity Interests, become entitled to receive or shall receive any certificate evidencing any Underlying Entity Interests or other equity interest, any option rights, or any equity interest in the Underlying Entity Interests, whether in addition to, in substitution for, as a conversion of, or in exchange for the Underlying Entity Interests, or otherwise in respect thereof, Seller shall accept the same as the Administrative Agent’s agent, hold the same in trust for the Administrative Agent and deliver the same forthwith to the Administrative Agent in the exact form received, duly indorsed by the Seller to the Administrative Agent, if required, together with an undated transfer power, if required, covering such certificate duly executed in blank, or if requested, deliver such Purchased Certificate re-registered in the name of Administrative Agent, to be held by the Administrative Agent subject to the terms hereof as additional security for the Obligations. Any sums paid upon or in respect of the Underlying Entity Interests upon the liquidation or dissolution of the applicable Underlying Entity, or otherwise shall be paid over to the Administrative Agent as additional security for the Obligations. If following the occurrence and during the continuation of an Event of Default, any sums of money or property so paid or distributed in respect of the Underlying Entity Interests shall be received by Seller, Seller shall, until such money or property is paid or delivered to the Administrative Agent for the benefit of Buyers, hold such money or property in trust for the Administrative Agent segregated from other funds of Seller as additional security for the Obligations. Administrative Agent shall cooperate with Seller and promptly take any action required pursuant to the applicable Program Agreements in accordance with its policies to cause any Purchased Certificate registered in the name of Administrative Agent to be re-registered and delivered to Seller upon repurchase of such Purchased Certificate by Seller.
e.Underlying Entity Interests as Securities. The parties acknowledge and agree that the Underlying Entity Interests shall constitute and remain “securities” as defined in Section 8-102 of the Uniform Commercial Code; Seller Parties covenant and agree that (i) the Underlying Entity Interests are not and will not be dealt in or traded on securities exchanges or securities markets and (ii) the Underlying Entity Interests are not and will not be investment company securities within the meaning of Section 8-103 of the Uniform Commercial Code. Seller shall, at its sole cost and expense, take all steps as may be necessary in connection with the delivery of the Purchased Certificates to Administrative Agent, with the appropriate documents to transfer power, dated and executed in blank, and the pledge of all Underlying Entity Interests to Administrative Agent on behalf of Buyers.
f.Cash Dividends; Voting Rights. Subject to this Section, after the occurrence and continuance of an Event of Default, Administrative Agent as the holder shall exercise all voting rights with respect to the Purchased Certificates, as applicable. Prior to the occurrence and continuance of an Event of Default, the Seller shall exercise all voting rights with respect to the Purchased Certificates, but subject in all events to the consent rights of Administrative Agent as set forth in each Underlying Entity Agreement. In no event shall any vote be cast or other action taken which would impair the Repurchase Assets or Purchased Certificates, as applicable, or which would result in a violation of any provision of this Agreement. Without limiting the generality of the foregoing, Administrative Agent shall have no obligation to (i) vote to enable, or take any other action to permit the Underlying Entity to issue any Capital Stock of any nature or to issue any other Capital Stock convertible into or granting the right to purchase or exchange for any trust interests of the Underlying Entity; (ii) sell, assign, transfer, exchange or otherwise dispose of, or grant any option with respect to, the Purchased Certificates; (iii) create, incur or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, the Purchased Certificates, the Repurchase Assets, or any interest therein, except for the Lien provided for by this Agreement; or (iv) enter into any agreement (other than each Underlying Entity Agreement and this Agreement and any agreements contemplated hereunder) or undertaking restricting the right or ability of Seller to sell, assign or transfer any Purchased Certificate.
g.Financing Statements. Each Seller Party agrees to execute, deliver and/or file such documents and perform such acts as may be reasonably necessary to fully perfect Administrative Agent’s security interest created hereby. Furthermore, the Seller Parties hereby authorize the Administrative Agent to file financing statements relating to (i) the Seller Repurchase Assets as the Administrative Agent, at its option, may deem appropriate and (ii) solely
with respect to Underlying Entities, the Contributed Repurchase Assets and REO Repurchase Assets, as the Administrative Agent, at its option, may deem appropriate, describing the collateral as “all assets of the Debtor” or words to that effect, and any limitations on such collateral description, notwithstanding that such collateral description may be broader in scope than the Contributed Repurchase Assets and REO Repurchase Assets described in this Agreement; provided, that, in each case, the Seller Parties shall have the right to review and consent to such financing statements. The Seller Parties shall pay the filing costs for any financing statement or statements prepared pursuant to this Section 8.
16.Payment and Transfer
Unless otherwise mutually agreed in writing or as otherwise set forth in Section 7 hereof, all transfers of funds to be made by Seller Parties hereunder shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to Administrative Agent at the following account (the “Program Account”) maintained by Administrative Agent: [***] or such other account as Administrative Agent shall specify to Seller Parties in writing. Each Seller Party acknowledges that it has no rights of withdrawal from the foregoing account. All Purchased Assets transferred by one party hereto to the other party shall be in the case of a purchase by a Buyer in suitable form for transfer or shall be accompanied by duly executed instruments of transfer or assignment in blank and such other documentation as Administrative Agent may reasonably request. All Purchased Assets and Contributed Assets shall be evidenced by a Trust Receipt. Any Repurchase Price received by Administrative Agent after 4:30 p.m. (New York City time) shall be deemed received on the next succeeding Business Day.
17.Conditions Precedent
v.Initial Transaction. As conditions precedent to the initial Transaction, Administrative Agent shall have received on or before the day of such initial Transaction the following, in form and substance satisfactory to Administrative Agent:
(i)Program Agreements. The Program Agreements duly executed and delivered by the parties thereto and being in full force and effect, free of any modification, breach or waiver.
(ii)Security Interest. Evidence that all other actions necessary or, in the opinion of Administrative Agent, desirable to perfect and protect Administrative Agent’s and Buyers’ interest in the Purchased Assets, Contributed Assets and other Repurchase Assets have been taken, including, without limitation, duly authorized and filed Uniform Commercial Code financing statements on Form UCC-1.
(iii)Organizational Documents. A certificate of the company secretary of each of Seller Party and Guarantor substantially in form and substance acceptable to Administrative Agent in its sole good faith discretion, attaching certified copies of each Seller Party’s and Guarantor’s organizational documents and resolutions approving the Program Agreements and transactions thereunder (either specifically or by general resolution) and all documents evidencing other necessary corporate action or governmental approvals as may be required in connection with the Program Agreements.
(iv)Good Standing Certificate. A certified copy of a good standing certificate from the jurisdiction of organization of each Seller Party and Guarantor, dated as of no earlier than thirty (30) calendar days prior to the Effective Date.
(v)Incumbency Certificate. An incumbency certificate of the company secretary of each Seller Party and Guarantor, certifying the names, true signatures and titles of the representatives duly authorized to request transactions hereunder and to execute the Program Agreements.
(vi)Opinion of Counsel. An opinion of each Seller Party’s and Guarantor’s counsel, as to such matters as Administrative Agent may request and in form and substance acceptable to Administrative Agent in its sole discretion, including, without limitation, with respect to (i) Administrative Agent’s lien on and perfected security interest in the Purchased Assets, Contributed Assets, and Repurchase Assets; (ii) the non-contravention, enforceability and corporate opinions with respect to each Seller Party and Guarantor, including an opinion in form and substance reasonably acceptable to Administrative Agent on behalf of Buyers, indicating that as of the date hereof, each of Seller Parties and Guarantor are not required to register as an “investment company,” as such term is defined in the Investment Company Act, as amended, and with respect to each Underlying Entity, for specified reasons other than the exemption provided by Section 3(c)(1) or Section 3(c)(7) thereof; (iii) a Bankruptcy Code opinion of counsel to each Seller Party and Guarantor with respect to the matters outlined in Section 26 hereof and the Guaranty and (iv) matters of Delaware law with respect to each Seller Party that organized under the laws of the State of Delaware and Trustee.
(vii)Asset Guidelines. A true and correct copy of the Asset Guidelines.
(viii)Fees. Payment of any fees due to Administrative Agent and Buyers hereunder.
(ix)Insurance. Evidence that Seller has added Administrative Agent as an additional loss payee under the Seller’s Fidelity Insurance.
j.All Transactions. The obligation of the Administrative Agent for the benefit of Buyers to enter into each Transaction pursuant to this Agreement is subject to the following conditions precedent:
(x)Due Diligence Review. Without limiting the generality of Section 34 hereof, Administrative Agent and Buyers shall have completed, to their satisfaction, their due diligence review of the related Purchased Assets and Contributed Assets and Seller Parties, Guarantor and the Servicer.
(xi)Required Documents.
(1)With respect to each Purchased Asset which is not a Wet Mortgage Loan and Contributed Asset, the Asset File has been delivered to the Custodian in accordance with the Custodial Agreement.
(2)With respect to each Wet Mortgage Loan, the Asset Schedule has been delivered to Administrative Agent or Custodian, as the case may be, in accordance with the Custodial Agreement.
(xii)Transaction Documents. Administrative Agent or its designee shall have received on or before the day of such Transaction (unless otherwise specified in this Agreement) the following, in form and substance satisfactory to Administrative Agent and (if applicable) duly executed:
(1)A Transaction Request and Asset Schedule delivered by a Seller Party pursuant to Section 3.c hereof.
(2)The Request for Certification and the related Asset Schedule delivered by a Seller Party, and (i) with respect to Mortgage Loans other than Simultaneously Funded Early Buyout Loans, the Trust Receipt and Custodial Asset Schedule or (ii) with respect to Mortgage Loans that are Simultaneously Funded Early
Buyout Loans, a preliminary Custodial Asset Schedule, in each case, delivered by Custodian.
(3)Such certificates, opinions of counsel or other documents as Administrative Agent may reasonably request.
(xiii)No Default. No Default or Event of Default shall have occurred and be continuing.
(xiv)Requirements of Law. Neither Administrative Agent nor Buyers shall have determined that the introduction of or a change in any Requirement of Law or in the interpretation or administration of any Requirement of Law applicable to Administrative Agent or any Buyer has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for Administrative Agent or any Buyer to enter into Transactions with a Pricing Rate based on the Reference Rate.
(xv)Representations and Warranties. Both immediately prior to the related Transaction and also after giving effect thereto and to the intended use thereof, the representations and warranties made by each Seller Party and Guarantor in each Program Agreement shall be true and correct on and as of such Purchase Date in all material respects with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).
(xvi)Electronic Tracking Agreement. To the extent Seller is selling Mortgage Loans which are registered on the MERS System, an Electronic Tracking Agreement entered into, duly executed and delivered by the parties thereto and being in full force and effect, free of any modification, breach or waiver.
(xvii)DE Compare Ratio. To the extent FHA Loans are subject to a Transaction, the applicable Seller Party’s DE Compare Ratio is less than 250%.
(xviii)No HUD Suspension. To the extent FHA Loans are subject to a Transaction, HUD has not suspended the applicable Seller Party’s ability to originate FHA Loans in any jurisdiction.
(xix)Approval of Servicing Agreement. To the extent not previously delivered and approved, Administrative Agent shall have, in its sole discretion, approved each Servicing Agreement pursuant to which any Mortgage Loan or Contributed Asset that is subject to the proposed Transaction is to be serviced during the term of such Transaction.
(xx)Servicer Notices. To the extent Seller Parties engage an unaffiliated Servicer to service a Purchased Asset or Contributed Asset, Seller Parties shall (i) notify Administrative Agent; (ii) deliver a fully executed Servicing Agreement in form and substance acceptable to Administrative Agent; and (iii) cause Servicer to enter into a Servicer Notice in form and substance acceptable to Administrative Agent.
(xxi)Material Adverse Effect. None of the following shall have occurred and/or is continuing:
(3)Credit Suisse AG, New York Branch’s corporate bond rating as calculated by S&P or Moody’s has been lowered or downgraded to a rating below investment grade by S&P or Moody’s;
(4)an event or events shall have occurred in the good faith determination of a Buyer resulting in the effective absence of a “repo market” or comparable “lending market” for financing debt obligations secured by mortgage loans or securities or an event or events shall have occurred resulting in such Buyer not being able to finance Purchased Assets or Contributed Assets through the “repo market” or “lending market” with traditional counterparties at rates which would have been reasonable prior to the occurrence of such event or events;
(5)an event or events shall have occurred resulting in the effective absence of a “securities market” for securities backed by mortgage loans or an event or events shall have occurred resulting in such Buyer not being able to sell securities backed by mortgage loans at prices which would have been reasonable prior to such event or events;
(6)there shall have occurred (i) a material change in financial markets, an outbreak or escalation of hostilities or a material change in national or international political, financial or economic conditions; (ii) a general suspension of trading on major stock exchanges; or (iii) a disruption in or moratorium on commercial banking activities or securities settlement services; or
(7)there shall have occurred a material adverse change in the financial condition of a Buyer which affects (or can reasonably be expected to affect) materially and adversely the ability of such Buyer to fund its obligations under this Agreement.
(xxii)Business Purpose Mortgage Loans. Solely with respect to Business Purpose Mortgage Loans:
(1)that are BPL – Holdbacks, Administrative Agent shall have reviewed and approved the escrow arrangements and documentation therefor;
(2)that are BPL – Holdbacks whereby the Seller Parties request the Holdback Amounts to be included in the Purchase Price prior to disbursement to the related Mortgagor, Administrative Agent shall have received the related Holdback Account Control Agreement, in form and substance acceptable to Administrative Agent, duly executed by the parties thereof; and
(3)Administrative Agent shall have received a letter agreement, in form and substance acceptable to Administrative Agent, executed by Administrative Agent, Seller and the applicable Qualified Originator.
(xxiii)Designated Assets – Purchase Price Incremental 2. With respect to each proposed Transaction the subject of which is a Designated Asset which is eligible for Purchase Price-Incremental 2, no Disqualification Event shall have occurred and be continuing.
(xxiv)Underlying Entity. With respect to any Underlying Entity to be added after the Effective Date:
(8)The items to be delivered pursuant to Sections 10.a(1)-(5) above, as applicable;
(9)An opinion of such Underlying Entity’s counsel, as to such matters as Administrative Agent may request and in form and substance acceptable to Administrative Agent in its sole discretion, including, without limitation, with respect to
(i) Administrative Agent’s lien on and perfected security interest in the Contributed Assets and related Repurchase Assets; (ii) the non-contravention, enforceability and corporate opinions with respect to such Underlying Entity, including an opinion in form and substance reasonably acceptable to Administrative Agent on behalf of Buyers, indicating that as of the date hereof, such Underlying Entity is not required to register as an “investment company,” as such term is defined in the Investment Company Act for specified reasons other than the exemption provided by Section 3(c)(1) or Section 3(c)(7) thereof; and (iii) a Bankruptcy Code opinion of counsel to Underlying Entity with respect to the matters outlined in Section 26 hereof;
(10)Seller shall deliver to the Administrative Agent the original of the Underlying Entity Certificate registered in the name of the Administrative Agent together with original undated transfer powers, duly executed in blank;
(11)A joinder agreement, duly executed by the parties hereto, joining the Underlying Entity to the applicable Program Agreements;
(12)With respect to any Underlying Entity that is not a trust, evidence that an Independent Manager has been appointed in accordance with the Underlying Entity Agreement; and
(13)Any other document required to be delivered by Administrative Agent in form and substance acceptable to Administrative Agent.
(xxv)Early Buyout Loans. Prior to the funding of any Transactions, the subject of which are Early Buyout Loans, Seller shall deliver to Administrative Agent a Custodial Account Control Agreement, duly executed by the parties thereto and in form and substance satisfactory to Administrative Agent.
18.Program; Costs
a.The Seller Parties shall reimburse Administrative Agent and Buyers for any of Administrative Agent’s and Buyers’ reasonable and documented out-of-pocket costs, including due diligence review costs and reasonable attorneys’ fees, incurred by Administrative Agent and Buyers in determining the acceptability to Administrative Agent and Buyers of any Purchased Asset or REO Property. The Seller Parties shall also pay, or reimburse Administrative Agent and Buyers if Administrative Agent or Buyers shall pay, any termination fee, which may be due any Servicer. The Seller Parties shall pay the reasonable and documented out-of-pocket fees and expenses of Administrative Agent’s and Buyers’ counsel in connection with the Program Agreements. Reasonable and documented legal fees for any subsequent amendments to this Agreement or related documents shall be borne by the Seller Parties. The Seller Parties shall pay ongoing custodial fees and expenses as set forth in the Custodial Agreement, and any other ongoing fees and expenses payable in accordance with any other Program Agreement. Without limiting the foregoing, the Seller Parties shall pay all fees as and when required under the Pricing Side Letter.
b.If any Buyer determines that, due to the introduction of, any change in, or the compliance by such Buyer with (i) any eurocurrency reserve requirement or (ii) the interpretation of any law, regulation or any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be an increase in the cost to such Buyer in engaging in the present or any future Transactions, then, to the extent each Seller Party and Guarantor received notice of such amounts no later than thirty (30) days after the incurrence of such costs, then each Seller Party and Guarantor may, at its option and in its sole discretion, either (i) terminate this Agreement and repurchase the Purchased Assets and pay costs or (ii) promptly pay such Buyer the actual cost of additional amounts as specified by such Buyer to compensate such Buyer for such increased costs; provided, however, that any such determination by any Buyer
must also be made in a manner substantially consistent with respect to similarly situated counterparties with substantially similar assets in similar facilities.
c.With respect to any Transaction, Administrative Agent and Buyers may conclusively rely upon, and shall incur no liability to any Seller Party or Guarantor in acting upon, any request or other communication that Administrative Agent and Buyers reasonably believe to have been given or made by a person authorized to enter into a Transaction on each Seller Party’s behalf, whether or not such person is listed on the certificate delivered pursuant to Section 10.a(5) hereof.
d.Notwithstanding the assignment of the Program Agreements with respect to each Purchased Asset to Administrative Agent for the benefit of Buyers, Seller Parties and Guarantor agrees and covenants with Administrative Agent and Buyers to reasonably enforce in a commercially reasonable manner Seller Parties’ and Guarantor’s rights and remedies with respect to parties other than Administrative Agent and Buyers set forth in the Program Agreements.
e.(i) Any payments made by a Seller Party or Guarantor to Administrative Agent or a Buyer or a Buyer assignee or participant hereunder or any Program Agreement shall be made free and clear of and without deduction or withholding for any Taxes, except as required by applicable law. If a Seller Party or Guarantor shall be required by applicable law (as determined in the good faith discretion of the applicable withholding agent) to deduct or withhold any Tax from any sums payable to Administrative Agent or a Buyer or Buyer assignee or participant, then (1) a Seller Party or Guarantor shall make such deductions or withholdings and pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law; (2) to the extent the withheld or deducted Tax is an Indemnified Tax, the sum payable shall be increased as necessary so that after making such deductions and withholdings (including such deductions and withholdings applicable to additional sums payable under this Section 11.e Administrative Agent or a Buyer receives an amount equal to the sum it would have received had no such deductions or withholdings been made; and (3) a Seller Party shall notify the Administrative Agent of the amount paid and shall provide the original or a certified copy of a receipt issued by the relevant Governmental Authority evidencing such payment within ten (10) days thereafter. Seller Parties and Guarantor shall otherwise indemnify Administrative Agent and such Buyer, within ten (10) days after demand therefor, for any Indemnified Taxes imposed on Administrative Agent or such Buyer (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 11.e and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally asserted by the relevant Governmental Authority.
(ii) Administrative Agent shall cause each Buyer and Buyer assignee and participant to deliver to a Seller Party and Guarantor, at the time or times reasonably requested by a Seller Party or Guarantor, such properly completed and executed documentation reasonably requested by a Seller Party or Guarantor as will permit payments made hereunder to be made without withholding or at a reduced rate of withholding. In addition, Administrative Agent shall cause each Buyer and Buyer assignee and participant, if reasonably requested by a Seller Party or Guarantor, to deliver such other documentation prescribed by applicable law or reasonably requested by a Seller Party or Guarantor as will enable a Seller Party or Guarantor to determine whether or not such Buyer or Buyer assignee or participant is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in this Section 11, the completion, execution and submission of such documentation (other than such documentation in Section 11.e(ii)(A), (B) and (C) below) shall not be required if in the Buyer’s or any Buyer’s assignee’s or participant’s judgment such completion, execution or submission would subject such Buyer or Buyer assignee or participant to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Buyer or Buyer assignee or participant. Without limiting the generality of the foregoing, Administrative Agent shall cause a Buyer or Buyer assignee or participant to deliver to each of Seller Parties and Guarantor, to the extent legally entitled to do so:
(A) in the case of a Buyer or Buyer assignee or participant which is a U.S. Person, a properly completed and executed IRS Form W-9 certifying that it is not subject to U.S. federal backup withholding tax;
(B) in the case of a Buyer or Buyer assignee or participant which is not a U.S. Person: (I) a properly completed and executed IRS Form W-8BEN, W-8BENE-E 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, (II) 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 (a “U.S. Tax Compliance Certificate”) to the effect that such non-U.S. Person is not (x) a “bank” within the meaning of Code section 881(c)(3)(A), (y) a “10 percent shareholder” of a Seller Party, Guarantor or 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), (III) to the extent such non-U.S. Person is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, 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 (1) 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 (IV) in the case of a Buyer or Buyer assignee or participant which is not a U.S. Person, 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 a Seller Party or Guarantor to determine the withholding or deduction required to be made.
(C) if a payment made to a Buyer or Buyer assignee or participant under this Agreement would be subject to U.S. federal withholding tax imposed by FATCA if such Buyer or assignee or participant 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), Administrative Agent on behalf of such Buyer or assignee or participant shall deliver to the Seller Parties or Guarantor at the time or times prescribed by law and at such time or times reasonably requested by a Seller Party 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 a Seller Party as may be necessary for such Seller Party 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 11.e, “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 Administrative Agent on behalf of each applicable Buyer or Buyer assignee or participant on or prior to the date on which such person becomes a Buyer or Buyer assignee or participant under this Agreement, as the case may be, and upon the obsolescence or invalidity of any IRS form previously delivered by it hereunder.
f.Any indemnification payable by a Seller Party or Guarantor to Administrative Agent or a Buyer or Buyer assignee or participant for Indemnified Taxes that are imposed on such Buyer or Buyer assignee or participant, as described in Section 11.e(i) hereof, shall be paid by a Seller Party or Guarantor within ten (10) days after demand therefor from Administrative Agent. A certificate as to the amount of such payment or liability delivered to a Seller Party or Guarantor by the Administrative Agent on behalf of a Buyer or Buyer assignee or participant shall be conclusive absent manifest error.
g.If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section (including by the payment of additional amounts pursuant to this Section 11), it shall pay to the
indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 11 with respect to the Taxes giving rise to such refund), net of all out of pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Section 11.g (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 11.g, in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 11.g the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
h.Each party’s obligations under this Section 11 shall survive any assignment of rights by, or the replacement of, a Buyer or a Buyer assignee or participant, and the repayment, satisfaction or discharge of all obligations under any Program Agreement.
i.Each party to this Agreement acknowledges that it is its intent for purposes of U.S. federal, state and local income and franchise taxes to treat each Transaction as indebtedness of Seller that is secured by the Purchased Assets and Contributed Assets as owned by Seller and the applicable Underlying Entity in the absence of an Event of Default by Seller. Administrative Agent on behalf of Buyers and Seller agree that they will treat and report for all tax purposes the Transactions entered into hereunder as one or more loans from a Buyer to Seller secured by the Purchased Assets and Contributed Assets, unless otherwise prohibited by law or upon a final determination by any taxing authority that the Transactions are not loans for tax purposes.
19.Servicing
j.Each Seller Party, on Administrative Agent’s and Buyers’ behalf, shall contract with a Servicer to, or if Seller is Servicer, Seller shall, service the Purchased Mortgage Loans and Contributed Assets consistent with the degree of skill and care that such Seller Party customarily requires with respect to similar Mortgage Loans and Contributed Assets owned or managed by it and in accordance with Accepted Servicing Practices. Each Seller Party shall ensure that Servicer (i) complies with all applicable federal, state and local laws and regulations, (ii) maintains all state and federal licenses necessary for it to perform its servicing responsibilities hereunder and (iii) does not impair the rights of Administrative Agent or Buyers in any Purchased Mortgage Loan or Contributed Asset or any payment thereunder. Administrative Agent may terminate the servicing of any Purchased Mortgage Loan or Contributed Asset with the then existing Servicer in accordance with Section 12.e hereof.
k.With respect to Mortgage Loans other than BPL – Holdbacks, Seller shall and shall cause the Servicer to hold or cause to be held all escrow funds collected by Seller and Servicer with respect to any Purchased Assets or Contributed Assets in trust accounts and shall apply the same for the purposes for which such funds were collected. With respect to BPL – Holdbacks, Seller shall and shall cause the originator or Servicer to hold or cause to be held all Holdback Amounts collected by the Seller or Servicer with respect to any Purchased Assets in the Holdback Account and shall apply the same to improve and rehabilitate the related Mortgaged Property.
l.On the Remittance Date, Seller shall and shall cause each Servicer to deposit all Income (net of any servicing fees and advances then due and owing pursuant to the terms of the applicable Servicing Agreement) received by such Servicer on the Purchased Assets in the Program Account.
m.Other than if the Servicer is a Seller Party, Seller Parties shall provide promptly to Administrative Agent a Servicer Notice, addressed to and agreed to by the Servicer of the related Purchased Mortgage Loans and Contributed Assets, advising such Servicer of such matters as Administrative Agent may reasonably request, including, without limitation, recognition by the Servicer of Administrative Agent’s and Buyers’ interest in such Purchased Mortgage Loans and Contributed Assets and the Servicer’s agreement that upon receipt of notice of an Event of Default that has occurred and is continuing from Administrative Agent, it will follow the instructions of Administrative Agent with respect to the Purchased Mortgage Loans and Contributed Assets and any related Income with respect thereto.
n.Upon the occurrence and continuance of an Event of Default hereunder, a Servicer Termination Event or a material default under the Servicing Agreement, Administrative Agent shall have the right to immediately terminate the Servicer’s right to service the Purchased Mortgage Loans and Contributed Assets under the Servicing Agreement without payment of any penalty or termination fee as set forth in the related Servicer Notice. Seller Parties and the Servicer shall cooperate in transferring the servicing of the Purchased Mortgage Loans and Contributed Assets to a successor servicer appointed by Administrative Agent on behalf of Buyers in its sole discretion. For the avoidance of doubt, any termination of the Servicer’s rights to service by the Administrative Agent as a result of the occurrence and continuation of an Event of Default shall be deemed part of an exercise of the Administrative Agent’s rights to cause the liquidation, termination or acceleration of this Agreement.
o.If a Seller Party should discover that, for any reason whatsoever, such Seller Party or any entity responsible to a Seller Party for managing or servicing any such Purchased Mortgage Loans or Contributed Assets has failed to perform fully a Seller Party’s obligations under the Program Agreements or any of the obligations of such entities with respect to the Purchased Mortgage Loans and Contributed Assets, such Seller Party shall promptly notify Administrative Agent.
p.For the avoidance of doubt, with respect to Purchased Mortgage Loans and Contributed Assets sold or contributed on a servicing released basis, no Seller Party retains economic rights to the servicing of the Purchased Mortgage Loans and Contributed Assets; provided that the Seller Parties shall and shall cause the Servicer to continue to service the Purchased Mortgage Loans and Contributed Assets hereunder as part of the Obligations hereunder. As such, the Seller Parties expressly acknowledge that the Purchased Mortgage Loans and Contributed Assets are sold or contributed to Administrative Agent for the benefit of Buyers on a “servicing released” basis with such servicing retained by the Servicer.
20.Representations and Warranties
q.Each Seller Party represents and warrants to Administrative Agent and Buyers as of the date hereof and as of each Purchase Date for any Transaction that:
(i)Seller Party Existence. Each Seller Party has been duly organized, is validly existing and is in good standing under the laws of the state of its jurisdiction.
(ii)Licenses. Each Seller Party is duly licensed or is otherwise qualified in each jurisdiction in which it transacts business for the business which it conducts and is not in default of any applicable material federal, state or local laws, rules and regulations.
(iii)Power. Each Seller Party has all requisite corporate or other power, and has all governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on its business as now being or as proposed to be conducted, except where the lack of such licenses, authorizations, consents and approvals would not be reasonably likely to have a Material Adverse Effect.
(iv)Due Authorization. Each Seller Party has all necessary corporate or other power, authority and legal right to execute, deliver and perform its obligations under each of the Program Agreements, as applicable. Each Program Agreement has been (or, in the case of Program Agreements not yet executed, will be) duly authorized, executed and delivered by each Seller Party, all requisite or other corporate action having been taken, and each is valid, binding and enforceable against each Seller Party in accordance with its terms except as such enforcement may be affected by bankruptcy, by other insolvency laws, or by general principles of equity.
(v)Financial Statements. The Seller has heretofore furnished to Administrative Agent a copy of (a) its consolidated balance sheet for the most recent fiscal year-end, and the related consolidated statements of income and retained earnings and of cash flows for the Seller for such fiscal year, setting forth in each case in comparative form the figures for the previous year, with the opinion thereon of a nationally recognized accounting firm reasonably acceptable to Administrative Agent and (b) its consolidated balance sheet for the most recent quarterly fiscal period of the Seller and the related consolidated statements of income and retained earnings and of cash flows for the Seller and its consolidated Subsidiaries for such quarterly fiscal period, setting forth in each case in comparative form the figures for the previous year. All such financial statements fairly present, in all material respects, the consolidated financial condition of the Seller and its Subsidiaries and the consolidated results of its operations as at such dates and for such fiscal periods, all in accordance with GAAP (other than monthly financial statements solely with respect to footnotes, year-end adjustments and cash flow statements) applied on a consistent basis. Since the most recent fiscal quarter-end, there has been no material adverse change in the consolidated business, operations or financial condition of the Seller and its consolidated Subsidiaries taken as a whole from that set forth in said financial statements nor is Seller aware of any state of facts which (with notice or the lapse of time) would or could result in any such material adverse change. The Seller has, on the date of the statements delivered pursuant to this Section (the “Statement Date”) no liabilities, direct or indirect, fixed or contingent, matured or unmatured, known or unknown, or liabilities for taxes, long-term leases or unusual forward or long-term commitments not disclosed by, or reserved against in, said balance sheet and related statements, and at the present time there are no material unrealized or anticipated losses from any loans, advances or other commitments of Seller except as heretofore disclosed to Administrative Agent in writing.
(vi)Reserved.
(vii)Solvency. Each Seller Party is solvent and will not be rendered insolvent by any Transaction and, after giving effect to such Transaction, will not be left with an unreasonably small amount of capital with which to engage in its business. The sale of the Purchased Assets to Administrative Agent for the benefit of Buyers will not cause the Seller to incur debts beyond its ability to pay such debts as they mature or is contemplating the commencement of insolvency, bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official in respect of such entity or any of its assets. The amount of consideration being received by the Seller Parties upon the sale of the Purchased Assets to Administrative Agent for the benefit of Buyers constitutes reasonably equivalent value and fair consideration for such Purchased Assets. The Seller Parties are not transferring any Purchased Assets with any intent to hinder, delay or defraud any of its creditors.
(viii)No Conflicts. The execution, delivery and performance by each Seller Party of each Program Agreement do not conflict with any term or provision of the formation or other governing documents of such Seller Party or any law, rule, regulation, order, judgment, writ, injunction or decree applicable to such Seller Party of any court, regulatory body, administrative agency or governmental body having jurisdiction over Seller, which conflict would have a Material Adverse Effect.
(ix)True and Complete Disclosure. All information, reports, exhibits, schedules, financial statements or certificates of each Seller Party, any Affiliate thereof or any of their officers furnished or to be furnished to Administrative Agent or Buyers in connection with the initial or any ongoing due diligence of such Seller Party or any Affiliate or officer thereof, and the negotiation, preparation, or delivery of the Program Agreements, as of the date of delivery to Administrative Agent or Buyers, when taken as a whole do not contain any untrue statement of material fact or omit to state any material facts necessary to make the statements herein or therein, in light of the circumstances in which they are made, not misleading.
(x)Approvals. No consent, approval, authorization or order of, registration or filing with, or notice to any Governmental Authority or court is required under applicable law in connection with the execution, delivery and performance by any Seller Party of each Program Agreement or if required, such consent, approval, authorization or order of, registration or filing has been obtained on or prior to the Closing Date, except for any filings and recordings in respect of the Liens created pursuant to the Program Agreements.
(xi)Litigation. There is no action, proceeding or investigation pending with respect to which any Seller Party has received service of process or, to the knowledge of a Responsible Officer of a Seller Party threatened in writing against it before any court, administrative agency or other tribunal (A) asserting the invalidity of any Program Agreement, (B) seeking to prevent the consummation of any of the transactions contemplated by any Program Agreement, (C) making a non-frivolous claim individually or in the aggregate in an amount greater than [***]; provided, that, this clause (C) shall not include any routine actions brought by or on behalf of an individual Mortgagor with respect to which Seller is acting in its capacity as servicer (which shall include without limitation, contested foreclosures, contested actions or bankruptcy proceedings) or (D) which would be reasonably likely to materially and adversely affect the validity of a material portion of the Mortgage Loans, Purchased Certificates or REO Property or the performance by it of its obligations under, or the validity or enforceability of any Program Agreement.
(xii)Reserved.
(xiii)Ownership. The Seller has not assigned, pledged, or otherwise conveyed or encumbered the Purchased Assets to any other Person, and immediately prior to the sale of the Purchased Assets to the Administrative Agent on behalf of the Buyers, Seller was the sole owner of the Purchased Assets and had good and marketable title thereto, free and clear of all Liens, in each case expect for Liens to be released simultaneously with the sale to Administrative Agent and Buyers hereunder.
(xiv)Asset Guidelines. The Asset Guidelines provided to Administrative Agent are the true and correct Asset Guidelines of the applicable Seller Party except as otherwise modified pursuant to the terms of this Agreement.
(xv)Taxes. Each Seller Party and its Subsidiaries have timely filed all federal tax returns and all other material tax returns that are required to be filed by them and have paid all material taxes, except for any such Taxes as are being appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided.
(xvi)Investment Company. No Seller Party is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act and with respect to each Underlying Entity for specified reasons other than the exemption provided by Section 3(c)(1) or Section 3(c)(7) thereof.
(xvii)Chief Executive Office; Jurisdiction of Organization. On the Effective Date, Seller Parties’ chief executive office, is, and has been, located at 2211 Old Earhart Road, Suite 250, Ann Arbor, Michigan 48105. On the Effective Date, Seller Parties’ jurisdiction of organization is the State of New Jersey. Seller Parties shall provide Administrative Agent with [***] advance notice of any change in any Seller Parties’ principal office or place of business, legal name or jurisdiction. No Seller Party has a trade name. During the preceding five (5) years, no Seller Party filed or had filed against it any bankruptcy receivership or similar petitions nor has it made any assignments for the benefit of creditors.
(xviii)Location of Books and Records. The location where Seller Parties keep their books and records, including all computer tapes and records relating to the Purchased Assets, Contributed Assets and the related Repurchase Assets, other than any such books, records or computer tapes held by the Custodian, is its chief executive office.
(xix)Reserved.
(xx)ERISA. Each Plan to which each Seller Party or its Subsidiaries make direct contributions, and, to the knowledge of such Seller Party, each other Plan and each Multiemployer Plan, is in compliance in all material respects with, and has been administered in all material respects in compliance with, the applicable provisions of ERISA, the Code and any other Federal or State law.
(xxi)Adverse Selection. No Seller Party has selected the Purchased Assets or Contributed Assets in a manner so as to adversely affect Buyers’ interests.
(xxii)Reserved.
(xxiii)Indebtedness. The Indebtedness of each Seller Party is set forth on Exhibit D hereto, as updated from time pursuant to the Officer’s Compliance Certificate.
(xxiv)Agency Approvals. To the extent any Purchased Asset consists of an Agency Security or Agency Mortgage Loan, with respect to each Agency Security and to the extent necessary, the applicable Seller Party is (i) an FHA Approved Mortgagee; (ii) a VA Approved Lender; (iii) approved by GNMA as an approved lender and approved issuer; (iv) approved by Fannie Mae as an approved seller/servicer; (v) approved by Freddie Mac as an approved seller/servicer and/or (vi) approved by the Secretary of Housing and Urban Development pursuant to Sections 203 and 211 of the National Housing Act. In each such case, such Seller Party is in good standing, with no event having occurred or such Seller Party having any reason whatsoever to believe or suspect will occur prior to the issuance of the Agency Security or the consummation of the Take-out Commitment, as the case may be, including, without limitation, a change in insurance coverage which would either make such Seller Party unable to comply with the eligibility requirements for maintaining all such applicable approvals or require notification to the relevant Agency or to the Department of Housing and Urban Development, FHA or VA. Should such Seller Party for any reason cease to possess all such applicable approvals, or should notification of the occurrence of any event that would impact Seller’s good standing or otherwise materially restrict Seller’s Agency Approvals in any manner to the relevant Agency or to the Department of Housing and Urban Development, FHA or VA be required, Seller Parties shall so notify Administrative Agent within [***] in writing.
(xxv)No Reliance. Each Seller Party has made its own independent decisions to enter into the Program Agreements and each Transaction and as to whether such Transaction is appropriate and proper for it based upon its own judgment and upon advice from such advisors (including without limitation, legal counsel and accountants) as it has deemed necessary. No Seller Party is relying upon any advice from Administrative Agent or Buyers as to any aspect of
the Transactions, including without limitation, the legal, accounting or tax treatment of such Transactions.
(xxvi)Plan Assets. No Seller Party is an “employee benefit plan” as defined in Section 3(3) of Title I of ERISA that is subject to Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code that is subject to Section 4975 of the Code, and the Purchased Assets are not “plan assets” within the meaning of 29 CFR § 2510.3- 101, as amended by Section 3(42) of ERISA, in Seller’s hands, and the Transactions contemplated by this Agreement are not in violation of any state or local statute, applicable to a Seller Party, that regulates investments or fiduciary obligations with respect to governmental plans within the meaning of Section 3(32) of ERISA or church plans within the meaning of Section 3(33) of ERISA and that is substantially similar to Section 406 of ERISA or Section 4975 of the Code.
(xxvii)No Prohibited Persons. No Seller Party nor, to the knowledge of Seller, any of their Subsidiaries, officers, directors, partners or members, is a Person (or to such Seller Party’s knowledge, fifty percent (50%) or greater owned by a Person): (i) whose name appears on the United States Treasury Department’s Office of Foreign Assets Control (“OFAC”) most current list of “Specifically Designated National and Blocked Persons” (which list may be published from time to time in various mediums including, but not limited to, the OFAC website, https://www.treasury.gov/ofac/downloads/sdnlist.pdf); or (ii) is otherwise the target of sanctions administered by OFAC (any and all parties or persons described in clauses (i) and (ii) above are herein referred to as a “Prohibited Person”).
(xxviii)Compliance with 1933 Act. Except as contemplated herein, no Seller Party nor anyone acting on its behalf has offered, transferred, pledged, sold, or otherwise disposed of any Purchased Certificate, any interest in any Purchased Certificate or any other similar security to, or solicited any offer to buy or accept a transfer, pledge, or other disposition of any Purchased Certificate, any interest in any Purchased Certificate or any other similar security from, or otherwise approached or negotiated with respect to any Purchased Certificate, any interest in any Purchased Certificate or any other similar security with, any person in any manner, or made any general solicitation by means of general advertising or in any other manner, or taken any other action which would constitute a distribution of any certificate under the 1933 Act or which would render the disposition of any Purchased Certificate a violation of Section 5 of the 1933 Act or require registration pursuant thereto.
r.With respect to each Purchased Asset and Contributed Asset, each Seller Party represents and warrants to Administrative Agent and Buyers as of the applicable Purchase Date for any Transaction and each date thereafter that each representation and warranty set forth on Schedule 1-A, 1-B and 1-C, hereto is true and correct in all material respects.
s.The representations and warranties set forth in this Agreement shall survive transfer of the Purchased Assets (including the beneficial interests in the Contributed Assets) to Administrative Agent for the benefit of Buyers and to each Buyer and shall continue for so long as the Purchased Assets and Contributed Assets are subject to this Agreement. Upon discovery by a Responsible Officer of Seller Party, Servicer or Administrative Agent of that any of the representations or warranties set forth in this Agreement was untrue when made, the discovering party shall promptly give notice of such discovery to the others. Administrative Agent has the right to require, such Seller Party to repurchase or remit the Release Price within one (1) Business Day after receipt of notice from Administrative Agent any Purchased Asset or Contributed Asset for which a breach of one or more of the representations and warranties referenced in Section 13.b hereof exists and which breach has a material adverse effect on the value of such Mortgage Loan or the interests of Administrative Agent or Buyers, and such repurchase shall occur within one (1) Business Day after receipt of notice from Administrative Agent requesting the same.
21.Covenants
Each Seller Party covenants with Administrative Agent and Buyers that, during the term of this facility:
t.Litigation. To the extent not prohibited from disclosing, Seller, in the Officer’s Compliance Certificate and with such information provided as noted in the applicable Schedule to the Officer’s Compliance Certificate, shall provide Administrative Agent a list of all material litigation, actions, suits, arbitrations, investigations (including, without limitation, any of the foregoing which, to the knowledge of a Responsible Officer of Seller, are threatened in writing or pending) before any Governmental Authority that (i) questions or challenges the validity or enforceability of any of the Program Agreements or any action to be taken in connection with the transactions contemplated hereby, (ii) makes a non-frivolous claim individually or in the aggregate in an amount greater than [***]; provided, that, this clause (ii) shall not include any routine actions brought by or on behalf of an individual Mortgagor with respect to which Seller is acting in its capacity as servicer (which shall include without limitation, contested foreclosures, contested actions or bankruptcy proceedings) or (iii) which, individually or in the aggregate, would be reasonably likely to have a Material Adverse Effect. Each Seller Party will promptly provide notice of any judgment, which with the passage of time, could cause an Event of Default hereunder.
u.Prohibition of Fundamental Changes. No Seller Party, without the prior written consent of Buyer, shall enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or dissolution) or sell all or substantially all of its assets; provided, that a Seller Party may merge or consolidate with any other Person if the Seller Party is the surviving corporation; and provided further, that if after giving effect thereto, no Event of Default would exist hereunder.
v.Servicing. No Seller Party shall cause the Purchased Assets or Contributed Assets to be serviced by any Servicer other than a Servicer expressly approved in writing by Administrative Agent on behalf of Buyers. For the avoidance of doubt, the Seller is an approved servicer.
w.Insurance. Seller shall obtain and maintain insurance with responsible companies in such amounts and against such risks as are customarily carried by business entities engaged in similar businesses similarly situated, including without limitation, the insurance required to be obtained and maintained by each Agency pursuant to the Agency Guides, and will furnish Administrative Agent on request information as to such insurance as reasonably requested by Administrative Agent, and provide within [***] after receipt of such reasonable request the certificates or other documents evidencing renewal of each such policy. Seller shall continue to maintain, for itself and its Subsidiaries, Fidelity Insurance in an aggregate amount at least equal to such amount as is required by each Agency.
x.No Adverse Claims. Each Seller Party warrants and will defend, and shall cause any Servicer to defend, the right, title and interest of Administrative Agent and Buyers in and to all Purchased Assets, Contributed Assets and the related Repurchase Assets against all adverse claims and demands.
y.Reserved.
z.Security Interest. Seller Parties shall do all things necessary to preserve the Purchased Assets, Contributed Assets and the related Repurchase Assets, as applicable, so that they remain subject to a first priority perfected security interest hereunder.
aa.Records.
(xxix)Seller Parties shall collect and maintain or cause to be collected and maintained all Records relating to the Purchased Assets and Contributed Assets in accordance with industry custom and practice for assets similar to the Purchased Assets and Contributed Assets, including
those maintained pursuant to the preceding subparagraph, and all such Records shall be in Seller’s, Servicer’s or Custodian’s possession or control unless pursuant to the Custodial Agreement or Administrative Agent otherwise approves. Except in accordance with the Custodial Agreement, no Seller Party shall allow any such papers, records or files that are an original or an only copy to leave Seller’s, Servicer’s or Custodian’s possession or control, except for individual items removed in connection with servicing a specific Purchased Asset or Contributed Asset, in which event such Seller Party will obtain or cause to be obtained a receipt from a financially responsible person for any such paper, record or file.
(xxx)For so long as Administrative Agent has an interest in or lien on any Purchased Asset and Contributed Asset, each Seller Party will hold or cause to be held all related Records in trust for Administrative Agent. Each Seller Party shall notify, or cause to be notified, every other party holding any such Records of the interests and liens in favor of Administrative Agent granted hereby.
(xxxi)Upon reasonable advance notice from Custodian or Administrative Agent, each Seller Party shall (x) make any and all such Records available to Custodian, Administrative Agent and a 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 Administrative Agent or a Buyer or its authorized agents to discuss the affairs, finances and accounts of such Seller Party with its chief operating officer and chief financial officer and to discuss the affairs, finances and accounts of such Seller Party with its independent certified public accountants.
ab.Books. Each Seller Party shall keep or cause to be kept in reasonable detail books and records of account of its assets and business and shall clearly reflect therein the transfer or contribution, as applicable, of Purchased Assets and Contributed Assets to Administrative Agent for the benefit of Buyers.
ac.Approvals. Each Seller Party shall maintain all licenses, permits or other approvals necessary for such Seller Party to conduct its business and to perform its obligations under the Program Agreements except where failure to so maintain would not result in a Material Adverse Effect.
ad.Material Change in Business. No Seller Party shall make any material change in the nature of its business as carried on at the date hereof without consent of Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed), it being understood that Seller may engage in business lines and transactions related to the mortgage banking and/or lending business or businesses ancillary to the mortgage banking and/or lending business and/or the servicing of Mortgage Loans. For the avoidance of doubt, the acquisition by Seller of a mortgage origination business, by itself would not be considered a material change for purposes of this Section 14.k.
ae.Asset Guidelines. Seller shall promptly inform Administrative Agent in writing of any material modifications to the Asset Guidelines that relate to Non-Agency Non-QM Mortgage Loans and shall promptly deliver to Administrative Agent a complete copy of the amended or modified Asset Guidelines.
af.Distributions. If an Event of Default has occurred and is continuing or a Margin Deficit exists, no Seller Party shall 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 such Seller Party.
ag.Applicable Law. Each Seller Party shall comply with the requirements of all applicable material laws, rules, regulations and orders of any Governmental Authority.
ah.Existence. Each Seller Party shall preserve and maintain (i) its legal existence and (ii) all of its material rights, privileges, licenses and franchises, except where the lack of such rights, privileges, licenses or franchises would not be reasonably likely to have a Material Adverse Effect.
ai.Chief Executive Office; Jurisdiction of Organization. Seller Parties shall not move their chief executive office from the address referred to in Section 13.a(17) hereof, change its jurisdiction of organization from the jurisdiction referred to in Section 13.a(17) hereof or change its name or organizational identification number, unless it shall have provided Administrative Agent thirty (30) days’ prior written notice of such change.
aj.Taxes. Each Seller Party shall timely file all federal tax returns and other material tax returns that are required to be filed by it and shall timely pay and discharge all material taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its property prior to the date on which penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained.
ak.Transactions with Affiliates. Except as contemplated by the Program Agreements, no Seller Party shall enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate unless such transaction is (a) otherwise permitted under the Program Agreements or (b) in the ordinary course of such Seller Party’s business.
al.Guarantees. No Seller Party shall create, incur, assume or suffer to exist any Guarantees, except (i) to the extent reflected in Seller’s financial statements or notes thereto and (ii) to the extent the aggregate Guarantees of Seller do not exceed [***] without providing prior written notice to Administrative Agent.
am.Indebtedness. Except with respect to increases in amounts of existing Indebtedness, no Seller Party shall incur any additional material Indebtedness, including without limitation, any Indebtedness relating to any mortgage servicing rights or corporate or servicing advances, (other than (i) Indebtedness existing on the Effective Date and (ii) usual and customary accounts payable for a mortgage company) without prior written notice to Administrative Agent.
an.Hedging. Each Seller Party, as applicable, has entered into Interest Rate Protection Agreements or other arrangements with respect to the Purchased Assets, having terms with respect to protection against fluctuations in interest rates consistent with prevailing market standards in effect at the time such arrangements are entered into.
ao.True and Correct Information. All information, reports, exhibits, schedules, financial statements or certificates of each Seller Party, any Affiliate thereof or any of their officers furnished to Administrative Agent and/or Buyers hereunder and during Administrative Agent’s and/or Buyers’ diligence of such Seller Party as of the date of delivery to Administrative Agent or Buyers, when taken as a whole, do not contain any untrue statement of material fact and do not omit to disclose any material facts necessary to make the statements herein or therein, in light of the circumstances in which they are made, not misleading. All required financial statements, information and reports delivered by each Seller Party to Administrative Agent and/or Buyers pursuant to this Agreement shall be prepared in accordance with U.S. GAAP, or, if applicable, to SEC filings, the appropriate SEC accounting regulations.
ap.Take-out Payments. To the extent any Agency Mortgage Loan is subject to a Transaction, Seller shall arrange that all payments under the related take-out commitment shall be paid directly to Administrative Agent at the account set forth in Section 9 hereof, or to an account approved by Administrative Agent in writing prior to such payment. With respect to any take-out commitment with an Agency, if applicable, (1) with respect to the wire transfer instructions as set forth in Freddie Mac Form 987 (Wire Transfer Authorization for a Cash Warehouse Delivery) such wire transfer instructions are identical to Administrative Agent’s wire instructions or
Administrative Agent has approved such wire transfer instructions in writing in its sole discretion, or (2) the Payee Number set forth on Fannie Mae Form 1068 (Fixed Rate, Graduated-Payment, or Growing-Equity Mortgage Loan Schedule) or Fannie Mae Form 1069 (Adjustable-Rate Mortgage Loan Schedule), as applicable, shall be identical to the Payee Number that has been identified by Administrative Agent in writing as Administrative Agent’s Payee Number or Administrative Agent has previously approved the related Payee Number in writing in its sole discretion.
aq.Agency Approvals. To the extent any Transaction consists of an Agency Mortgage Loan, the applicable Seller Party shall maintain its status with each Agency as set forth in Section 13.a(24) (the “Agency Approvals”) and each Seller Party, as applicable, shall service all such Agency Mortgage Loans which in accordance with the applicable Agency Guide. To the extent any Transaction consists of an Agency Mortgage Loan, should any Seller Party, for any reason, cease to possess all such applicable Agency Approvals, or should notification of the occurrence of any event that would impact Seller’s good standing or otherwise materially restrict Seller’s Agency Approvals in any manner to the relevant Agency or to the Department of Housing and Urban Development, FHA, VA or USDA be required, such Seller Party shall so notify Administrative Agent promptly, and in any event, within one (1) Business Day, in writing. Notwithstanding the preceding sentence, to the extent any Transaction consists of an Agency Mortgage Loan, the applicable Seller Party shall take all necessary action to maintain all of their applicable Agency Approvals at all times during the term of this Agreement and each outstanding Transaction.
ar.No Pledge. Except as contemplated herein, no Seller Party shall pledge, transfer or convey any security interest in any Holdback Account or Custodial Account to any Person without the express written consent of Administrative Agent.
as.Plan Assets. No Seller Party shall be an “employee benefit plan” as defined in Section 3(3) of Title I of ERISA that is subject to Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code that is subject to Section 4975 of the Code and such Seller Party shall not use “plan assets” within the meaning of 29 CFR §2510.3-101, as amended by Section 3(42) of ERISA to engage in this Agreement or any Transaction hereunder. The Transactions contemplated by this Agreement shall not violate any state or local statute, applicable to a Seller Party, that regulates investments of or fiduciary obligations with respect to governmental plans within the meaning of Section 3(32) of ERISA or church plans within the meaning of Section 3(33) of ERISA and that is substantially similar to Section 406 of ERISA or Section 4975 of the Code.
at.Reserved.
au.Beneficial Ownership Certification. Each Seller Party shall (i) deliver a Beneficial Ownership Certification on or prior to the Effective Date, and (ii) to the extent any information in any previously delivered Beneficial Ownership Certification is no longer true or correct, deliver an updated Beneficial Ownership Certification with the next delivered Officer’s Compliance Certificate. All information contained in each Beneficial Ownership Certification shall be true and correct in all respects as of the date delivered.
av.No Prohibited Persons. No Seller Party nor any of its officers, directors, partners or members, shall be a Prohibited Person.
aw.Quality Control. Seller shall maintain an internal quality control program that verifies, on a regular basis, the existence and accuracy of all legal documents, credit documents, property appraisals, and underwriting decisions related to Mortgage Loans and shall provide a report on the results of such quality control program in the Officer’s Compliance Certificate provided pursuant to Section 17.b(4) hereof. Such program shall be capable of evaluating and monitoring the overall quality of Seller’s loan production and servicing activities. Such program shall (i) ensure that the Mortgage Loans are originated, acquired and serviced in accordance with prudent mortgage banking practices and accounting principles; (ii) guard against dishonest, fraudulent, or negligent acts; and (iii) guard against errors and omissions by officers, employees, or other authorized persons.
ax.Lender Insurance Authority. In the event that Seller has on the date hereof or subsequently receives Lender Insurance Authority, such authority shall not be revoked or suspended.
ay. [***].
az.Investment Company. No Seller Party shall be an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act and with respect to each Underlying Entity for specified reasons other than the exemption provided by Section 3(c)(1) or Section 3(c)(7) thereof.
ba.SPE Covenant Separateness. Each Underlying Entity shall (a) own no assets, and will not engage in any business, other than the assets and transactions specifically contemplated by this Agreement; (b) not incur any Indebtedness or obligation, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), other than pursuant hereto; (c) not make any loans or advances to any third party, and shall not acquire obligations or securities of its affiliates; (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 organizational documents; (f) do all things necessary to observe organizational formalities and to preserve its existence, and will not amend, modify or otherwise change its organizational documents, or suffer same to be amended, modified or otherwise changed, without the prior written consent of Administrative Agent on behalf of Buyers; (g) maintain all of its books, records, financial statements and bank accounts separate from those of its Affiliates; (h) be, and at all times will 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, shall not identify itself or any of its affiliates as a division or part of the other and shall maintain and utilize a separate telephone number and separate stationery, invoices and checks; (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; (j) not engage in or suffer any change of ownership, dissolution, winding up, liquidation, consolidation or merger in whole or in part; (k) not commingle its funds or other assets with those of any Affiliate or any other Person; (l) maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any affiliate or any other person; (m) not and will not hold itself out to be responsible for the debts or obligations of any other Person; (n) cause each of its direct and indirect owners to agree not to (i) file or consent to the filing of any bankruptcy, insolvency or reorganization case or proceeding with respect to such Underlying Entity; institute any proceedings under any applicable insolvency law or otherwise seek any relief under any laws relating to the relief from debts or the protection of debtors generally with respect to such Underlying Entity (ii) seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official for Seller or a substantial portion of its properties; or (iii) make any assignment for the benefit of Seller’s creditors, with respect to an Underlying Entity other than a trust and in the case of each of clause (i), (ii), and (iii), without the prior written consent of the Independent Manager.
bb.Reserved.
bc.Financial Covenants. Seller shall satisfy the following financial covenants (each tested on a consolidated basis):
(i)Adjusted Tangible Net Worth. As of the end of each calendar month, Seller shall maintain an Adjusted Tangible Net Worth of at least [***].
(ii)Maintenance of Liquidity. At all times, Seller shall ensure that it has Liquidity in an amount not less than [***].
(iii)Indebtedness to Adjusted Tangible Net Worth Ratio. As of the end of each calendar month, Seller’s ratio of Indebtedness (on and off balance sheet) to Adjusted Tangible Net Worth shall not exceed [***].
(iv)Maintenance of Profitability. Seller shall not permit Adjusted Net Income for any Test Period, before income taxes for such Test Period and distributions made during such Test Period, to be, (i) for the Test Period ending on June 20, 2022, a loss greater than [***] and (ii) for any Test Period thereafter, to be less than [***].
bd.HUD and FHA Matters. With respect to each Early Buyout Loan that is or was an FHA Loan, the Seller shall be listed as the servicer on FHA Connection System and the Nominee to be identified as the mortgagee of record on such system under the mortgagee number provided in writing by Seller to Administrative Agent. With respect to each Early Buyout Loan that is or was a VA Loan, the Seller shall be listed as the servicer on the VALERI system. With respect to each Early Buyout Loan that is or was a USDA Loan, the Seller shall be listed as the servicer and Seller as the holding lender on the USDA LINC system. All claims to HUD, VA and USDA under such applicable numbers for remittance of amounts shall be directed to the Clearing Account.
22.Events of Default
Each of the following shall constitute an “Event of Default” hereunder:
be.Payment Failure. Failure of any Seller Party to pay any of the following, whether by acceleration or otherwise, under the terms of this Agreement or any other Program Agreement:
(i)any payment of Price Differential on a Price Differential Payment Date;
(ii)any payment of Repurchase Price on a Repurchase Date;
(iii)any payment of any other sum which has become due, within [***] of the due date; or
(iv)any payment to cure any Margin Deficit when due pursuant to Section 6 hereof.
bf.Cross Default. Any Seller Party, Guarantor or any of their Subsidiaries shall be in default under (i) any Indebtedness, in the aggregate, in excess of (A) [***] with respect to Seller or (B) [***] with respect to an Underlying Entity, Guarantor or of such Subsidiary, in each case, which default (1) involves the failure to pay a matured obligation, or (2) permits the acceleration of the maturity of obligations by any other party to or beneficiary with respect to such Indebtedness, or (ii) any other contract or contracts, in the aggregate in excess of (A) [***] to which Seller is a party or (B) [***] to which an Underlying Entity, Guarantor or such Subsidiary is a party, in each case, which default (1) involves the failure to pay a matured obligation, or (2) permits the acceleration of the maturity of obligations by any other party to or beneficiary of such contract.
bg.Assignment. Assignment by any Seller Party or Guarantor of this Agreement or any Program Agreement or any rights hereunder without first obtaining the specific written consent of Administrative Agent, or the granting by any Seller Party of any security interest, lien or other encumbrances on any Purchased Assets to any person other than Administrative Agent.
bh.Insolvency. An Act of Insolvency shall have occurred with respect to any Seller Party, Guarantor or any Affiliate thereof.
bi.Material Adverse Effect. The occurrence of a Material Adverse Effect.
bj.Breach of Specified Representation or Covenant or Obligation. A breach by any Seller Party of any of the representations, warranties or covenants or obligations set forth in Sections 13.a(1) (Seller Party Existence), 13.a(7) (Solvency), 14.b (Prohibition of Fundamental Changes), 14.m (Distributions), 14.o (Existence), 14.y (No Pledge), 14.z (Plan Assets) or14.jj (Financial Covenants) of this Agreement.
bk.Breach of Non-Financial Representation or Covenant. A breach by any Seller Party Guarantor of any other material representation, warranty or covenant set forth in this Agreement (and not otherwise specified in Section 15.f above) or any other Program Agreement, if such breach is not cured within [***] of knowledge of a Responsible Officer of such Seller Party or Guarantor (other than the representations and warranties set forth in Schedule 1-A, 1-B, or 1-C hereto), which shall be considered solely for the purpose of determining the Asset Value, unless (i) such party shall have made any such representations and warranties with knowledge that they were materially false or misleading at the time made, (ii) any such representations and warranties have been determined by Administrative Agent in its sole discretion to be materially false or misleading on a regular basis.
bl.Change of Control. The occurrence of a Change in Control, without the prior written consent of the Administrative Agent.
bm.Failure to Transfer. A Seller Party fails to transfer the Purchased Assets to Administrative Agent for the benefit of the applicable Buyer (or with respect to Contributed Assets, fails to transfer such Contributed Assets to the applicable Underlying Entity) on the applicable Purchase Date (provided the Administrative Agent, on behalf of the applicable Buyer, has tendered the related Purchase Price).
bn. Judgment. A final judgment or judgments for the payment of money in excess of (i) [***] individually or in the aggregate shall be rendered against Seller or (ii) [***] individually or in the aggregate shall be rendered against an Underlying Subsidiary, the Guarantor or any of its Subsidiaries, in each case, by one (1) or more courts, administrative tribunals or other bodies having jurisdiction and the same shall not be satisfied, discharged (or provision shall not be made for such discharge) or bonded, or a stay of execution thereof shall not be procured, within [***] from the date of entry thereof.
bo.Government Action. Any Governmental Authority or any person, agency or entity acting under governmental authority shall have taken any action to condemn, seize or appropriate, or to assume custody or control of, all or any substantial part of the Property of any Seller Party, Guarantor or any Affiliate thereof, or shall have taken any action to displace the management of such Seller Party, Guarantor or any Affiliate thereof or to curtail its authority in the conduct of the business of such Seller Party or Guarantor, and such action provided for in this Section 15.k shall not have been discontinued or stayed within [***].
bp.FHA and HUD. Seller is subject to FHA or HUD fees or penalties which have not been paid or is subject to a set off by either of FHA or HUD which failure or failures occur on a persistent and material basis after notice or knowledge thereof (regardless of any subsequent cure).
bq.Inability to Perform. An officer of a Seller Party or Guarantor shall admit in writing its inability to, or its intention not to, perform any of such Seller Party’s Obligations hereunder or Guarantor’s obligations hereunder or under the Guaranty.
br.Security Interest. This Agreement shall for any reason cease to create a valid, first priority security interest in any material portion of the Purchased Assets, Contributed Assets or other Repurchase Assets purported to be covered hereby.
bs.Financial Statements. A Seller Party’s or Guarantor’s audited annual financial statements or the notes thereto or other opinions or conclusions stated therein shall be qualified or
limited by reference to the status of such Seller Party or Guarantor as a “going concern” or a reference of similar import.
bt.Guarantor Breach. Any repudiation of the Guaranty by the Guarantor, or if the Guaranty is not enforceable against the Guarantor.
bu.Underlying Entity Breach. A breach by any Underlying Entity of any material representation, warranty or covenant set forth in the related Underlying Entity Assignment Agreement, or any other Program Agreement, any repudiation of such Underlying Entity Assignment Agreement by such Underlying Entity, as applicable, or if such Underlying Entity Assignment Agreement is not enforceable against the applicable Underlying Entity.
bv.Servicer Termination Event. A Servicer Termination Event shall have occurred with respect to any Servicer and Seller Parties have not appointed a successor servicer acceptable to Administrative Agent within [***] following such Servicer Termination Event.
An Event of Default shall be deemed to be continuing unless expressly waived by Administrative Agent in writing. If Administrative Agent expressly waives an Event of Default in writing, then such Event of Default shall be deemed to no longer exist or be continuing.
23.Remedies Upon Default
In the event that an Event of Default shall have occurred and is continuing:
bw.Administrative Agent may, at its option (which option shall be deemed to have been exercised immediately upon the occurrence of an Act of Insolvency of any Seller Party or Guarantor), 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). Administrative Agent shall (except upon the occurrence of an Act of Insolvency of any Seller Party or Guarantor) give notice to Seller Parties and Guarantor of the exercise of such option as promptly as practicable.
bx.If Administrative Agent exercises or is deemed to have exercised the option referred to in subparagraph (a) of this Section, (i) any Seller Party’s obligations in such Transactions to repurchase all Purchased Assets at the Repurchase Price therefor on the Repurchase Date determined in accordance with subparagraph (a) of this Section, shall thereupon become immediately due and payable, (ii) all Income paid after such exercise or deemed exercise shall be retained by Administrative Agent and applied, in Administrative Agent’s sole discretion, in accordance with Section 7(j) hereof, and (iii) any Seller Party shall immediately deliver to Administrative Agent the Asset Files relating to any Purchased Assets or Contributed Assets subject to such Transactions then in any Seller Party’s possession or control.
by.Administrative Agent also shall have the right to obtain physical possession, and to commence an action to obtain physical possession, of all Records and files of any Seller Party relating to the Purchased Assets, Contributed Assets and Repurchase Assets and all documents relating to the Purchased Assets and Contributed Assets (including, without limitation, any legal, credit or servicing files with respect to such Purchased Assets, Contributed Assets and Repurchase Assets) which are then or may thereafter come in to the possession of a Seller Party or any third party acting for such Seller Party. To obtain physical possession of any Purchased Assets and Contributed Assets held by Custodian, Administrative Agent shall present to Custodian a Trust Receipt. Without limiting the rights of Administrative Agent hereto to pursue all other legal and equitable rights available to Administrative Agent for any Seller Party’s failure to perform its obligations under this Agreement, each Seller Party acknowledges and agrees that the remedy at law for any failure to perform obligations hereunder would be inadequate and Administrative Agent shall be entitled to specific performance, injunctive relief, or other equitable remedies in the event of any such failure. The availability of these remedies shall not prohibit Administrative
Agent from pursuing any other remedies for such breach, including the recovery of monetary damages.
bz.Administrative Agent shall have the right to direct all Servicers then servicing any Purchased Assets and Contributed Assets to remit all Income thereon to Administrative Agent, and if any such payments are received by any Seller Party, Seller shall not commingle the amounts received with other funds of any Seller Party and shall promptly pay them over to Administrative Agent. Administrative Agent shall also have the right to terminate any one (1) or all of the Servicers then servicing any Purchased Mortgage Loans and Contributed Assets with or without cause. In addition, Administrative Agent shall have the right to immediately sell the Purchased Assets and liquidate all Repurchase Assets. Such disposition of Purchased Assets and Contributed Assets may be, at Administrative Agent’s option on a servicing-released basis. Administrative Agent shall not be required to give any warranties as to the Purchased Assets and Contributed Assets with respect to any such disposition thereof. Administrative Agent may specifically disclaim or modify any warranties of title or the like relating to the Purchased Assets and Contributed Assets. The foregoing procedure for disposition of the Purchased Assets and Contributed Assets and liquidation of the Repurchase Assets shall not be considered to adversely affect the commercial reasonableness of any sale thereof. Each Seller Party agrees that it would not be commercially unreasonable for Administrative Agent to dispose of the Purchased Assets, Contributed Assets or the Repurchase Assets or any portion thereof by using internet sites that provide for the auction of assets similar to the Purchased Assets, Contributed Assets or the Repurchase Assets, or that have the reasonable capability of doing so, or that match buyers and sellers of assets. Administrative Agent shall be entitled to place the Purchased Assets and Contributed 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. Administrative Agent shall also be entitled to sell any or all of such Purchased Assets and Contributed Assets individually for the prevailing price. Administrative Agent shall also be entitled, in its sole discretion to elect, in lieu of selling all or a portion of such Purchased Assets and Contributed Assets, to give such Seller Party credit for such Purchased Assets, Contributed Assets and the Repurchase Assets in an amount equal to the Asset Value of the Purchased Assets and Contributed Assets against the aggregate unpaid Repurchase Price and any other amounts owing by the Seller Parties hereunder.
ca.Upon the occurrence of one (1) or more Events of Default, Administrative Agent may apply any proceeds from the liquidation of the Purchased Assets, Contributed Assets and Repurchase Assets to the Repurchase Prices hereunder and all other Obligations in the manner Administrative Agent deems appropriate in its sole discretion and subject to the Administration Agreement and in the order of priority set forth in Section 7(j) hereof.
cb.Each Seller Party shall be liable to Administrative Agent and each Buyer for (i) the amount of all reasonable and documented legal or other expenses (including, without limitation, all costs and expenses of Administrative Agent and each Buyer in connection with the enforcement of this Agreement or any other agreement evidencing a Transaction, whether in action, suit or litigation or bankruptcy, insolvency or other similar proceeding affecting creditors’ rights generally, further including, without limitation, the reasonable fees and expenses of counsel (including the costs of internal counsel of Administrative Agent and Buyers) incurred in connection with or as a result of the occurrence and continuation of an Event of Default, (ii) damages in an amount equal to the cost (including all fees, expenses and commissions) entering into or terminating hedge transactions in connection with or as a result of the occurrence and continuation of an Event of Default, and (iii) any other loss, damage, cost or expense directly arising or resulting from the occurrence and continuance of an Event of Default in respect of a Transaction.
cc.Each Seller Party further recognizes that Administrative Agent may be unable to effect a public sale of any or all of the Underlying Entity Interests by reason of certain prohibitions contained in the 1934 Act and applicable state securities laws or otherwise, and may be compelled to resort to one (1) or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for
investment and not a view to the distribution or resale thereof. In view of the nature of the Underlying Entity Interests, each Seller Party agrees that liquidation of any Underlying Entity Interests may be conducted in a private sale and at such price as Administrative Agent may deem commercially reasonable. Administrative Agent shall be under no obligation to delay a sale of any of the Underlying Entity Interests for the period of time necessary to permit the Administrative Agent to register the Underlying Entity Interests for public sale under the 1934 Act, or under applicable state securities laws, even if Administrative Agent would agree to do so.
cd.To the extent permitted by applicable law, each Seller Party shall be liable to Administrative Agent and each Buyer for interest on any amounts owing by such Seller Party hereunder, upon the occurrence and continuance of an Event of Default, from the date such Seller Party becomes liable for such amounts hereunder until such amounts are (i) paid in full by such Seller Party or (ii) satisfied in full by the exercise of Administrative Agent’s and Buyers’ rights hereunder. Interest on any sum payable by a Seller Party under this Section 16.h shall accrue at a rate equal to the Post Default Rate.
ce.Administrative Agent shall have, in addition to its rights hereunder, any rights otherwise available to it under any other Program Agreement or applicable law.
cf.Administrative Agent may exercise one (1) or more of the remedies available to Administrative Agent immediately upon the occurrence and continuance of an Event of Default and, except to the extent provided in subsections (a) and (d) of this Section, at any time thereafter without notice to Seller Parties. All rights and remedies arising under this Agreement as amended from time to time hereunder are cumulative and not exclusive of any other rights or remedies which Administrative Agent may have.
cg.Administrative Agent may enforce its rights and remedies hereunder without prior judicial process or hearing, and each Seller Party hereby expressly waives any defenses such Seller Party might otherwise have to require Administrative Agent to enforce its rights by judicial process. Each Seller Party also waives any defense (other than a defense of payment or performance) such Seller Party might otherwise have arising from the use of nonjudicial process, enforcement and sale of all or any portion of the Repurchase Assets, or from any other election of remedies. Each Seller Party recognizes that nonjudicial remedies are consistent with the usages of the trade, are responsive to commercial necessity and are the result of a bargain at arm’s length.
ch.Administrative Agent shall have the right to perform reasonable due diligence with respect to Seller Parties and the Purchased Assets and Contributed Assets, which review shall be at the expense of Seller.
24.Reports
ci.Default Notices. Each Seller Party shall furnish and shall cause Guarantor to furnish to Administrative Agent immediately, notice of the occurrence of any (A) Event of Default hereunder, (B) default or breach by such Seller Party or any Servicer or Guarantor of any obligation under any Program Agreement or (C) event or circumstance that such party reasonably expects has resulted in, or will, with the passage of time, result in, a Material Adverse Effect or an Event of Default by such party.
cj.Financial Notices. Each Seller Party shall furnish:
(i)as soon as available and in any event within (A) except with respect to the last calendar month of the fiscal year, thirty (30) calendar days and (B), with respect to the last calendar month of the fiscal year, forty-five (45) days, in each case, after the end of each calendar month, the unaudited consolidated balance sheets of Seller and its consolidated Subsidiaries as of the end of such period and the related unaudited consolidated statements of income for the Seller and its consolidated Subsidiaries for such period and the portion of the fiscal year through the end of such period, accompanied by a certificate of a Responsible Officer of Seller, which certificate
shall state that said consolidated financial statements fairly present in all material respects the consolidated financial condition and results of operations of Seller and its consolidated Subsidiaries in accordance with GAAP (other than solely with respect to footnotes and year-end adjustments) consistently applied, as at the end of, and for, such period;
(ii)as soon as available and in any event within ninety (90) days after the end of each fiscal year of Seller, the consolidated balance sheets of Seller and its consolidated Subsidiaries as at the end of such fiscal year and the related consolidated statements of income and retained earnings for the Seller and its consolidated Subsidiaries for such year, setting forth in each case in comparative form the figures for the previous year, accompanied by an opinion thereon of independent certified public accountants of recognized national standing, shall have no “going concern” qualification and shall state that said consolidated financial statements fairly present the consolidated financial condition and results of operations of Seller and its respective consolidated Subsidiaries as at the end of, and for, such fiscal year in accordance with GAAP;
(iii)as soon as available and in any event within forty-five (45) calendar days after the end of each fiscal quarter, the unaudited consolidated balance sheets of Seller and its consolidated Subsidiaries as of the end of such period and the related unaudited consolidated statements of income and retained earnings and of cash flows for the Seller and its consolidated Subsidiaries for such period and the portion of the fiscal year through the end of such period, accompanied by a certificate of a Responsible Officer of Seller, which certificate shall state that said consolidated financial statements fairly present in all material respects the consolidated financial condition and results of operations of Seller and its consolidated Subsidiaries in accordance with GAAP (other than solely with respect to footnotes, year-end adjustments) consistently applied, as at the end of, and for, such period;
(iv)at the time Seller furnishes each set of financial statements pursuant to Section 17.b(1), (2) or (3) above, an Officer’s Compliance Certificate of a Responsible Officer of Seller;
(v)as soon as available and in any event within thirty (30) days of receipt thereof:
(1)if applicable, copies of any 10-Ks, 10-Qs, registration statements and other “corporate finance” SEC filings by Seller Parties and Guarantor, within five (5) Business Days of their filing with the SEC; provided, that, Seller Parties and Guarantor or any Subsidiary will provide Administrative Agent with a copy of the annual 10-K filed with the SEC by Seller Parties and Guarantor or its Subsidiaries, no later than ninety (90) days after the end of the year;
(2)to the extent not prohibited by any Governmental Authority, copies of relevant portions of all final written 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 such Seller Party and Guarantor’s operations;
(3)such other information regarding the financial condition, operations, or business of such Seller Party and Guarantor as Administrative Agent may reasonably request; and
(4)the particulars of any Event of Termination in reasonable detail.
(i)reserved;
(ii)Seller shall provide Administrative Agent, as part of the Officer’s Compliance Certificate, a list of all material litigation, actions, suits, arbitrations or investigations pursuant to Section 14.a; and
(iii)Seller shall provide the market value analysis for the valuation of its mortgage servicing rights as determined by a Third Party Evaluator for each month, in all instances as set forth in the Officer’s Compliance Certificate.
ck.Notices of Certain Events. Notices of Certain Events. As soon as possible and in any event within [***] (unless otherwise noted below) of knowledge of a Responsible Officer of the Seller thereof, each Seller Party shall furnish to Administrative Agent notice of the following events:
(vi)a material and adverse change in the insurance coverage required of such Seller Party or any other Person pursuant to any Program Agreement, with a copy of evidence of same attached that is not otherwise required by the Agencies;
(vii)to the extent not prohibited by any Governmental Authority, any material dispute, litigation, investigation, proceeding or suspension between such Seller Party, Guarantor or Servicer, on the one hand, and any Governmental Authority;
(viii)any material change in accounting policies or financial reporting practices of Seller or Guarantor;
(ix)within [***] of knowledge of a Responsible Officer of Seller thereof, each Seller shall furnish to Administrative Agent notice of the following events with respect to any Purchased Asset or Contributed Asset, that the underlying Mortgaged Property or REO Property, as applicable, has been damaged by waste, fire, earthquake or earth movement, windstorm, flood, tornado or other casualty, or otherwise damaged so as to affect adversely the value of such Purchased Mortgage Loan or Contributed Asset;
(x)to the extent not prohibited by any Governmental Authority, any material penalties, sanctions or charges levied, or threatened to be levied, against Seller, any material change in approval status, or material adverse actions taken against Seller by any Government Authority supervising or regulating the origination or servicing of mortgage loans by, or the issuer status of, Seller;
(xi)reserved;
(xii)any default related to any Repurchase Asset or any lien or security interest (other than security interests created hereby or by the other Program Agreements) on, or claim asserted against, any of the Purchased Assets or Contributed Assets; and
(xiii)any other event, circumstance or condition that has resulted, or has a reasonable likelihood of resulting, in a Material Adverse Effect with respect to such Seller Party, Guarantor or Servicer
cl.Servicing Tape. On or prior to the [***] of each calendar month, each Seller Party will furnish to Administrative Agent (i) an electronic Purchased Mortgage Loans and Contributed Assets performance data, including, without limitation, delinquency reports and volume information, broken down by product (i.e., delinquency, foreclosure and net charge off reports) and (ii) electronically, in a format mutually acceptable to Administrative Agent and such
Seller Party, servicing information, including, without limitation, those fields reasonably requested by Administrative Agent from time to time, on a loan by loan basis and in the aggregate, with respect to the Purchased Mortgage Loans and Contributed Assets serviced by such Seller or any Servicer for the month (or any portion thereof) prior to the Reporting Date. In addition to the foregoing information on each Reporting Date, each Seller Party will furnish to Administrative Agent such information upon the occurrence and continuation of an Event of Default.
cm.Other Reports. Each Seller Party shall deliver to Administrative Agent any other reports or information reasonably requested by Administrative Agent or as otherwise required pursuant to this Agreement or as set forth in the Officer’s Compliance Certificate delivered pursuant to Section 17.b(4) above.
cn.DE Compare Ratio and HUD Reports. To the extent Purchased Assets and/or Contributed Assets consist of FHA Loans or VA Loans, the Seller Parties shall furnish to Administrative Agent the following notices:
1.In the event the applicable Seller Party’s DE Compare Ratio equals or exceeds [***], such Seller Party shall provide Buyer with written notice of such occurrence within [***], which notice shall include a written summary of actions Seller Party is taking to correct its DE Compare Ratio.
2. In the event applicable Seller Party receives any inquiry or notice from HUD regarding its DE Compare Ratio, such Seller Party shall provide Buyer with written notice of such inquiry or notice within [***], regardless of Seller Party’s current DE Compare Ratio.
3.In the event of any action plan with respect to such Seller Party’s DE Compare Ratio is agreed to between Seller Party and HUD or imposed upon Seller Party by HUD, such Seller Party shall provide Buyer with a written summary of such agreement or imposition, as applicable, within [***].
25.Repurchase Transactions
A Buyer may, in its sole election, engage in repurchase transactions (as “seller” thereunder) with any or all of the Purchased Assets and/or Repurchase Assets or pledge, hypothecate, assign, transfer or otherwise convey any or all of the Purchased Assets and/or Repurchase Assets with a counterparty of Buyers’ choice (such transaction, a “Repledge Transaction”). Any Repledge Transaction shall be effected by notice to the Administrative Agent, and shall be reflected on the books and records of the Administrative Agent. No such Repledge Transaction shall relieve such Buyer of its obligations to transfer Purchased Assets and Repurchase Assets to Seller (and not substitutions thereof) pursuant to the terms hereof. In furtherance, and not by limitation of, the foregoing, it is acknowledged that each counterparty under a Repledge Transaction (a “Repledgee”), is a repledgee as contemplated by Sections 9-207 and 9-623 of the UCC (and the relevant Official Comments thereunder). Administrative Agent and Buyers are each hereby authorized to share this Agreement, the Program Agreements and any information delivered hereunder with the Repledgee or any potential Repledgee, so long as such Repledgee or potential Repledgee is subject to confidentiality provisions substantially similar to those provided herein and covering the terms of this Agreement and the other Program Agreements.
26.Single Agreement
Administrative Agent, Buyers and Seller Parties acknowledge they have 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 Administrative Agent, Buyers and Seller Parties 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 and (ii) 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. Notwithstanding anything in this Agreement to the contrary, in the event that (a) a Buyer is not an Affiliate of Administrative Agent, Alpine or CS Cayman (a “Non-Affiliate Buyer”), (b) an Event of Default shall have occurred and is continuing and (c) Administrative Agent provides written notice to the Seller to sever each Non-Affiliate Buyer’s Transactions (the “Non-Affiliate Transactions”) and treat such Non-Affiliate Transactions as separate Transactions under this Agreement (a “Severance Notice”), then Administrative Agent, Buyers and Seller Parties acknowledge that each such Non-Affiliate Transaction shall be deemed a separate Transaction under a separate and distinct agreement with the same terms and conditions as set forth herein (each a “Non-Affiliate MRA”), and each such Non-Affiliate Buyer shall be deemed to be the administrative agent with respect to its respective Non-Affiliate Transactions under its respective Non-Affiliate MRA; provided, that Transactions owned by Administrative Agent, Alpine and CS Cayman or any respective Affiliate shall continue to be deemed a single Transaction with Administrative Agent serving as the administrative agent for Alpine, CS Cayman or any respective Affiliate, in each case, pursuant to the terms and conditions of this Agreement.
27.Notices and Other Communications
Any and all notices (with the exception of Transaction Requests, which shall be delivered via electronic mail or other electronic medium agreed to by the Administrative Agent and the Seller Parties), statements, demands or other communications hereunder may be given by a party to the other by mail, email, facsimile, messenger or otherwise to the address specified below, 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. In all cases, to the extent that the related individual set forth in the respective “Attention” line is no longer employed by the respective Person, such notice may be given to the attention of a Responsible Officer of the respective Person or to the attention of such individual or individuals as subsequently notified in writing by a Responsible Officer of the respective Person.
If to Seller Parties:
Home Point Financial Corporation
2211 Old Earhart Road, Suite 250
Ann Arbor, MI 48105
Attention: [***]
Email: [***]
with a copy to:
Home Point Financial Corporation
2211 Old Earhart Road, Suite 250
Ann Arbor, MI 48105
Attention: [***]
Telephone: [***]
E-mail: [***]
with a copy to:
Home Point Financial Corporation
2211 Old Earhart Road, Suite 250
Ann Arbor, MI 48105
Attention: [***]
E-mail: [***]
If to Administrative Agent:
For Transaction Requests:
CSFBMC LLC
c/o Credit Suisse Securities (USA) LLC
One Madison Avenue, 2nd floor
New York, New York 10010
Attention: [***]
Phone: [***]
E-mail: [***]
with a copy to:
Credit Suisse First Boston Mortgage Capital LLC
c/o Credit Suisse Securities (USA) LLC
Eleven Madison Avenue, 4th Floor
New York, New York 10010
Attention: [***]
E-mail: [***]
For all other Notices:
Credit Suisse First Boston Mortgage Capital LLC
c/o Credit Suisse Securities (USA) LLC
Eleven Madison Avenue, 4th Floor
New York, New York 10010
Attention: [***]
Phone Number[***]
Fax Number: [***]
E-mail: [***]
with a copy to:
Credit Suisse First Boston Mortgage Capital LLC
c/o Credit Suisse Securities (USA) LLC
Eleven Madison Avenue, 11th Floor
New York, New York 10010
Attention: [***]
Fax Number: [***]
28.Entire Agreement; Severability
This Agreement and the Administration 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 provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.
29.Non assignability
a.Assignments. The Program Agreements are not assignable by any Seller Party or any Guarantor. Subject to Section 36 hereof (Acknowledgement of Assignment and Administration of Repurchase Agreement) and at no cost of expense to the Seller, each of Administrative Agent and Buyers may from time to time assign all or a portion of their rights and obligations under this Agreement and the Program Agreements pursuant to the Administration Agreement; provided, however that Administrative Agent shall notify Seller of any such assignment and shall maintain, solely for this purpose as a non-
fiduciary agent of Seller Parties, for review by Seller Parties upon written request, a register of assignees and participants (the “Register”) and a copy of an executed assignment and acceptance by Administrative Agent and assignee (“Assignment and Acceptance”), specifying the percentage or portion of such rights and obligations assigned. The entries in the Register shall be conclusive absent manifest error, and the Seller Parties, Guarantor, Administrative Agent and Buyers shall treat each Person whose name is recorded in the Register pursuant to the preceding sentence as a Buyer hereunder. Upon such assignment and recordation in the Register, (a) such assignee shall be a party hereto and to each Program Agreement to the extent of the percentage or portion set forth in the Assignment and Acceptance, and shall succeed to the applicable rights and obligations of Administrative Agent and Buyers hereunder, as applicable, and (b) Administrative Agent and Buyer, as applicable, shall be released from its obligations hereunder and under the Program Agreements. Any assignment hereunder shall be deemed a joinder of such assignee as a Buyer hereto. Unless otherwise stated in the Assignment and Acceptance, each Seller Party shall continue to take directions solely from Administrative Agent unless otherwise notified by Administrative Agent in writing. Administrative Agent and Buyers may distribute to any prospective or actual assignee this Agreement, the other Program Agreements, any document or other information delivered to Administrative Agent and/or Buyers by Seller Parties.
b.Participations. At no cost of expense to the Seller, any Buyer may sell participations to one (1) or more Persons in or to all or a portion of its rights and obligations under this Agreement and under the Program Agreements; provided, however, that (i) such Buyer shall notify Seller of such sale, (ii) such Buyer’s obligations under this Agreement or in any Transaction under this Agreement and the other Program Agreements shall remain unchanged, (iii) such Buyer shall remain solely responsible to the other parties hereto for the performance of such obligations; (iv) such Participant shall not be entitled to receive any greater payment under Section 11, with respect to any participation, than its participating Lender would have been entitled to receive; and (v) Seller Parties shall continue to deal solely and directly with Administrative Agent and/or Buyers in connection with such Buyer’s rights and obligations under this Agreement and the other Program Agreements. Administrative Agent and Buyers may distribute to any prospective or actual Participant this Agreement, the other Program Agreements any document or other information delivered to Administrative Agent and/or Buyers by Seller Parties. Each Buyer that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of Seller Parties, maintain a register on which it enters the name and address of each Participant and the Purchase Price (and stated interest) of the Transactions entered into by Buyer (the “Participant Register”). If Buyer sells a participation in any Transaction, it shall provide Seller, or maintain as agent of Seller, the information described in this paragraph and permit Seller to review such information as reasonably needed for Seller to comply with its obligations under this Agreement or under any applicable law or governmental regulation or procedure, including, without limitation, as necessary to establish that such Transaction is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The information maintained by a Buyer or by the Seller with respect to participations shall be conclusive absent manifest error, and Buyer shall treat each Person whose name is recorded in such participant registers as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
30.Set-off
In addition to any rights and remedies of the Administrative Agent and Buyers hereunder and by law, the Administrative Agent and Buyers shall have the right, solely after an Event of Default has occurred and is continuing, without prior notice to the Seller Parties or Guarantor, any such notice being expressly waived by the Seller Parties and Guarantor to the extent permitted by applicable law to set-off and appropriate and apply against any Obligation from any Seller Party, Guarantor or any Affiliate thereof to a Buyer or any of its Affiliates any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other obligation (including to return excess margin), credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by or due from a Buyer or any Affiliate thereof to or for the credit or the account of any Seller Party, Guarantor or any Affiliate thereof. All such set-offs shall be subject to the priorities set forth in the Administration Agreement. Administrative Agent or such Buyer agrees promptly to notify Seller Parties and Guarantor after any such set off and
application made by Administrative Agent or such Buyer; provided that the failure to give such notice shall not affect the validity of such set off and application.
31.Binding Effect; Governing Law; Jurisdiction
a.This Agreement shall be binding and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Each Seller Party acknowledges that the obligations of Administrative Agent and Buyers hereunder or otherwise are not the subject of any guaranty by, or recourse to, any direct or indirect parent or other Affiliate of Administrative Agent and Buyers. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WHICH SHALL GOVERN).
b.EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY. EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ARISING OUT OF OR RELATING TO THE PROGRAM AGREEMENTS IN ANY ACTION OR PROCEEDING. EACH PARTY HERETO HEREBY SUBMITS TO, AND WAIVES ANY OBJECTION IT MAY HAVE TO, EXCLUSIVE PERSONAL JURISDICTION AND VENUE IN THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT TO ANY DISPUTES ARISING OUT OF OR RELATING TO THE PROGRAM AGREEMENTS.
32.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 Section 6.a or Section 16.a hereof or otherwise, will not constitute a waiver of any right to do so at a later date.
33.Intent
c.The parties intend and recognize that (i) each Transaction is a “repurchase agreement” as that term is defined in Section 101 of the Bankruptcy Code, a “securities contract” as that term is defined in Section 741 of the Bankruptcy Code, and a “master netting agreement” as that term is defined in Section 101(38A)(A) of the Bankruptcy Code, (ii) all payments hereunder are deemed “margin payments” or “settlement payments” as defined in the Bankruptcy Code, (iii) the pledge of the Repurchase Assets constitutes “a security agreement or other arrangement or other credit enhancement” that is “related to” this Agreement and Transactions hereunder within the meaning of Sections 101(38A)(A), 101(47)(A)(v) and 741(7)(A)(xi) of the Bankruptcy Code , and (iv) the Guaranty constitutes “a security agreement or other arrangement or other credit enhancement” that is “related to” the Agreement and Transactions hereunder within the meaning of Sections 101(38A)(A), 101(47)(a)(v) and 741(7)(A)(xi) of the Bankruptcy Code. Each Seller Party, Administrative Agent and Buyers further agrees that it shall not challenge, and hereby waives to the fullest extent available under applicable law its right to challenge, the characterization of any Transaction under this Agreement or this Agreement as a “securities contract” and/or “master netting agreement” within the meaning of the Bankruptcy Code.
d.Each Seller Party, Administrative Agent and Buyers further recognize and intend that this Agreement is an agreement to provide financial accommodations and is not subject to assumption pursuant to Bankruptcy Code Section 365(a).
e.Administrative Agent’s or a Buyer’s right to liquidate the Purchased Assets and Contributed Assets delivered to it in connection with the Transactions hereunder or to accelerate or terminate this Agreement or otherwise exercise any other remedies pursuant to Section 16 hereof is a contractual right to liquidate, accelerate or terminate such Transaction as described in Bankruptcy Code Sections 362(b)(6), 362(b)(7), 362(b)(27), 546(e), 546(f), 546(j), 555, 559 and 561; Administrative Agent’s or a Buyer’s right to set-off claims and appropriate and apply any and all deposits of money or property or any other indebtedness at any time held or owing by Buyer to or for the credit of the account of any Affiliate against and on account of the obligations and liabilities of Seller pursuant to Section 23 hereof is a contractual right as described in Bankruptcy Code Sections 553 and 561; and; any payments or transfers of property made with respect to this Agreement or any Transaction to satisfy a Margin Deficit shall be considered a “margin payment” or “settlement payment” as such terms are defined in Bankruptcy Code Sections 741(5) and 741(8).
f.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).
g.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 (1) or both of the parties is not a “financial institution” as that term is defined in FDICIA).
h.This Agreement is intended to be a “repurchase agreement”, “master netting agreement” and a “securities contract,” within the meaning of Section 101(47), Section 555, Section 559 and Section 741 under the Bankruptcy Code.
i.Each party agrees that this Agreement is intended to create mutuality of obligations among the parties, and as such, this Agreement constitutes a contract which (i) is between all of the parties and (ii) places each party in the same right and capacity.
34.Disclosure Relating to Certain Federal Protections
The parties acknowledge that they have been advised that:
h.in the case of Transactions in which one of the parties is a broker or dealer registered with the SEC under Section 15 of the 1934 Act, the Securities Investor Protection Corporation has taken the position that the provisions of the SIPA do not protect the other party with respect to any Transaction hereunder;
i.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
j.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.
35.Power of Attorney
Each Seller Party hereby authorizes Administrative Agent to file such financing statement or statements relating to the Repurchase Assets as Administrative Agent, at its option, may deem
appropriate. Each Seller Party hereby appoints Administrative Agent as such Seller Party’s agent and attorney-in-fact to execute any such financing statement or statements in such Seller Party’s name and to perform all other acts which Administrative Agent 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 Repurchase Assets, including, but not limited to, the right to endorse notes, complete blanks in documents, transfer servicing, and sign assignments on behalf of such Seller Party as its agent and attorney-in-fact. This agency and power of attorney is coupled with an interest and is irrevocable without Administrative Agent’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. Each Seller Party shall pay the filing costs for any financing statement or statements prepared pursuant to this Section 28. In addition to the foregoing, each Seller Party agrees to execute a Power of Attorney, in the form of Exhibit A hereto, to be delivered on the date hereof; provided that Administrative Agent shall not exercise such Power of Attorney unless an Event of Default has occurred and is continuing.
36.Buyers May Act Through Administrative Agent
Each Buyer has designated the Administrative Agent under the Administration Agreement for the purpose of performing any action hereunder.
37.Indemnification; Obligations
j.Each Seller Party and Guarantor agrees to hold Administrative Agent, Buyers and each of their respective Affiliates and their officers, directors, employees, agents and advisors (each, an “Indemnified Party”) harmless from and indemnify each Indemnified Party (and will reimburse each Indemnified Party as the same is incurred) against all liabilities, losses, damages, judgments, and reasonable and documented, out-of-pocket costs and expenses (including, without limitation, reasonable fees and expenses of counsel) of any kind which may be imposed on, incurred by, or asserted against any Indemnified Party relating to or arising out of this Agreement, any Transaction Request, any Program Agreement or any transaction contemplated hereby or thereby (including, without limitation, (i) any such liabilities, losses, damages, judgments, costs and expenses arising from any acts or omissions of such party and (ii) any wire fraud or data or systems intrusions which causes Administrative Agent or Buyers to suffer any such liability, loss, damage, judgment, cost and/or expense), resulting from anything other than the Indemnified Party’s fraud, bad faith, gross negligence or willful misconduct. Each Seller Party and Guarantor also agrees to reimburse each Indemnified Party for all reasonable and documented, out-of-pocket expenses in connection with the enforcement of this Agreement and the exercise of any right or remedy provided for herein, any Transaction Request and any Program Agreement, including, without limitation, the reasonable fees and disbursements of counsel. Each Seller Party’s and Guarantor’s agreements in this Section 30 shall survive the payment in full of the Repurchase Price and the expiration or termination of this Agreement. Each Seller Party and Guarantor hereby acknowledges that its obligations hereunder are recourse obligations of each Seller Party and Guarantor and are not limited to recoveries each Indemnified Party may have with respect to the Purchased Assets. Each Seller Party and Guarantor also agrees not to assert any claim against Administrative Agent, each Buyer or any of its Affiliates, or any of their respective officers, directors, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the facility established hereunder, the actual or proposed use of the proceeds of the Transactions, this Agreement or any of the transactions contemplated thereby. This Section 30.a shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim. THE FOREGOING INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY APPLIES, WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF THE INDEMNIFIED PARTIES.
k.Without limitation to the provisions of Section 4 hereof, if any payment of the Repurchase Price of any Transaction is made by any Seller Party other than on the then scheduled Repurchase Date thereto as a result of an acceleration of the Repurchase Date pursuant to Section 16 hereof or for any other reason, such Seller Party shall, upon demand by Administrative Agent,
pay to Administrative Agent on behalf of Buyers an amount sufficient to compensate Buyers for any losses, costs or expenses that they may reasonably incur as of a result of such payment.
l.Without limiting the provisions of Section 30.a hereof, if a Seller Party fails to pay when due any costs, expenses or other amounts payable by it under this Agreement, including, without limitation, fees and expenses of counsel and indemnities, such amount may be paid on behalf of such Seller Party by Administrative Agent (subject to reimbursement by such Seller Party) in its sole discretion.
38.Counterparts
This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, and all such counterparts shall together constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement in a Portable Document Format (PDF) or by facsimile shall be effective as delivery of a manually executed original counterpart of this Agreement. The parties agree that this Agreement, any addendum or amendment hereto or any other document necessary for the consummation of the transaction contemplated by this Agreement may be accepted, executed or agreed to through the use of an electronic signature in accordance with the E-Sign, the UETA and any applicable state law. Any document accepted, executed or agreed to in conformity with such laws will be binding on all parties hereto to the same extent as if it were physically executed and each party hereby consents to the use of any secure third party electronic signature capture service providers, as long as such service providers use system logs and audit trails that establish a temporal and process link between the presentation of identity documents and the electronic signing, together with identifying information that can be used to verify the electronic signature and its attribution to the signer’s identity and evidence of the signer’s agreement to conduct the transaction electronically and of the signer’s execution of each electronic signature.
39.Confidentiality
c.This Agreement and its terms, provisions, supplements and amendments, and notices hereunder, are proprietary to Administrative Agent and Buyers and shall be held by each Seller Party and Guarantor in strict confidence and shall not be disclosed to any third party without the written consent of Administrative Agent except for (i) disclosure to such party’s direct and indirect Affiliates and Subsidiaries, attorneys or accountants, but only to the extent such disclosure is necessary and such parties agree to hold all information in strict confidence or (ii) disclosure required by any Requirement of Law. Notwithstanding the foregoing or anything to the contrary contained herein or in any other Program Agreement, the parties hereto may disclose to any and all Persons, without limitation of any kind, the federal, state and local tax treatment of the Transactions, any fact relevant to understanding the federal, state and local tax treatment of the Transactions, and all materials of any kind (including opinions or other tax analyses) relating to such federal, state and local tax treatment and that may be relevant to understanding such tax treatment; provided that such party may not disclose the name of or identifying information with respect to the other parties or any pricing terms (including, without limitation, the Purchase Price, Pricing Rate, Purchase Price Percentage, Asset Value, Maximum Value Amount and any other fees specified in the Pricing Side Letter) or other nonpublic business or financial information (including any sublimits and financial covenants) that is unrelated to the federal, state and local tax treatment of the Transactions and is not relevant to understanding the federal, state and local tax treatment of the Transactions, without the prior written consent of the Administrative Agent.
d.Notwithstanding anything in this Agreement to the contrary, each Seller Party shall comply with all applicable local, state, and federal laws, including, without limitation, all privacy and data protection law, rules and regulations that are applicable to the Purchased Assets, Contributed Assets and/or any applicable terms of this Agreement (the “Confidential Information”). Each Seller Party understands that the Confidential Information may contain “nonpublic personal information”, as that term is defined in Section 509(4) of the Gramm-Leach-Bliley Act (the “Act”), and each Seller Party agrees to maintain such nonpublic personal information that it receives hereunder in accordance with the Act and other applicable federal and state privacy laws. The Seller Parties shall implement such physical and other security measures
as shall be necessary to (a) ensure the security and confidentiality of the “nonpublic personal information” of the “customers” and “consumers” (as those terms are defined in the Act) of Administrative Agent and Buyers or any Affiliate of Administrative Agent or Buyers which the a Seller Party holds, (b) protect against any threats or hazards to the security and integrity of such nonpublic personal information, and (c) protect against any unauthorized access to or use of such nonpublic personal information. Each Seller Party represents and warrants that it has implemented appropriate measures to meet the objectives of Section 501(b) of the Act and of the applicable standards adopted pursuant thereto, as now or hereafter in effect. Upon request, each Seller Party will provide evidence reasonably satisfactory to allow Administrative Agent and/or Buyers to confirm that the providing party has satisfied its obligations as required under this Section. Without limitation, this may include Administrative Agent’s or Buyers’ review of audits, summaries of test results, and other equivalent evaluations of a Seller Party. Each Seller Party shall notify Administrative Agent immediately following discovery of any breach or compromise of the security, confidentiality, or integrity of nonpublic personal information of the customers and consumers of Administrative Agent, Buyers or any Affiliate of Buyers provided directly to such Seller Party by Administrative Agent, Buyers or such Affiliate. Each Seller Party shall provide such notice to Administrative Agent by personal delivery, by facsimile with confirmation of receipt, or by overnight courier with confirmation of receipt to the applicable requesting individual.
e.Notwithstanding anything else herein, nothing in this Agreement shall require any party to provide any notice, information, investigation, audit, correspondence, and any other communication (collectively, “Information”) to any other party if providing such Information is prohibited by applicable laws, or if such party is required to not disclose such Information by a governmental authority or Agency.
40.Recording of Communications
Administrative Agent, Buyers, each Seller Party and Guarantor shall have the right (but not the obligation) from time to time to make or cause to be made tape recordings of communications between its employees and those of the other party with respect to Transactions. Administrative Agent, Buyers, each Seller Party and Guarantor consent to the admissibility of such tape recordings in any court, arbitration, or other proceedings. The parties agree that a duly authenticated transcript of such a tape recording shall be deemed to be a writing conclusively evidencing the parties’ agreement.
41.Periodic Due Diligence Review
Each Seller Party and Guarantor acknowledges that Administrative Agent and Buyers have the right to perform continuing due diligence reviews with respect to the Seller Parties and Guarantors, the Purchased Assets and Contributed Assets, for purposes of verifying compliance with the representations, warranties, and specifications made hereunder, for the purpose of performing quality control review of the Purchased Assets and Contributed Assets or otherwise, and each Seller Party agrees that upon reasonable (but no less than two (2) Business Day’s) prior notice unless an Event of Default shall have occurred, in which case no notice is required, to any Seller Party, Administrative Agent, Buyers or their authorized representatives will be permitted during normal business hours to examine, inspect, and make copies and extracts of, the Asset Files and any and all documents, data, records, agreements, instruments or information relating to such Purchased Assets and Contributed Assets (including, without limitation, quality control review) in the possession or under the control of a Seller Party, a Servicer, the Guarantor and/or the Custodian. Each Seller Party also shall make available to Administrative Agent and Buyers a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Asset Files, the Purchased Assets and Contributed Assets. Without limiting the generality of the foregoing, each Seller Party acknowledges that Administrative Agent and Buyers may purchase Purchased Assets and Contributed Assets from a Seller Party based solely upon the information provided by such Seller Party to Administrative Agent and Buyers in the Asset Schedule and the representations, warranties and covenants contained herein, and that Administrative Agent or Buyers, at their option, have the right at any time to conduct a partial or complete due diligence review on some or all of the Purchased Assets and Contributed Assets purchased in a Transaction, including, without limitation, ordering BPOs, new credit reports and new appraisals on the related Mortgaged Properties and
otherwise re-generating the information used to originate such Purchased Assets and Contributed Assets. Administrative Agent or Buyers may underwrite such Purchased Assets and Contributed Assets itself or engage a mutually agreed upon third party underwriter to perform such underwriting. Each Seller Party agrees to cooperate with Administrative Agent, Buyers and any third party underwriter in connection with such underwriting, including, but not limited to, providing Administrative Agent, Buyers and any third party underwriter with access to any and all documents, records, agreements, instruments or information relating to such Purchased Assets and Contributed Assets in the possession, or under the control, of Seller Parties. Each Seller Party further agrees that Seller Parties shall pay all costs and expenses incurred by Administrative Agent and Buyers in connection with Administrative Agent’s and Buyers’ activities pursuant to this Section 34.
42.Authorizations
Any of the persons whose signatures and titles appear on Schedule 2 hereto are authorized, acting singly, to act for Seller Parties or Administrative Agent to the extent set forth therein, as the case may be, under this Agreement. The Seller Parties may amend Schedule 2 hereto from time to time by delivering a revised Schedule 2 to Administrative Agent and expressly stating that such revised Schedule 2 shall replace the existing Schedule 2 hereto.
43.Acknowledgment of Assignment and Administration of Repurchase Agreement
Pursuant to Section 22 above (Non-assignability) of this Agreement, Administrative Agent may sell, transfer and convey or allocate certain Purchased Assets and Contributed Assets and the related Repurchase Assets and related Transactions to certain affiliates of Administrative Agent and/or one (1) or more CP Conduits (the “Additional Buyers”). Each Seller Party hereby acknowledges and agrees to the joinder of such Additional Buyers and the assignments and the terms and provisions set forth in the Administration Agreement. The Administrative Agent shall administer the provisions of this Agreement, subject to the terms of the Administration Agreement for the benefit of the Buyers and any Repledgees, as applicable. For the avoidance of doubt, all payments, notices, communications and agreements pursuant to this Agreement shall be delivered to, and entered into by, the Administrative Agent for the benefit of the Buyers and/or the Repledgees, as applicable. Furthermore, to the extent that the Administrative Agent exercises remedies pursuant to this Agreement, any of the Administrative Agent and/or any Buyer will have the right to bid on and/or purchase any of the Repurchase Assets pursuant to Section 16 above (Remedies Upon Default). The benefit of all representations, rights, remedies and covenants set forth in this Agreement shall inure to the benefit of the Administrative Agent on behalf of each Buyer and Repledgees, as applicable. All provisions of this Agreement shall survive the transfers contemplated herein (including any Repledge Transactions) and in the Administration Agreement, except to the extent such provisions are modified by the Administration Agreement. In the event of a conflict between the Administration Agreement and this Agreement, the terms of the Administration Agreement shall control. Notwithstanding that multiple Buyers may purchase individual Purchased Mortgage Loans and Contributed Assets subject to Transactions entered into under this Agreement, all Transactions shall continue to be deemed a single Transaction and all of the Repurchase Assets shall be security for all of the Obligations hereunder, subject to the priority of payments provisions set forth in the Administration Agreement.
44.Acknowledgement of Anti-Predatory Lending Policies
Administrative Agent has in place internal policies and procedures that expressly prohibit its purchase of any High Cost Mortgage Loan.
45.Documents Mutually Drafted
Each Seller Party, the Guarantor, the Administrative Agent and the Buyers agree that this Agreement and each other Program Agreement prepared in connection with the Transactions set forth herein have been mutually drafted and negotiated by each party, and consequently such documents shall not be construed against either party as the drafter thereof.
46.General Interpretive Principles
For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:
m.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;
n.accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;
o.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;
p.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;
q.the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision;
r.the term “include” or “including” shall mean without limitation by reason of enumeration;
s.all times specified herein or in any other Program Agreement (unless expressly specified otherwise) are local times in New York, New York unless otherwise stated;
t.all references herein or in any Program Agreement to “good faith” means good faith as defined in Section 1-201(b)(20) of the UCC as in effect in the State of New York; and
u.an Event of Default shall be deemed continuing unless such Event of Default has been waived in writing.
47.Conflicts
In the event of any conflict between the terms of this Agreement and any other Program Agreement, the documents shall control in the following order of priority: first, the terms of the Pricing Side Letter shall prevail, then the terms of the Administration Agreement, then the terms of this Agreement shall prevail, and then the terms of the other Program Agreements shall prevail.
48.Pool Subdivisions
The Administrative Agent may from time to time deliver to Seller Parties a Pool Subdivision Notice which notice shall identify a Pool of Purchased Assets and/or Contributed Assets that shall be treated separately from the remaining Purchased Assets and/or Contributed Assets (which remaining Purchased Assets and/or Contributed Assets shall constitute another Pool). The Administrative Agent may modify any such Pool Subdivision Notice from time to time to readjust the composition of the Pools identified therein. Following delivery of a Pool Subdivision Notice, the calculations with respect to Price Differential (and all of the component calculations used in determining such calculation) shall be calculated separately on the basis of the Purchased Assets comprising each Pool, which shall result in a separate Price Differential for each Pool. For the avoidance of doubt, a Pool Subdivision Notice shall not (a) modify or otherwise affect the rights and obligations of the parties under the Program Agreements except as expressly contemplated in this Section 41; and (b) shall not be construed as a Severance Notice as contemplated by Section 19 of this Agreement.
49.Bankruptcy Non-Petition
The parties hereby agree that they shall not institute against, or join any other person in instituting against, any Buyer that is a CP Conduit any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or other proceeding under any federal or state bankruptcy or similar law, for one (1) year and one (1) day after the latest maturing commercial paper note issued by the applicable CP Conduit is paid in full.
50.Limited Recourse
The obligations of each Buyer under this Agreement or any other Program Agreement are solely the corporate obligations of such Buyer. No recourse shall be had for the payment of any amount owing by any Buyer under this Agreement, or for the payment by any Buyer of any fee in respect hereof or any other obligation or claim of or against such Buyer arising out of or based on this Agreement, against any stockholder, partner, member, employee, officer, director or incorporator or other authorized person of such Buyer. In addition, notwithstanding any other provision of this Agreement, the parties agree that all payment obligations of any Buyer that is a CP Conduit under this Agreement shall be limited recourse obligations of such Buyer, payable solely from the funds of such Buyer available for such purpose in accordance with its commercial paper program documents. Each party waives payment of any amount which such Buyer does not pay pursuant to the operation of the preceding sentence until the day which is at least one (1) year and one (1) day after the payment in full of the latest maturing commercial paper note (and waives any “claim” against such Buyer within the meaning of Section 101(5) of the Bankruptcy Code or any other Debtor Relief Law for any such insufficiency until such date).
51.Nominee
a.Seller Parties, Administrative Agent and the Buyers hereby acknowledge and agree, and Seller Parties hereby appoint, the Nominee as (i) their nominee as mortgagee of record and payee on the FHA Connection System with respect to each Early Buyout Loan, and the Nominee hereby accepts such appointment, and (ii) as nominee and agent of Seller Parties, Administrative Agent and the Buyers as set forth herein, to the extent applicable.
b.Following receipt by Nominee of written notice of the occurrence and continuation of an Event of Default, the Nominee agrees to take direction from the Administrative Agent with respect to the FHA Loans, Early Buyout Loans and Contributed REO Properties.
c.It is the intent of the Seller Parties, Servicer, Administrative Agent and the Buyers that the Nominee retains bare legal title to the Early Buyout Loans, and Contributed REO Properties for all purposes including, without limitation, for purposes of Section 541(d) of the Bankruptcy Code and accordingly, Nominee, in their capacity as a nominee, shall have no property right to the Contributed REO Properties.
d.Administrative Agent may, upon notice to the Seller Parties, terminate the Nominee and appoint itself or another person as the successor nominee following an Event of Default that is continuing.
52.Joint and Several
Seller Parties, Administrative Agent and Buyers hereby acknowledge and agree that Seller Parties are each jointly and severally liable to Administrative Agent and Buyers for all of their respective Obligations hereunder. Accordingly, each Seller Party waives any and all notice of creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by Administrative Agent upon such Seller Party’s joint and several liability. Each Seller Party waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon such Seller Party with respect to the Obligations. When pursuing its rights and remedies hereunder against any Seller Party, Administrative Agent may, but shall be under no obligation to, pursue such rights and remedies hereunder against any Seller Party or against any collateral security for the Obligations or any right of offset with respect thereto, and any failure by Administrative Agent to pursue such other rights or remedies or to collect any payments from such Seller Party to realize upon any such collateral security or to exercise any such right of offset, or any release of such Seller Party or any such collateral security, or right of offset, shall not relieve such Seller Party of any liability hereunder, and shall not impair or affect
the rights and remedies, whether express, implied or available as a matter of law, of Administrative Agent against such Seller Party.
[Signature Pages Follow]
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed as of the date first above written.
CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC,
as Administrative Agent
By:
Name:
Title:
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,
as a Buyer
By:
Name:
Title:
By:
Name:
Title:
ALPINE SECURITIZATION LTD as a Buyer, by Credit Suisse AG, New York Branch as Attorney-in-Fact
By:
Name:
Title:
By:
Name:
Title:
Signature Page to the Master Repurchase Agreement
HOME POINT FINANCIAL CORPORATION, as Seller
By:
Name:
Title:
Signature Page to the Master Repurchase Agreement
SCHEDULE 1-A
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO PURCHASED MORTGAGE LOANS AND CONTRIBUTED MORTGAGE LOANS
Each Seller Party makes the following representations and warranties to Administrative Agent with respect to each Purchased Mortgage Loan and Contributed Mortgage Loan that is at all times subject to a Transaction hereunder and at all times while the Program Agreements and any Transaction hereunder is in full force and effect. With respect to those representations and warranties which are made to the best of such Seller Party’s knowledge, if it is discovered by such Seller Party or Administrative Agent that the substance of such representation and warranty is inaccurate, notwithstanding such Seller Party’s lack of knowledge with respect to the substance of such representation and warranty, such inaccuracy shall be deemed a breach of the applicable representation and warranty for purposes of determining Asset Value.
1.Payments Current. Except with respect to a Mortgage Loan that is an Early Buyout Loan, Non-Performing Mortgage Loan or a Re-Performing Mortgage Loan, all payments required to be made up to the Purchase Date for the Mortgage Loan under the terms of the Mortgage Note have been made and credited. With respect to a Mortgage Loan other than an Early Buyout Loan, Non-Performing Mortgage Loan or a Re-Performing Mortgage Loan, no payment required under the Mortgage Loan is more than sixty (60) days delinquent using the Mortgage Bankers Association method of determining delinquency nor has any payment under the Mortgage Loan been delinquent more than sixty (60) days at any time since the origination of the Mortgage Loan and, if the Mortgage Loan is a Co-op Loan (other than a Non-Performing Mortgage Loan or a Re-Performing Mortgage Loan), no foreclosure action or private or public sale under the Uniform Commercial Code has ever to the knowledge of the related Seller Party, been threatened or commenced with respect to the Co-op Loan. Except with respect to a Mortgage Loan that is a Non-Performing Mortgage Loan or a Re-Performing Mortgage Loan, the first Monthly Payment shall be made, or shall have been made, with respect to the Mortgage Loan by the next due date.
2.No Outstanding Charges. Except with respect to Non-Performing Mortgage Loans and Re-Performing Mortgage Loans, all taxes, governmental assessments, insurance premiums, water, sewer and municipal charges, leasehold payments or ground rents which previously became due and owing have been paid, or an escrow of funds has been established, to the extent permitted by law, 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. No Seller Party nor the originator from which such Seller Party acquired the Mortgage Loan has advanced funds, or induced, solicited or knowingly received any advance of funds by a party other than the Mortgagor, directly or indirectly, for the payment of any amount required under the Mortgage Loan, except for interest accruing from the date of the Mortgage Note or date of disbursement of the proceeds of the Mortgage Loan, whichever is earlier, to the day which precedes by one month the Due Date of the first installment of principal and interest thereunder.
3.Type of Loan. With respect to each Business Purpose Mortgage Loan, (i) the Mortgage Loan is primarily for business or commercial purposes (as referenced in the Truth and Lending Act and its implementing regulation, Regulation Z) and not primarily for personal, family or household purposes and (ii) the Mortgaged Property securing the related Mortgage is non-owner occupied. Such Business Purpose Mortgage Loan is not subject to the Truth in Lending Act and its implementing regulation, Regulation Z, and the Real Estate Settlement Procedures Act and its implementing regulation, Regulation X. The Mortgagor has executed a business purpose affidavit stating that the Business Purpose Mortgage Loan is for commercial, business or investment purposes only and that the Mortgagor is not and will not occupy or claim the property as a primary or secondary residence.
4.Income/Employment/Assets. With respect to each Business Purpose Mortgage Loan, the originator verified the Mortgagor’s income, employment, and assets in accordance with the Acquisition Guidelines.
5.Original Terms Unmodified. Other than with respect to Early Buyout Loans, Non-Performing Mortgage Loans and Re-Performing Mortgage Loans, the terms of the Mortgage Note (and the Proprietary Lease, the Assignment of Proprietary Lease and Stock Power with respect to each Co-op Loan) 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 recorded, if necessary to protect the interests of Buyers, and which has been delivered to the Custodian and the terms of which are reflected in the Custodial Asset Schedule and approved by the Administrative Agent. The substance of any such waiver, alteration or modification has been approved by the title insurer, to the extent required, and its terms are reflected on the Custodial Asset Schedule. No Mortgagor in respect of the Mortgage Loan has been released, in whole or in part, except in connection with an assumption agreement approved by the title insurer, to the extent required by such policy, and which assumption agreement is part of the Asset File delivered to the Custodian and the terms of which are reflected in the Custodial Asset Schedule.
6.No Defenses. The Mortgage Loan (and the Assignment of Proprietary Lease related to each Co-op 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, and no Mortgagor in respect of the Mortgage Loan was a debtor in any state or federal bankruptcy or insolvency proceeding at the time the Mortgage Loan was originated. Except with respect to a Mortgage Loan that is an Early Buyout Loan, Non-Performing Mortgage Loan or a Re-Performing Mortgage Loan, no Seller Party has knowledge nor has it received any notice that any Mortgagor in respect of the Mortgage Loan is a debtor in any state or federal bankruptcy or insolvency proceeding. Except that the Mortgage Loan may not be a Qualified Mortgage Loan and may be a “higher cost mortgage loan” as defined under 12 CFR 1026.35, no Seller Party has knowledge of any circumstances or condition with respect to the Mortgage, the Mortgaged Property, the Mortgagor or the Mortgagor’s credit standing that could reasonably be expected to cause the Mortgage Loan to become delinquent or materially adversely affect the value or marketability of the Mortgage Loan.
7.Hazard and Flood 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 the applicable Seller Party as of the date of origination consistent with the Acquisition Guidelines, against earthquake and other risks insured against by Persons operating like properties in the locality of the Mortgaged Property, in an amount not less than the greatest of (i) 100% of the replacement cost of all improvements to the Mortgaged Property, (ii) the outstanding principal balance of the Mortgage Loan, or (iii) the amount necessary to avoid the operation of any co-insurance provisions with respect to the Mortgaged Property, and consistent with the amount that would have been required as of the date of origination in accordance with the Acquisition Guidelines. 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 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 1973. All such insurance policies (collectively, the “hazard insurance policy”) contain a standard mortgagee clause naming the related Seller Party or its servicer, and 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 any Seller Party. All premiums on such insurance policy 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 therefor from such Mortgagor. Where required by state law or regulation, the Mortgagor has been given an opportunity to choose the carrier of the required hazard insurance, provided the policy is not a “master” or “blanket” hazard insurance policy covering a condominium, or any hazard insurance policy covering the common facilities of a planned unit development. The hazard insurance policy is the valid and binding obligation of the insurer and is in full force and effect. No Seller Party has engaged in, or has knowledge of the Mortgagor’s having engaged in, any act or omission which would impair the coverage of any such policy, the benefits of the endorsement provided for herein, or the validity and binding effect of either including, without limitation, any unlawful fee, commission, kickback or other unlawful compensation or value of any kind having been or will be received, retained or realized by any attorney,
firm or other Person, or that such unlawful items have been received, retained or realized by such Seller Party.
8.Environmental Compliance. To the best of the applicable Seller Party’s knowledge, there does not exist on the Mortgaged Property any hazardous substances, hazardous materials, hazardous wastes, solid wastes or other pollutants, as such terms are defined in the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. 9601 et seq., the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., or other applicable federal, state or local environmental laws including, without limitation, asbestos, in each case in excess of the permitted limits and allowances set forth in such environmental laws to the extent such laws are applicable to the Mortgaged Property. To the best of the applicable Seller Party’s knowledge with respect to each of the following clauses, there is no pending action or proceeding directly involving the Mortgaged Property in which compliance with any environmental law, rule or regulation is an issue; there is no violation of any applicable environmental law (including, without limitation, asbestos), rule or regulation with respect to the Mortgaged Property; and nothing further remains to be done to satisfy in full all requirements of each such law, rule or regulation constituting a prerequisite to use and enjoyment of said property.
9.Compliance with Applicable Law. At the time of origination, or if modified, the date of modification, any and all requirements of any federal, state or local 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, the consummation of the transactions contemplated hereby will not involve the violation of any such laws or regulations, and the related Seller Party shall maintain or shall cause its agent to maintain in its possession, available for the inspection of Administrative Agent, and shall deliver to Administrative Agent, upon demand, evidence of compliance with all such requirements.
10.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 effect any such release, cancellation, subordination or rescission. Except with respect to a Mortgage Loan that is an Early Buyout Loan, no Seller Party has waived the performance by the Mortgagor of any action, if the Mortgagor’s failure to perform such action would cause the Mortgage Loan to be in default, nor has any Seller Party waived any default resulting from any action or inaction by the Mortgagor.
11.Source of Loan Payments. With respect to Business Purpose Mortgage Loans, no payments due and payable under the terms of the Mortgage Note and Mortgage, have been paid by any person (other than the Mortgagor and any guarantor) who was involved in, or benefited from, the sale or purchase of the Mortgaged Property or the origination, refinancing, sale, purchase or servicing of the Mortgage Loan.
12.Location and Type of Mortgaged Property. The Mortgaged Property is located in an Acceptable State as identified in the Asset Schedule and consists of a single parcel of real property with a dwelling which is acceptable to the related Agency pursuant to the applicable Agency Guide. No residence or dwelling is a mobile home or a manufactured dwelling. No portion of the Mortgaged Property is used for commercial purposes; provided that Mortgaged Properties which contain a home office shall not be considered as being used for commercial purposes as long as the Mortgaged Property has not been altered for commercial purposes and is not storing any chemicals or raw materials other than those commonly used for homeowner repair, maintenance and/or household purposes. The Mortgage Loan is not secured by an industrial, agricultural, mixed use, undeveloped property, or by a condominium unit that was part of a condominium development that operated as, or held itself out to be, a condominium hotel, regardless of whether the unit itself was being used as a condotel unit.
13.Validity of Lien. The Mortgage is a valid, subsisting, enforceable and perfected, and with respect to each Mortgage Loan other than a Second Lien Mortgage Loan, first priority lien and first priority security interest or, with respect to a Second Lien Mortgage Loan, a second lien or a second priority security interest, in each case, 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:
(1)the lien of current real property taxes, water charges, sewer runts, homeowners’ association dues and fees and other assessments not yet due and payable;
(2)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 generally and specifically referred to in lender’s title insurance policy delivered to the originator of the Mortgage Loan and (a) referred to or otherwise considered in the appraisal made for the originator of the Mortgage Loan or (b) which do not adversely affect the Appraised Value of the Mortgaged Property set forth in such appraisal;
(3)the exceptions (general and specific) and exclusions, if any, set forth in the title policy;
(4)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; and
(5)with respect to Second Lien Mortgage Loans, a first lien.
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 (a) with respect to Mortgage Loans other than Second Lien Mortgage Loans, first lien and first priority security interest and (b) with respect to Second Lien Mortgage Loans, second lien and second priority interest, in each case, on the property described therein and the related Seller Party has full right to pledge and assign the same to Administrative Agent. The Mortgaged Property was not, as of the date of origination of the Mortgage Loan, subject to a mortgage, deed of trust, deed to secure debt or other security instrument creating a lien subordinate to the lien of the Mortgage, except in accordance with the Acquisition Guidelines.
14.Validity of Mortgage Loan 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, subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). All parties to the Mortgage Note, the Mortgage and any other such related agreement had legal capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage Note, the Mortgage and any such agreement, and the Mortgage Note, the Mortgage and any other such related agreement have been duly and properly executed by such related parties. 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. The related Seller Party has reviewed all of the documents constituting the Asset File and has made such inquiries as it deems necessary to make and confirm the accuracy of the representations set forth herein.
15.Full Disbursement of Proceeds. Other than with respect to Holdback Amounts in the related Holdback Account, HELOCs, HECM Loans and Private Label Reverse Mortgage Loans, and any escrow holdback amounts with respect to weather-related or seasonal improvement costs, fees or expenses, the proceeds of the Mortgage Loan have been fully disbursed and there is no further requirement for future advances thereunder, and, other than with respect to Business Purpose Mortgage Loans, 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. 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. All broker fees have been properly assessed to the Mortgagor and no claims will arise as to broker fees that are double charged and for which the Mortgagor would be entitled to reimbursement.
16.Ownership. The applicable Seller Party has full right to sell the Mortgage Loan 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 such Mortgage Loan pursuant to this Agreement and following the sale of each Mortgage Loan, Buyers will own such Mortgage Loan (and with respect to any Co-op Loan, the sole owner of the related Assignment of Proprietary Lease) free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest except any such security interest created pursuant to the terms of this Agreement. The applicable Seller Party intends to relinquish all rights to possess, control and monitor the Mortgage Loan. Other than with respect to an Agency Mortgage Loan, the Mortgaged Property was not, as of the date of origination of the Mortgage Loan, subject to a mortgage, deed of trust, deed to secure debt or other security instrument creating a lien subordinate to the lien of the Mortgage.
17.Doing Business. All parties which have had any interest in the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of such interest, were) (i) in compliance with any and all applicable licensing requirements of the laws of the state wherein the Mortgaged Property is located, and (ii) either (A) organized under the laws of such state, (B) qualified to do business in such state, (C) a federal savings and loan association, a savings bank or a national bank having a principal office in such state, or (D) not doing business in such state, in each case, to the extent non-compliance would have a material adverse effect on such Mortgage Loan or on the Administrative Agent or Buyers’ rights thereunder.
18.Title Insurance. The Mortgage Loan is covered by either (i) an attorney’s opinion of title and abstract of title, the form and substance of which is acceptable to prudent mortgage lending institutions making mortgage loans in the area wherein the Mortgaged Property is located or (ii) an ALTA lender’s title insurance policy or other generally acceptable form of policy in accordance with the Asset Guidelines, with respect to each Agency Mortgage Loan, acceptable to Fannie Mae or Freddie Mac, as applicable, and with respect to FHA Loans, USDA Loans and VA Loans, the FHA, USDA or the VA, as the case may be, and each such title insurance policy is issued by a title insurer acceptable to Fannie Mae or Freddie Mac, as applicable, and with respect to FHA Loans, USDA Loans and VA Loans, the FHA, USDA or the VA, as the case may be, and qualified to do business in the jurisdiction where the Mortgaged Property is located, insuring the applicable Seller Party, its successors and assigns, as to the first priority lien of the Mortgage other than Second Lien Mortgage Loans, and with respect to Second Lien Mortgage Loans as to the second priority lien of the related Mortgage, as applicable, in the original principal amount of the Mortgage Loan, with respect to a Mortgage Loan (or to the extent a Mortgage Note provides for negative amortization, the maximum amount of negative amortization in accordance with the Mortgage), subject only to the exceptions contained in clauses (i) - (v) of paragraph (m) of this Schedule 1-A, and in the case of an adjustable rate Mortgage Loan, against any loss by reason of the invalidity or unenforceability of the lien resulting from the provisions of the Mortgage providing for adjustment to the Mortgage Interest Rate and Monthly Payment. Where required by state law or regulation, the Mortgagor has been given the opportunity to choose the carrier of the required mortgage title insurance. Additionally, such lender’s title insurance policy affirmatively insures ingress and egress and against encroachments by or upon the Mortgaged Property or any interest therein. The title policy does not contain any special exceptions (other than the standard exclusions) for zoning and uses and has been marked to delete the standard survey exception or to replace the standard survey exception with a specific survey reading. The applicable Seller Party, its successors and assigns, are the sole insureds of such lender’s title insurance policy, and such lender’s title insurance policy is valid and remains in full force and effect and will be in force and effect upon the consummation of the transactions contemplated by this Agreement. No claims have been made under such lender’s title insurance policy, and no prior holder or servicer of the related Mortgage, including the related Seller Party, has done, by act or omission, anything which would impair the coverage of such lender’s title insurance policy, including without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful items have been received, retained or realized by such Seller Party.
19.No Defaults. Except with respect to an Early Buyout Loan, Non-Performing Mortgage Loan, other than a Monthly Payment no more than sixty (60) days delinquent, there is no default, breach, violation or event of acceleration existing under the Mortgage or the Mortgage Note and no event has occurred 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, and no Seller Party nor its predecessors have waived any default, breach, violation or event of acceleration; and no Seller Party nor any of its Affiliates nor any of their respective predecessors, have waived any default, breach, violation or event which would permit acceleration; and with respect to each Co-op Loan other than an Early Buyout Loan or Non-Performing Mortgage Loan, there is no default in complying with the terms of the Mortgage Note, the Assignment of Proprietary Lease and the Proprietary Lease and all maintenance charges and assessments (including assessments payable in the future installments, which previously became due and owing) have been paid, and the related Seller Party has the right under the terms of the Mortgage Note, Assignment of Proprietary Lease and Recognition Agreement to pay any maintenance charges or assessments owed by the Mortgagor, except with respect to a Mortgage Loan that is an Early Buyout Loan.
20.No Mechanics’ Liens. Except as insured against by the related title insurance policy, to the applicable Seller Party’s best knowledge, there are no mechanics’ or similar liens or claims which have been filed for work, labor or material (and, other than with respect to HECM Loans and Private Label Reverse Mortgage Loans, 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.
21.Location of Improvements; Encroachments. Except as insured against by the related title insurance policy, all improvements which were considered in determining the Appraised Value of the Mortgaged Property lie wholly within the boundaries and building restriction lines of the Mortgaged Property, no improvements on adjoining properties encroach upon the Mortgaged Property, and no improvement located on or being part of the Mortgaged Property is in violation of any applicable zoning and building law, ordinance or regulation.
22.Origination; Payment Terms. With respect to any Agency Mortgage Loan, the Mortgage Loan was originated by or in conjunction with a mortgagee approved by the Secretary of Housing and Urban Development pursuant to Sections 203 and 211 of the National Housing Act, a savings and loan association, a savings bank, a commercial bank, credit union, insurance company or similar banking institution which is supervised and examined by a federal or state authority. Other than with respect to HELOCs, principal and/or interest payments on the Mortgage Loan commenced or will commence no more than sixty (60) days after funds were disbursed in connection with the Mortgage Loan. Other than with respect to a Business Purpose Mortgage Loan or as otherwise permitted by the applicable Agency Guide, no Mortgage Loan has a balloon payment feature. The Mortgagor contributed a percentage amount equal to or greater than the amount required pursuant to the applicable Agency Guide of the purchase price for the Mortgaged Property from their own funds. Interest on the Mortgage Loan is calculated on the basis of a 360-day year consisting of twelve (12) 30-day months. With respect to adjustable rate Mortgage Loans, the Mortgage Interest Rate is adjusted on each Interest Rate Adjustment Date to equal the Index plus the Gross Margin (rounded up or down to the nearest .125%), subject to the Mortgage Interest Rate Cap. Other than with respect to HELOCs, HECM Loans and Private Label Reverse Mortgage Loans, the Mortgage Note is payable on the first day of each month in equal monthly installments of principal and interest, which installments of interest with respect to adjustable rate Mortgage Loans, are subject to change on the Interest Rate Adjustment Date due to adjustments to the Mortgage Interest Rate on each Interest Rate Adjustment Date, with interest calculated and payable in arrears, sufficient to amortize the Mortgage Loan fully by the stated maturity date, over an original term of not more than thirty (30) years from commencement of amortization.
23.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. There is no homestead or other exemption available to the Mortgagor that would interfere with such right of foreclosure. The Mortgage Note and Mortgage are on forms acceptable to Fannie Mae or Freddie Mac, as applicable.
24.Occupancy of the Mortgaged Property. As of the Purchase Date the Mortgaged Property is, or, in the case of Mortgaged Property which is a second or vacation home or investment property, capable of being lawfully occupied under applicable law. Other than with respect to Business Purpose Mortgage Loans, all inspections, licenses and certificates required to be made or issued with respect to all occupied portions of the Mortgaged Property and, with respect to the use and occupancy of the same, including but not limited to certificates of occupancy and fire underwriting certificates, have been made or obtained from the appropriate authorities. No Seller Party has received notification from any Governmental Authority that the Mortgaged Property is in material non-compliance with such laws or regulations, is being used, operated or occupied unlawfully or has failed to have or obtain such inspection, licenses or certificates, as the case may be. No Seller Party has received notice of any violation or failure to conform with any such law, ordinance, regulation, standard, license or certificate. Other than with respect to a Business Purpose Mortgage Loan, with respect to any Mortgage Loan originated with an “owner-occupied” Mortgaged Property, the Mortgagor represented at the time of origination of the Mortgage Loan that the Mortgagor would occupy the Mortgaged Property as the Mortgagor’s primary residence.
25.No Additional Collateral. The Mortgage Note is not and has not been 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 (m) above.
26.Data. The information on the Asset Schedule correctly and accurately reflects the information contained in the applicable Seller Party’s records (including, without limitation, the Asset File, as applicable) in all material respects. The information contained under each of the headings in the Asset Schedule for such Mortgage Loan is true, complete and correct in all material respects.
27.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 the Custodian or Administrative Agent to the trustee under the deed of trust, except in connection with a trustee’s sale after default by the Mortgagor.
28.Transfer of Mortgage Loans. Except with respect to a Mortgage Loan registered with MERS or intended for purchase by GNMA, the related Assignment of Mortgage is in recordable form and is acceptable for recording under the laws of the jurisdiction in which the Mortgaged Property is located.
29.Due-on-Sale. Except with respect to a Mortgage Loan intended for purchase by GNMA, and subject to the federal Garn-St. Germain Depository Institutions Act of 1982 and similar state laws restricting the enforceability of “due on sale” provisions, 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.
30.No Graduated Payments or Contingent Interests. The Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan does not have a shared appreciation or other contingent interest feature. No Mortgage Loan has a negative amortization feature.
31.Consolidation of Future Advances. Any future advances made to the Mortgagor prior to the Purchase Date have been consolidated with the outstanding principal amount secured by the Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and single repayment term. The lien of the Mortgage securing the consolidated principal amount is expressly insured as having first lien priority with respect to Mortgage Loans other than Second Lien Mortgage Loans, or second lien priority with respect to Second Lien Mortgage Loans, in each case, by a title insurance policy, an endorsement to the policy insuring the mortgagee’s consolidated interest or by other title evidence in accordance with the Asset Guidelines and, with respect to each Agency Mortgage Loan, acceptable to the related Agency. The consolidated principal amount does not exceed the original principal amount of the Mortgage Loan.
32.No Condemnation Proceeding/No Damage. Subsequent to the origination of the Mortgage Loan, to each Seller Party’s best knowledge, there have not been any condemnation proceedings with respect to the Mortgaged Property and no Seller Party has knowledge of any such proceedings. Except with respect to Non-Performing Mortgage Loans and Re-Performing Mortgage Loans, to the best of each Seller Party’s knowledge, the Mortgaged Property is undamaged by water, fire, earthquake, earth movement other than earthquake, windstorm, flood, tornado, or similar casualty (excluding casualty from the presence of hazardous wastes or hazardous substances) to affect adversely the value of the Mortgaged Property as security for the Mortgage Loan as reflected in the value of the Mortgage Loan.
33.Servicing and Collection Practices; Escrow Deposits; Holdback Amounts. The servicing and collection practices used by the applicable Seller Party with respect to each Mortgage Loan have been in accordance with Accepted Servicing Practices, applicable laws and regulations, and have been in all respects legal and proper. With respect to (i) each Mortgage Loan for which there are escrow deposits and Holdback Amounts, all such payments are held in the related Holdback Account in trust for the related Seller Party and (ii) all such payments in respect of escrow deposits and Escrow Payments are in the possession of, or under the control of, the related Seller Party and, in each case, no deficiencies exist in connection therewith for which customary arrangements for repayment thereof have not been made. Holdback Amounts and Escrow Payments, have been collected in full compliance with state and federal law. An escrow of funds is not prohibited by applicable law and, where required by applicable law, has been established in an amount sufficient to pay for every item that remains unpaid and has been assessed but is not yet due and payable. No escrow deposits, Escrow Payments or Holdback Amounts or other charges or payments due the related Seller Party 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. Any interest required to be paid pursuant to state, federal and local law has been properly paid and credited.
34.Conversion to Fixed Interest Rate. Except as allowed by Fannie Mae or Freddie Mac or otherwise as expressly approved in writing by Administrative Agent, with respect to adjustable rate Mortgage Loans, the Mortgage Loan is not convertible to a fixed interest rate Mortgage Loan.
35.Other Insurance Policies. No action, inaction or event has occurred and no state of facts exists or has existed that has resulted or will result in the exclusion from, denial of, or defense to coverage under any applicable special hazard insurance policy, private mortgage insurance policy or bankruptcy bond, irrespective of the cause of such failure of coverage. In connection with the placement of any such insurance, no commission, fee, or other compensation has been or will be received by the related Seller Party or by any officer, director, or employee of such Seller Party or any designee of such Seller Party or any corporation in which such Seller Party or any officer, director, or employee had a financial interest at the time of placement of such insurance.
36.Servicemembers Civil Relief Act. The Mortgagor has not notified the related Seller Party, and no Seller Party has knowledge, of any relief requested or allowed to the Mortgagor under the Servicemembers Civil Relief Act of 2003.
37.Property Valuation. Each Asset File for a Mortgage Loan contains a written BPO or appraisal that sets forth an “as is” value prepared by a third-party appraiser licensed or certified by the applicable governmental body in which the mortgaged property is located and in accordance with the requirements of Title XI of FIRREA. The appraisal for such Mortgage Loan satisfies, with respect to each Agency Mortgage Loan, the requirements of Fannie Mae, Freddie Mac, Ginnie Mae, FHA, or VA, as applicable, and applicable legal and regulatory requirements, and was made and signed prior to the final approval of the Mortgage Loan application. The person performing such property valuation (including an appraiser) received no benefit from, and such person’s compensation or flow of business from the originator from which the related Seller Party purchased the related Mortgage Loan was not affected by, the approval or disapproval of such Mortgage Loan. All improvements which were considered in determining the appraised value of the Mortgaged Property lie wholly within the boundaries and building restriction lines of the Mortgaged Property, and no improvements on adjoining properties encroach upon the Mortgaged Property. With respect to Second Lien Mortgage Loans, the related Asset File contains a review appraisal approved by Administrative Agent in its sole discretion was conducted
and executed prior to the funding of the Mortgage Loan by a qualified third party appraiser who had no interest, direct or indirect in the Mortgaged Property or in any loan made on the security thereof, and whose compensation is not affected by the approval or disapproval of the Mortgage Loan.
38.Disclosure Materials. The Mortgagor has received all disclosure materials required by applicable law with respect to the making of adjustable rate mortgage loans, and the related Seller Party maintains copies of such disclosure materials in the Asset File.
39.Construction or Rehabilitation of Mortgaged Property. Other than with respect to a Business Purpose Mortgage Loan, no Mortgage Loan was made in connection with the construction or rehabilitation of a Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged Property. No Business Purpose Mortgage Loan was made in connection with the ground up construction of a Mortgaged Property.
40.No Defense to Insurance Coverage. No action has been taken or failed to be taken, no event has occurred and no state of facts exists or has existed on or prior to the Purchase Date (whether or not known to any Seller Party on or prior to such date) which has resulted or will result in an exclusion from, denial of, or defense to coverage under any private mortgage insurance, if any, (including, without limitation, any exclusions, denials or defenses which would limit or reduce the availability of the timely payment of the full amount of the loss otherwise due thereunder to the insured) whether arising out of actions, representations, errors, omissions, negligence, or fraud of any Seller Party, the related Mortgagor or any party involved in the application for such coverage, including the appraisal, plans and specifications and other exhibits or documents submitted therewith to the insurer under such insurance policy, or for any other reason under such coverage, but not including the failure of such insurer to pay by reason of such insurer’s breach of such insurance policy or such insurer’s financial inability to pay.
41.Capitalization of Interest. The Mortgage Note does not by its terms provide for the capitalization or forbearance of interest.
42.No Equity Participation. No document relating to the Mortgage Loan provides for any contingent or additional interest in the form of participation in the cash flow of the Mortgaged Property or a sharing in the appreciation of the value of the Mortgaged Property. The indebtedness evidenced by the Mortgage Note is not convertible to an ownership interest in the Mortgaged Property or the Mortgagor and no Seller Party has financed nor does it own directly or indirectly, any equity of any form in the Mortgaged Property or the Mortgagor.
43.Proceeds of Mortgage Loan. The proceeds of the Mortgage Loan have not been and shall not be used to satisfy, in whole or in part, any debt owed or owing by the Mortgagor to the related Seller Party or any Affiliate or correspondent of such Seller Party, except in connection with a refinanced Mortgage Loan.
44.Origination Date. Other than with respect to Early Buyout Loans, Non-Performing Mortgage Loans, Re-Performing Mortgage Loans, Scratch and Dent Mortgage Loans and Seasoned Performing Loans, the Purchase Date is no more than one-hundred and eighty (180) days following the origination date.
45.Reserved.
46.Mortgage Submitted for Recordation. The Mortgage either has been or will promptly be submitted for recordation in the appropriate governmental recording office of the jurisdiction where the Mortgaged Property is located.
47.Documents Genuine. The Mortgage Loan and all Mortgage Loan Documents are complete and authentic and all signatures thereon are genuine and such Mortgage Loan is (i) a “closed” loan and (ii) other than with respect to a BPL – Holdback, HECM Loan, Private Label Reverse Mortgage Loan or HELOC, fully funded by the related Seller Party and held in such Seller Party’s name.
48.Reserved.
49.Description. The Mortgage Loan conforms to the description thereof as set forth on the related Asset Schedule delivered to the Custodian and Administrative Agent.
50.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.
51.Acquisition Guidelines. The Mortgage Loan has been acquired in accordance with the Acquisition Guidelines (including all supplements or amendments thereto) previously provided to Administrative Agent, other than with respect to any Agency Mortgage Loan, which has been acquired in accordance with the applicable Agency Guide.
52.Primary Mortgage Guaranty Insurance. If so indicated on the related Asset Schedule, each Mortgage Loan is insured as to payment defaults by a policy of primary mortgage guaranty insurance in the amount required where applicable, and by an insurer approved, by the applicable take-out investor, if applicable, and all provisions of such primary mortgage guaranty insurance have been and are being complied with, such policy is in full force and effect, and all premiums due thereunder have been paid. Each Mortgage Loan which is represented to Administrative Agent to have, or to be eligible for, FHA insurance is insured, or eligible to be insured, pursuant to the National Housing Act. Each Mortgage Loan which is represented by the related Seller Party to be guaranteed, or to be eligible for guaranty, by the VA is guaranteed, or eligible to be guaranteed, under the provisions of Chapter 37 of Title 38 of the United States Code. As to each FHA insurance certificate or each VA guaranty certificate, the related Seller Party has complied with applicable provisions of the insurance for guaranty contract and federal statutes and regulations, all premiums or other charges due in connection with such insurance or guarantee have been paid, there has been no act or omission which would or may invalidate any such insurance or guaranty, and the insurance or guaranty is, or when issued, will be, in full force and effect with respect to each Mortgage Loan. There are no defenses, counterclaims, or rights of setoff affecting the Mortgage Loans or affecting the validity or enforceability of any private mortgage insurance or FHA insurance applicable to the Mortgage Loans or any VA guaranty with respect to the Mortgage Loans.
53.Reserved.
54.Predatory Lending Regulations; High Cost Loans. No Mortgage Loan (a) is subject to Section 226.32 of Regulation Z or any similar state law (relating to high interest rate credit/lending transactions), (b) is a High Cost Mortgage Loan or (c) contains any term or condition, or involves any loan origination practice, that has been defined as “predatory” under any applicable federal, state, county or municipal law, or that has been expressly categorized as an “unfair” or “deceptive” term, condition or practice in any such applicable federal, state, county or municipal law. No predatory or deceptive lending practices, including, without limitation, the extension of credit without regard to the ability of the Mortgagor to repay and the extension of credit which has no apparent benefit to the Mortgagor, were employed in the origination of the Mortgage Loan.
55.Credit Score and Reporting. Other than with respect to Early Buyout Loans, as of the date of the Mortgage Note, the Mortgagor’s credit score as listed on the Asset Schedule is no more than ninety (90) days old, or as otherwise permitted by the applicable Agency. In connection with the servicing of the Mortgage Loan (other than Early Buyout Loans), full, complete and accurate information with respect to the Mortgagor’s credit file has been or will be furnished to Equifax, Experian and Trans Union Credit Information in accordance with the Fair Credit Reporting Act and its implementing regulations.
56.FHA Mortgage Insurance; VA Loan Guaranty; USDA Loan Guaranty. With respect to the FHA Loans, the FHA Mortgage Insurance Contract is or eligible to be in full force and effect and there exists no impairment to full recovery without indemnity to the Department of Housing and Urban Development or the FHA under FHA Mortgage Insurance. With respect to the VA Loans, the VA Loan Guaranty Agreement is in full force and effect to the maximum extent stated therein. With respect to the USDA Loans, the USDA Loan Guaranty Agreement is in full force and effect to the maximum extent stated therein. All necessary steps have been taken to keep such guaranty or insurance valid, binding and enforceable and each of such is the binding, valid and enforceable obligation of the FHA, USDA and the
VA, respectively, to the full extent thereof, without surcharge, set-off or defense. Each FHA Loan, USDA Loan and VA Loan was originated in accordance with the criteria of an Agency for purchase of such Mortgage Loans.
57.Asset Schedule. The information set forth in the related Asset Schedule and all other information or data furnished by, or on behalf of, the applicable Seller Party to Administrative Agent is complete, true and correct in all material respects.
58.Qualified Mortgage. Notwithstanding anything to the contrary set forth in this Agreement, on and after January 10, 2014 (or such later date as set forth in the relevant regulations), (i) the originator made a reasonable and good faith determination that the Mortgagor had a reasonable ability to repay the loan according to its terms, in accordance with 12 CFR 1026.43(c) and (ii) except with respect to Non-Agency Non-QM Mortgage Loans, Scratch and Dent Mortgage Loans or unless otherwise approved in writing by Administrative Agent in its sole discretion, each Mortgage Loan is a Qualified Mortgage Loan.
59.TRID Compliance. Other than with respect to a Business Purpose Mortgage Loan or Second Lien Mortgage Loan, with respect to each Mortgage Loan where the Mortgagor’s loan application for the Mortgage Loan was taken on or after October 3, 2015, such Mortgage Loan was originated in compliance with the TILA-RESPA Integrated Disclosure Rule.
60.Co-op Loan: Valid First Lien. With respect to each Co-op Loan that is an Early Buyout Loan where the related Mortgaged Property has been sold to a third party and the FHA Mortgage Insurance claim proceeds have not yet been received, the related Mortgage is a valid, enforceable and subsisting first security interest on the related Co-op Shares securing the related Proprietary Lease, subject only to (a) liens of the Co-op Corporation for unpaid assessments representing the Mortgagor’s pro rata share of the Co-op Corporation’s payments for its blanket mortgage, current and future real property taxes, insurance premiums, maintenance fees and other assessments to which like collateral is commonly subject and (b) other matters to which like collateral is commonly subject which do not materially interfere with the benefits of the security intended to be provided by the security interest. With respect to each Co-op Loan that is not an Early Buyout Loan, the related Mortgage is a valid, enforceable and subsisting first security interest on the related Co-op Shares securing the related Proprietary Lease, subject only to (a) liens of the Co-op Corporation for unpaid assessments representing the Mortgagor’s pro rata share of the Co-op Corporation’s payments for its blanket mortgage, current and future real property taxes, insurance premiums, maintenance fees and other assessments to which like collateral is commonly subject and (b) other matters to which like collateral is commonly subject which do not materially interfere with the benefits of the security intended to be provided by the security interest. There are no liens against or security interests in the Co-op Shares relating to each Co-op Loan (except for unpaid maintenance, assessments and other amounts owed to the related cooperative which individually or in the aggregate will not have a material adverse effect on such Co-op Loan), which have priority equal to or over the related Seller Party’s security interest in such Co-op Shares.
61.Co-op Loan: Compliance with Law. With respect to each Co-op Loan, the related Co-op Corporation that owns title to the related Co-op Project is a “cooperative housing corporation” within the meaning of Section 216 of the Internal Revenue Code, and is in material compliance with applicable federal, state and local laws which, if not complied with, could have a material adverse effect on the Mortgaged Property.
62.Co-op Loan: No Pledge. With respect to each Co-op Loan, there is no prohibition against pledging the Co-op Shares or assigning the Proprietary Lease. With respect to each Co-op Loan, (i) the term of the related Proprietary Lease is longer than the term of the Co-op Loan, (ii) there is no provision in any Proprietary Lease which requires the Mortgagor to offer for sale the Co-op Shares owned by such Mortgagor first to the Co-op Corporation, (iii) there is no prohibition in any Proprietary Lease against pledging the Co-op Shares or assigning the Proprietary Lease and (iv) the Recognition Agreement is on a form of agreement published by Aztech Document Systems, Inc. as of the date hereof or includes provisions which are no less favorable to the lender than those contained in such agreement.
63.Co-op Loan: Acceleration of Payment. With respect to each Co-op Loan, each Assignment of Proprietary Lease contains enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the realization of the material benefits of the security provided thereby. The Assignment of Proprietary Lease contains an enforceable provision for the acceleration of the payment of the unpaid principal balance of the Mortgage Note in the event the Co-op Unit is transferred or sold without the consent of the holder thereof.
64.Compliance with Anti-Money Laundering Laws. To the knowledge of a Responsible Officer of the Seller, each originator from which any Seller Party has purchased any Mortgage Loan has complied with all applicable anti-money laundering laws and regulations, including without limitation the PATRIOT Act with respect to the origination of each Mortgage Loan and has established an anti-money laundering compliance program if required by applicable anti-money laundering laws and regulations and has conducted the requisite due diligence in connection with the origination of each Mortgage Loan for purposes of all applicable anti-money laundering laws, including with respect to the legitimacy of the applicable Mortgagor and the origin of the assets used by the Mortgagor to purchase the property in question, and maintains, and will maintain, sufficient information to identify the applicable Mortgagor for purposes of all applicable anti-money laundering laws. To the knowledge of a Responsible Officer of the Seller, no Mortgage Loan is in violation of Executive Order 13224 or the regulations promulgated by the Office of Foreign Assets Control of the United States Department of the Treasury (the “OFAC Regulations”), and no Mortgagor or guarantor on the Mortgage Loan is listed as a “specially designated national” or “blocked person” for purposes of the OFAC Regulations.
65.Access; Utilities; Separate Tax Lots. With respect to each Business Purpose Mortgage Loan, each Mortgaged Property (a) is located on or adjacent to a public road and has direct legal access to such road, or has access via an irrevocable easement or irrevocable right of way permitting ingress and egress to/from a public road, (b) is served by or has uninhibited access rights to public or private water and sewer (or well and septic) and electricity all of which are appropriate for the current use of such Mortgaged Property, and (c) constitutes one or more separate tax parcels which do not include any property which is not part of such Mortgaged Property or is subject to an endorsement under the related title policy insuring such Mortgaged Property.
66.Local Law Compliance. With respect to each Business Purpose Mortgage Loan, the terms of the related loan documents require the related Mortgagor to cause the Mortgaged Property to comply in all material respects with all applicable governmental regulations, zoning and building laws.
67.Licenses and Permits. With respect to each Business Purpose Mortgage Loan, each Mortgagor covenants in the loan documents that it shall keep all material licenses, permits and applicable governmental authorizations necessary for its operation of each related Mortgaged Property in full force and effect, and all such licenses, permits and applicable governmental authorizations are in effect. No Seller Party is aware of any Mortgagor, guarantor or other obligor on any Business Purpose Mortgage Loan having received notice of any noncompliance with any use or occupancy law, ordinance, regulation, standard, license or certificate with respect to any Mortgaged Property.
68.Mortgage Provisions. With respect to each Business Purpose Mortgage Loan, the Mortgage Note or the Mortgage contain provisions regarding the rights and remedies of the holder thereof for the realization against the related Mortgaged Property of the principal benefits of the security intended to be provided thereby, including realization by judicial or, if applicable, non-judicial foreclosure, subject to receivership, bankruptcy, insolvency, moratorium and other laws and principles of equity affecting the rights of creditors, whether considered in a proceeding at law or in equity.
69.Litigation. To the knowledge of a Responsible Officer of the Seller, there is no litigation, proceeding or governmental investigation pending, or any order, injunction or decree outstanding, existing or relating to the Mortgage Loan or the related Mortgaged Property.
70.Complete Asset Files. For each Mortgage Loan, all of the required Mortgage Loan documents have been delivered to the Custodian in accordance with the Custodial Agreement and all Mortgage Loan documents necessary to foreclose on the Mortgaged Property are included in the Asset File delivered to the Custodian. No material documentation is missing from the Asset File in possession
of Custodian, unless such documentation is subject to a Servicer request for release of documents and a foreclosure attorney acknowledgment in form and substance acceptable to Administrative Agent. Each of the documents and instruments specified to be included in the Asset File is executed and in due and proper form, and each such document or instrument is in form acceptable to the applicable federal or state regulatory agency.
71.Holdback Amounts: With respect to any Mortgage Loan for which there are Holdback Amounts, such Holdback Amounts have been deposited in the Holdback Account.
72.No Ground Leases. No Mortgaged Property is subject to a ground lease, it being understood that the term ground lease does not refer to the leasehold interests that have been approved by the Administrative Agent in accordance with the terms of the Program Agreements.
73.Advance-Paid Periodic Payments. Except with respect to any interest reserve amounts, no Mortgage Loan contains a provision requiring more than two (2) monthly or other scheduled periodic payments by the Mortgagor on the Mortgage Loan to be paid in advance from the proceeds of the Mortgage Loan.
74.General Liability Insurance. With respect to each Business Purpose Mortgage Loan, the related Mortgaged Property is required pursuant to the related Mortgage to be (or the holder of the Mortgage can require that the Mortgaged Property be), and at origination the related Seller Party received evidence that such Mortgaged Property was, insured by a hazard and rental loss insurance policy (as applicable) in amounts as required for similar properties in accordance with the Acquisition Guidelines.
75.Cross-Collateralization. Except as approved by Administrative Agent, no Mortgage Loan is cross-collateralized or provides for cross-default against any other Mortgage Loan unless such Mortgage Loan is cross-collateralized and cross-defaulted with another Mortgage Loan sold by the applicable Seller Party to the Administrative Agent with the same Mortgagor or an Affiliate thereof controlled by the person or persons controlling the Mortgagor or controlled by any guarantor of such Mortgagor.
76.Assignment of Leases and Rents. With respect to each Business Purpose Mortgage Loan, any assignment of leases, rents and profits or similar document or instrument executed by the related Mortgagor in connection with the origination of the related Mortgage Loan, as such document may be amended, modified, renewed or extended from time to time (the “Assignment of Leases and Rents”) was duly executed, acknowledged and delivered and establishes and creates a valid and enforceable first priority collateral assignment of, or lien on, the related Mortgagor’s interest in all leases, sub-leases, licenses or other agreements pursuant to which any person is entitled to occupy, use or possess all or any portion of the real property subject to the related Mortgage, subject to legal limitations of general applicability to mortgage loans similar to the Mortgage Loan, and the Mortgagor and each assignor of such Assignment of Leases and Rents to the related Seller Party have the full right to assign the same. Each Business Purpose Mortgage Loan contains an Assignment of Leases and Rents, and such Assignment of Leases and Rents is included either in the related Mortgage or in a related separate assignment document. The related assignment of any Assignment of Leases and Rents not included in the related Mortgage has been executed and delivered to the Administrative Agent in blank, is otherwise in recordable form and constitutes a legal, valid and binding assignment, sufficient to convey to the assignee named therein (assuming that the assignee has the capacity to acquire such Assignment of Leases and Rents) all of the assignor’s right, title and interest in, to and under such Assignment of Leases and Rents.
77.Non-conforming Uses. With respect to each Business Purpose Mortgage Loan, if the Mortgaged Property constitutes a legal nonconforming use, the nonconforming improvements may be rebuilt to current density and used and occupied for such nonconforming purposes if damaged or destroyed or ordinance and law endorsement to hazard policy unless otherwise disclosed to Administrative Agent in writing.
78.No Releases. With respect to each Business Purpose Mortgage Loan, no Mortgage Note or Mortgage requires the mortgagee to release all or any material portion of the related Mortgaged Property that was included in the valuation for such Mortgaged Property, and/or generates income, from
the lien of the related Mortgage except upon payment in full of all amounts due under the related Business Purpose Mortgage Loan.
79.No Prior Modifications. With respect to a Non-Performing Mortgage Loan or Re-Performing Mortgage Loan, if such Mortgage Loan has been modified after acquisition by the related Seller Party, the current and applicable modified terms are reflected on the Asset Schedule and the signed modification documents are in the related loan file and are approved by the Administrative Agent.
80.Leases. Other than with respect to an Agency Mortgage Loan, if a Mortgage Loan is secured by a long-term residential lease, to the best of each Seller Party’s knowledge: (A) the terms of such lease expressly permit the mortgaging of the leasehold estate, the assignment of the lease without the lessor’s consent (or the lessor’s consent has been obtained and such consent is in the Asset File), and the acquisition by the holder of the Mortgage of the rights of the lessee upon foreclosure or assignment in lieu of foreclosure or provide the holder of the Mortgage with substantially similar protection; (B) the terms of such lease do not allow the termination thereof upon the lessee’s default without the holder of the Mortgage being entitled to receive written notice of, and opportunity to cure, such default or prohibit the holder of the Mortgage from being insured under the hazard insurance policy related to the Mortgaged Property; (C) the original term of such lease is not less than fifteen (15) years; (D) the term of such lease does not terminate earlier than five years after the maturity date of the Mortgage Note; and (E) the Mortgaged Property is located in a jurisdiction in which the use of leasehold estates for residential properties is an accepted practice. With respect to an Agency Mortgage Loan, such lease complies with the applicable Agency Guidelines.
81.HELOC Terms. With respect to HELOCs, the related Mortgagor may request advances up to the Credit Limit within the first (1st) ten (10) years following the date of origination.
82.Revolving Term. Each HELOC provides for an initial period (the “Revolving Period”) during which the Mortgagor is required to make monthly payments of interest payable in arrears and requires repayment of the unpaid principal balance thereof over a period following the Revolving Period (the “Repayment Period”) which is not in excess of one hundred twenty (120) months. As of the Purchase Date no HELOC was in its Repayment Period. The Mortgage Interest Rate on each Mortgage Loan adjusts periodically in accordance with the Credit Line Agreement. On each Interest Rate Adjustment Date the related Seller Party has made interest rate adjustments on the Mortgage Loan which are in compliance with the related Mortgage, Mortgage Note and Credit Line Agreement and applicable law.
83.Draws In Compliance With Laws. Each Draw under the HELOC has been disbursed in accordance with all applicable laws, rules and regulations, including, without limitation, all state and local licensing requirements.
84.Enforcement of Remedies. Each Credit Line Agreement permits the holder to enforce its full remedies, with respect to, among other things, material events of default by the Mortgagor, declines in the value of the related Mortgaged Property and material changes in the Mortgagor’s financial circumstances.
85.FICO Scores. With respect to each Non-Agency Non-QM Mortgage Loan (other than a Non-QM – Low FICO Mortgage Loan), the Mortgagor’s FICO score at the time of origination was [***] or greater. With respect to each Non-QM – Low FICO Mortgage Loan, the Mortgagor’s FICO score at the time of origination was at least [***] but not greater than [***].
86.Credit Limits. With respect to each HELOC, if the related Seller Party has increased a Mortgagor’s Credit Limit, (i) such Seller Party has notified the Administrative Agent in writing of such Seller Party’s decision to increase a Mortgagor’s Credit Limit in accordance with Mortgage Loan Documents, (ii) such increase has been effected by such Seller Party through modification of the Mortgage Loan with the Mortgagor; (iii) the related Seller Party has delivered to the Administrative Agent an updated Asset Schedule reflecting the modification to the Mortgage Loan and (iv) the related Seller Party has delivered to the Custodian any modified Mortgage Loan documents. Notwithstanding anything to the contrary herein, in no event shall Administrative Agent or Buyers have any obligation to fund any Draws with respect to any HELOC, which obligations shall be retained by the Seller Parties.
SCHEDULE 1-B
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO CONTRIBUTED REO PROPERTY
Each Seller Party makes the following representations and warranties to Administrative Agent with respect to each Contributed REO Property that is at all times subject to a Transaction hereunder and at all times while the Program Agreements and any Transaction hereunder is in full force and effect. With respect to those representations and warranties which are made to the best of such Seller Party’s knowledge, if it is discovered by such Seller Party or Administrative Agent that the substance of such representation and warranty is inaccurate, notwithstanding such Seller Party’s lack of knowledge with respect to the substance of such representation and warranty, such inaccuracy shall be deemed a breach of the applicable representation and warranty for purposes of determining Asset Value.
(1)Asset File. (i) The related deed in the name of the Underlying Entity shall have been submitted for recording, (ii) a copy of the recorded deed if returned by the recording office shall be delivered to the applicable Custodian within fifteen (15) Business Days of such REO Property being acquired by the Underlying Entity, and (iii) all other documents required to be delivered as part of the Asset File shall be delivered to the applicable Custodian within fifteen (15) Business Days of such REO Property being acquired by the Underlying Entity or held by an attorney in connection with a foreclosure pursuant to an Attorney Bailee Letter.
(2)Ownership. The Underlying Entity is the sole owner and holder of the REO Property and the Servicing Rights related thereto. The Underlying Entity has not assigned or pledged the REO Property and the related Servicing Rights except as contemplated in this Agreement, and, except as otherwise disclosed to Administrative Agent in writing, 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, and (C) 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.
(3)Title. Each deed is genuine, constitutes the legal, valid and binding conveyance of the REO Property in fee simple to the Underlying Entity or its designee.
(4)REO Property as Described. The information set forth in the related Asset Schedule and all other information or data furnished by, or on behalf of, the Seller Parties to Administrative Agent is true and correct in all material respects as of the date or dates on which such information is furnished.
(5)Taxes and Assessments. There are no property taxes, governmental charges, levies or governmental assessments with respect to any REO Property that are delinquent by more than thirty (30) days; provided, however, that a disclosure of outstanding charges provided to Administrative Agent may include the total amount without specifying the related categories of outstanding charges.
(6)No Litigation. Other than any customary claim or counterclaim arising out of any eviction, foreclosure or collection proceeding relating to any REO Property or as otherwise disclosed in writing to Administrative Agent, there is no litigation, proceeding or governmental investigation pending, or any order, injunction or decree outstanding, existing or relating to each Seller Party or any of their Subsidiaries with respect to the REO Property that would materially and adversely affect the value of the REO Property.
(7)Hazard Insurance. All buildings or other customarily insured improvements upon the Contributed REO Property are insured by an insurer against loss by fire, hazards of extended coverage and such other hazards in an amount not less than the lesser of the maximum insurable value and the BPO value.
(8)No Mechanics’ Liens. There are no 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 or may be liens prior to, or equal or coordinate with, the lien of the Mortgage.
(9)No Damage. The REO Property is undamaged by water, fire, earthquake, earth movement other than earthquake, windstorm, flood, tornado, defective construction materials or work, or similar casualty which would cause such REO Property to become uninhabitable.
(10)No Condemnation. There is no proceeding pending, or to Seller Party’s knowledge, threatened, for the total or partial condemnation of the REO Property.
(11)Environmental Laws. The REO Property is currently in material compliance with all applicable environmental laws pertaining to environmental hazards including, without limitation, asbestos.
(12)Location and Type of REO Property. Each REO Property is located in the U.S. or a territory of the U.S. and consists of a one- to four-unit residential property, which may include, but is not limited to, a single-family dwelling, townhouse, condominium unit, or unit in a planned unit development.
(13)No Fraudulent Acts. No fraudulent acts were committed by any Seller Party in connection with the acquisition of such REO Property.
(14)Acquisition of REO Property. With respect to each such REO Property, (i) such REO Property is a Mortgaged Property acquired by Underlying Entity through foreclosure or by deed in lieu of foreclosure or otherwise, and (ii) with respect to each such REO Property, upon the consummation of the related Transaction, the applicable Custodian shall have received the related Asset File and such Asset File shall not have been released from the possession of the applicable Custodian for longer than the time periods permitted under the related Custodial Agreement.
(15)No Occupants. Except as otherwise disclosed in writing to Administrative Agent, no tenant or other party has any right to occupy or is currently occupying any REO Property.
(16)Title Policy. From and after the date that is one (1) Business Day following the conversion of a Mortgage Loan to a REO Property, the REO Property is insured by either an ALTA title insurance policy or other generally acceptable form of policy of title insurance acceptable to prudent mortgage lending institutions in the area where the related REO Property is located, issued by a title insurer acceptable to prudent mortgage lenders. With respect to each REO Property, Underlying Entity is the sole insured of such policy, and such policy is in full force and effect and will be in full force and effect and inure to the benefit of each Seller Party and its successors. No claims have been made under such policy and no prior holder of the REO Property, including Underlying Entity, has done by act or omission, anything that would impair the coverage of such policy.
(17)No Environmental Issue. All uses and operations on or of the REO Properties are not in violation of any environmental laws and in compliance with permits issued pursuant thereto and the REO Property is free and clear of all Liens and other encumbrances that may be imposed as a result of any violation of an environmental law, whether due to any act or omission of Underlying Entity or any other person or entity.
SCHEDULE 1-C
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE PURCHASED CERTIFICATES
Each Seller Party makes the following representations and warranties to Administrative Agent with respect to each Purchased Certificate that is at all times subject to a Transaction hereunder and at all times while the Program Agreements and any Transaction hereunder is in full force and effect. With respect to those representations and warranties which are made to the best of such Seller Party’s knowledge, if it is discovered by such Seller Party or Administrative Agent that the substance of such representation and warranty is inaccurate, notwithstanding such Seller Party’s lack of knowledge with respect to the substance of such representation and warranty, such inaccuracy shall be deemed a breach of the applicable representation and warranty for purposes of determining Asset Value.
(a)Ownership. Each Underlying Entity Certificate constitutes all the issued and outstanding beneficial interests of all classes of the applicable Underlying Entity, as applicable, and such interests are certificated.
(b)Compliance with Law. Each Underlying Entity Certificate complies in all respects with, or are exempt from, all applicable requirements of federal, state or local law relating to such Underlying Entity Certificate.
(c)Good Title. Immediately prior to the sale, transfer and assignment to Administrative Agent thereof, the related Seller has good title to, and is the sole owner and holder of, such Underlying Entity Certificate, and such Seller is transferring such Underlying Entity Certificate free and clear of any and all liens, pledges, encumbrances, charges, security interests or any other ownership interests of any nature encumbering such Underlying Entity Certificate.
(d)No Fraud. No fraudulent acts were committed by the Sellers or any of their respective Affiliates in connection with the issuance of the Underlying Entity Certificate.
(e)No Defaults. No (i) monetary default, breach or violation exists with respect to any agreement or other document governing or pertaining to such Underlying Entity Certificate, or (ii) event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach or violation of such Underlying Entity Certificate.
(f)No Modifications. Except as expressly contemplated herein, no Seller Party is a party to any document, instrument or agreement, and there is no document, that by its terms modifies or affects the rights and obligations of any holder of such Underlying Entity Certificate and no Seller Party has consented to any material change or waiver to any term or provision of any such document, instrument or agreement and no such change or waiver exists.
(g)Power and Authority. The applicable Seller Party has full right, power and authority to sell and assign the applicable Underlying Entity Certificate and such Underlying Entity Certificate 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.
(h)Consents and Approvals. Other than consents and approvals obtained as of the related Purchase Date or those already granted in the documents governing such Underlying Entity Certificate, no consent or approval by any Person is required in connection with the related Seller’s sale and/or Administrative Agent’s acquisition of such Underlying Entity Certificate, for Administrative Agent’s exercise of any rights or remedies in respect of the applicable Underlying Entity Certificate or for Administrative Agent’s sale, pledge or other disposition of such Underlying Entity 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 with respect to such Underlying Entity Certificate.
(i)No Governmental Approvals. 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 Sellers is required for any transfer or assignment by the holder of such Underlying Entity Certificate to the Administrative Agent.
(j)Original Certificate. The applicable Seller has delivered to Administrative Agent the original Underlying Entity Certificate or other similar indicia of ownership of the Purchased Certificate, however denominated, re-registered in Administrative Agent’s name as required hereunder or as otherwise agreed to by Administrative Agent.
(k)Duly and Validly Issued. Each Underlying Entity Certificate has been duly and validly issued in the name of Administrative Agent.
(l)No Notices. No Seller Party has 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 Underlying Entity Certificate is or may become obligated.
(m)REO Certificate as a Security. Each Underlying Entity Certificate (a) constitutes “securities” as defined in Section 8-102 of the Uniform Commercial Code (b) is not dealt in or traded on securities exchanges or in securities markets, (c) does not constitute an investment company security (within the meaning of Section 8-103(c) of the Uniform Commercial Code) and (d) is not held in a securities account (within the meaning of Section 8-103(c) of the Uniform Commercial Code).
(n)No Distributions. There are (x) no outstanding rights, options, warrants or agreements for a purchase, sale or issuance, in connection with any Underlying Entity Certificate (except as expressly contemplated or permitted by this Agreement), (y) no agreements on the part of the related Seller to issue, sell or distribute such Underlying Entity Certificate (except as expressly contemplated or permitted by this Agreement), and (z) no obligations on the part of such Seller (contingent or otherwise) to purchase, repurchase, redeem or otherwise acquire any securities or any interest therein (other than from Administrative Agent or as expressly contemplated by this Agreement) or to pay any dividend or make any distribution in respect of such Underlying Entity Certificate (other than to Administrative Agent or as expressly contemplated by this Agreement until the repurchase of such Underlying Entity Certificate).
(o)Conveyance; First Priority Lien. Upon delivery to the Administrative Agent of the applicable Underlying Entity Certificate (and assuming the continuing possession by the Administrative Agent of the Purchased Asset in accordance with the requirements of applicable law) and the filing of a financing statement covering such Underlying Entity Certificate in the appropriate jurisdictions and naming the related Seller as debtor and the Administrative Agent as secured party, such Seller has conveyed and transferred to Administrative Agent all of its right, title and interest to such Underlying Entity Certificate, including taking all steps as may be necessary in connection with the endorsement, transfer of power, delivery and pledge of such Underlying Entity Certificate as a “security” (as defined in Section 8-102 of the Uniform Commercial Code) to Administrative Agent. Upon delivery of such Underlying Entity Certificate to Administrative Agent the Lien granted hereunder is a first priority Lien on such Underlying Entity Certificate.
(p)No Waiver. No Seller has waived or agreed to any waiver under, or agreed to any amendment or other modification of the related Underlying Entity Agreement, as applicable, except as expressly contemplated herein or otherwise agreed to by Administrative Agent in writing.
(q)Status of Underlying Entity. Since the date of its organization until the date of this Agreement, no Underlying Entity, has been engaged in any business or activity and has not owned any assets other than the assets made subject to Transactions hereunder.
SCHEDULE 2
AUTHORIZED REPRESENTATIVES
SELLER AUTHORIZATIONS
Any of the persons whose signatures and titles appear below are authorized, acting singly, to act for Seller under this Agreement:
Authorized Representatives for execution of Program Agreements and amendments
Authorized Representatives for execution of Transaction Requests and day-to-day operational functions
Authorized Representatives to the Master Repurchase Agreement
ADMINISTRATIVE AGENT AND BUYER AUTHORIZATIONS
Any of the persons whose signatures and titles appear below, including any other authorized officers, are authorized, acting singly, to act for Administrative Agent and/or Buyers under this Agreement:
| | | | | | | | |
| Name | Title | Signature |
| [***] | [***] | |
| [***] | [***] | |
| [***] | [***] | |
| [***] | [***] | |
| [***] | [***] | |
| [***] | [***] | |
| [***] | [***] | |
| [***] | [***] | |
| [***] | [***] | |
| [***] | [***] | |
| [***] | [***] | |
Authorized Representatives to the Master Repurchase Agreement
LEGAL02/41520943v4LEGAL02/41845682v4
EXHIBIT A
FORM OF POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that [Home Point Financial Corporation] [Underlying Entity] [(“Seller”)] [(“Underlying Entity”)] hereby irrevocably constitutes and appoints Credit Suisse First Boston Mortgage Capital LLC (“Administrative Agent”) and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of [Seller] [Underlying Entity] and in the name of [Seller] [Underlying Entity] or in its own name, from time to time in Administrative Agent’s discretion:
(1)in the name of [Seller] [Underlying Entity], or in its own name, or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due with respect to any assets purchased or contributed by Administrative Agent on behalf of certain Buyers and/or Repledgees under the Master Repurchase Agreement (as amended, restated, supplemented or otherwise modified from time to time) dated October 23, 2020 (the “Assets”) and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by Administrative Agent for the purpose of collecting any and all such moneys due with respect to any other assets whenever payable;
(2)to pay or discharge taxes and liens levied or placed on or threatened against the Assets;
(3)(i) to direct any party liable for any payment under any Assets to make payment of any and all moneys due or to become due thereunder directly to Administrative Agent or as Administrative Agent shall direct; (ii) to ask or demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Assets; (iii) to sign and endorse any invoices, assignments, verifications, notices and other documents in connection with any Assets; (iv) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Assets or any proceeds thereof and to enforce any other right in respect of any Assets; (v) to defend any suit, action or proceeding brought against [Seller] [Underlying Entity] with respect to any Assets; (vi) to settle, compromise or adjust any suit, action or proceeding described in clause (v) above and, in connection therewith, to give such discharges or releases as Administrative Agent may deem appropriate; (vii) to cause the mortgagee of record to be changed to Administrative Agent on the FHA, VA or USDA system, as applicable and (viii) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any Assets as fully and completely as though Administrative Agent were the absolute owner thereof for all purposes, and to do, at Administrative Agent’s option and [Seller] [Underlying Entity]’s expense, at any time, and from time to time, all acts and things which Administrative Agent deems necessary to protect, preserve or realize upon the Assets and Administrative Agent’s Liens thereon and to effect the intent of this Agreement, all as fully and effectively as [Seller] [Underlying Entity] might do;
(4)for the purpose of carrying out the transfer of servicing with respect to the Assets from [Seller] [Underlying Entity] to a successor servicer appointed by Administrative Agent in its sole discretion and to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish such transfer of servicing, and, without limiting the generality of the foregoing, [Seller] [Underlying Entity] hereby gives Administrative Agent the power and right, on behalf of [Seller] [Underlying Entity], without assent by [Seller] [Underlying Entity], to, in the name of [Seller] [Underlying Entity] or its own name, or otherwise, prepare and send or cause to be sent “good-bye” letters to all mortgagors under the Assets, transferring the servicing of the Assets to a successor servicer appointed by Administrative Agent in its sole discretion; and
(5)for the purpose of delivering any notices of sale to mortgagors or other third parties, including without limitation, those required by law.
[Seller] [Underlying Entity] hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable.
[Seller] [Underlying Entity] also authorizes Administrative Agent, from time to time, to execute, in connection with any sale, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Assets.
The powers conferred on Administrative Agent hereunder are solely to protect Administrative Agent’s interests in the Assets and shall not impose any duty upon it to exercise any such powers. Administrative Agent shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to [Seller] [Underlying Entity] for any act or failure to act hereunder, except for its or their own gross negligence or willful misconduct.
TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, [SELLER] [UNDERLYING ENTITY] HEREBY AGREES THAT ANY THIRD PARTY RECEIVING A DULY EXECUTED COPY OR FACSIMILE OF THIS INSTRUMENT MAY ACT HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF SHALL BE INEFFECTIVE AS TO SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL NOTICE OR KNOWLEDGE OF SUCH REVOCATION OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD PARTY, AND ADMINISTRATIVE AGENT ON ITS OWN BEHALF AND ON BEHALF OF ADMINISTRATIVE AGENT’S ASSIGNS, HEREBY AGREES TO INDEMNIFY AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY AND ALL CLAIMS THAT MAY ARISE AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD PARTY HAVING RELIED ON THE PROVISIONS OF THIS INSTRUMENT.
[REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURES FOLLOW.]
IN WITNESS WHEREOF [Seller] [Underlying Entity] has caused this Power of Attorney to be executed and [Seller] [Underlying Entity]’s seal to be affixed this ______ day of ____________, 202___.
[HOME POINT FINANCIAL CORPORATION] [Underlying Entity], as [Seller] [Underlying Entity]
By:
Name:
Title:
Signature Page to Power of Attorney
On the ______ day of ____________, 20___ before me, a Notary Public in and for said State, personally appeared ________________________________, known to me to be _____________________________________ of [Home Point Financial Corporation] [Underlying Entity], the institution that executed the within instrument and also known to me to be the person who executed it on behalf of said corporation, and acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the day and year in this certificate first above written.
_____________________________
Notary Public
My Commission expires ________________________________
Signature Page to Power of Attorney
EXHIBIT B
FORM OF ESCROW INSTRUCTION LETTER TO BE PROVIDED BY SELLER BEFORE CLOSING
The escrow instruction letter (the “Escrow Instruction Letter”) shall also include the following instruction to the Settlement Agent (the “Escrow Agent”):
Credit Suisse First Boston Mortgage Capital LLC (the “Administrative Agent”), has agreed to provide funds (“Escrow Funds”) to [Seller] to finance certain mortgage loans (the “Mortgage Loans”) for which you are acting as Escrow Agent.
You hereby agree that (a) you shall receive such Escrow Funds from Administrative Agent to be disbursed in connection with this Escrow Instruction Letter, (b) you will hold such Escrow Funds in trust, without deduction, set-off or counterclaim for the sole and exclusive benefit of Administrative Agent until such Escrow Funds are fully disbursed on behalf of Administrative Agent in accordance with the instructions set forth herein, and (c) you will disburse such Escrow Funds on the date specified for closing (the “Closing Date”) only after you have followed the Escrow Instruction Letter’s requirements with respect to the Mortgage Loans. In the event that the Escrow Funds cannot be disbursed on the Closing Date in accordance with the Escrow Instruction Letter, you agree to promptly remit the Escrow Funds to the Administrative Agent by re-routing via wire transfer the Escrow Funds in immediately available funds, without deduction, set-off or counterclaim, back to the account specified in Administrative Agent’s incoming wire transfer.
You further agree that, upon disbursement of the Escrow Funds, you will hold all Mortgage Loan Documents specified in the Escrow Instruction Letter in escrow as agent and bailee for Administrative Agent, and will forward the Mortgage Loan Documents and original Escrow Instruction Letter in connection with such Mortgage Loans by overnight courier to the Custodian within five (5) Business Days following the date of origination.
You agree that all fees, charges and expenses regarding your services to be performed pursuant to the Escrow Instruction Letter are to be paid by Seller or its borrowers, and Administrative Agent shall have no liability with respect thereto.
You represent, warrant and covenant that you are not an affiliate of or otherwise controlled by Seller, and that you are acting as an independent contractor and not as an agent of Seller.
The provisions of this Escrow Instruction Letter may not be modified, amended or altered, except by written instrument, executed by the parties hereto and Administrative Agent. You understand that Administrative Agent shall act in reliance upon the provisions set forth in this Escrow Instruction Letter, and that Administrative Agent on behalf of Buyers and certain Repledgees is an intended third party beneficiary hereof.
Whether or not an Escrow Instruction Letter executed by you is received by the Custodian, your acceptance of the Escrow Funds shall be deemed to constitute your acceptance of the Escrow Instruction Letter.
EXHIBIT C
OFFICER’S COMPLIANCE CERTIFICATE
I, ___________________, do hereby certify that I am the [duly elected, qualified and authorized] [CFO/TREASURER/FINANCIAL OFFICER] of Home Point Financial Corporation (“Seller”). This Certificate is delivered to you in connection with Section 17 of the Master Repurchase Agreement dated as of October 23, 2020, among Seller, any Underlying Entity joined thereto from time to time, Credit Suisse AG, a company incorporated in Switzerland, acting through its Cayman Islands Branch, Alpine Securitization LTD and Credit Suisse First Boston Mortgage Capital LLC (as amended, restated, supplemented or otherwise modified from time to time, the “Agreement”), as the same may have been amended from time to time. I hereby certify that, as of the date of the financial statements attached hereto and as of the date hereof, Seller and Guarantor are and have been in compliance with all the terms of this Agreement and, without limiting the generality of the foregoing, I certify that:
Adjusted Tangible Net Worth. As of the end of each calendar month, Seller has maintained an Adjusted Tangible Net Worth of at least [***]. A calculation of Seller’s actual Adjusted Tangible Net Worth is provided in Schedule 1 hereto.
Maintenance of Liquidity. At all times, Seller has maintained Liquidity in an amount not less than [***]. A calculation of Seller’s actual Liquidity is provided in Schedule 1 hereto.
Indebtedness to Adjusted Tangible Net Worth Ratio. As of the end of each calendar month, Seller’s ratio of Indebtedness (on and off balance sheet) to Adjusted Tangible Net Worth has not exceeded [***]. A calculation of Seller’s actual Indebtedness to Adjusted Tangible Net Worth is provided in Schedule 1 hereto.
Maintenance of Profitability. Seller has not permitted Adjusted Net Income for any Test Period, before income taxes for such Test Period and distributions made during such Test Period, to be [***].
Insurance. Seller, or its Affiliates, have maintained, for Seller Parties and their Subsidiaries, insurance coverage with respect to employee dishonesty, forgery or alteration, theft, disappearance and destruction, robbery and safe burglary, property (other than money and securities) and computer fraud or an aggregate amount of at least $1,000,000. The actual amount of such coverage is $_____________.
Financial Statements. The financial statements attached hereto are accurate and complete, accurately reflect the financial condition of Seller, and do not omit any material fact as of the date(s) thereof.
Documentation. Seller Parties have performed the documentation procedures required by its operational guidelines with respect to endorsements and assignments, including the recordation of assignments, or has verified that such documentation procedures have been performed by a prior holder of such Purchased Asset and Contributed Asset.
Compliance. Seller Parties have observed or performed in all material respects all of its covenants and other agreements, and satisfied every condition, contained in this Agreement and the other Program Agreements to be observed, performed and satisfied by it. [If a covenant or other agreement or condition has not been complied with, Seller Parties shall describe such lack of compliance and provide the date of any related waiver thereof.]
Regulatory Action. Except as otherwise disclosed to Administrative Agent or to the extent prohibited from disclosing by any Governmental Authority, no Seller Party is currently under investigation or, to best of Seller Parties’ knowledge, no investigation by any federal, state or local government agency is threatened. Except to the extent
prohibited from disclosing by any Governmental Authority, neither Seller Party has been the subject of any government investigation which has resulted in the voluntary or involuntary suspension of a license, a cease and desist order, or such other action as could adversely impact Seller Parties’ business. [If so, Seller Parties shall describe the situation in reasonable detail and describe the action that Seller Parties have taken or proposes to take in connection therewith.]
No Default. No Default or Event of Default has occurred or is continuing. [If any Default or Event of Default has occurred and is continuing, Seller Parties shall describe the same in reasonable detail and describe the action Seller Parties have taken or proposes to take with respect thereto, and if such Default or Event of Default has been expressly waived by Administrative Agent in writing, Seller Parties shall describe the Default or Event of Default and provide the date of the related waiver.]
Distributions. If an Event of Default has occurred and is continuing, no Seller Party has paid any dividends greater than Net Income in any given calendar year.
Indebtedness. All Indebtedness (other than Indebtedness evidenced by the Repurchase Agreement) of Seller Parties existing on the date hereof is listed on Schedule 2 hereto.
[Originations][Acquisitions]. Attached hereto as Schedule 3 is a true and correct summary of all Mortgage Loans [originated][acquired] by Seller Parties for the calendar month ending [DATE] and for the year to date ending [DATE].
Hedging. Attached hereto as Schedule 4 is a true and correct summary of all Interest Rate Protection Agreements entered into or maintained by Seller Parties during the calendar month ending on [DATE].
Repurchases and Early Payment Default Requests. Attached hereto as Schedule 5 is a true and correct summary of the portfolio performance including representation breaches, missing document breaches, repurchases due to fraud, early payment default requests, and Mortgage Loans subject to other warehouse lines in excess of sixty (60) days summarized on the basis of (a) pending repurchase demands (including weighted average duration of outstanding request), (b) satisfied repurchase demands and (c) total repurchase demands.
Quality Control. Attached hereto as Schedule 6 is a true and correct copy of the internal quality control maintained by Seller Parties.
Litigation Summary. To the extent Seller is not prohibited from disclosing, attached hereto as Schedule 7 is a true and correct summary of all material actions, notices, proceedings and investigations pending with respect to which Seller Parties have received service of process or other form of notice or, to the best of Seller Parties’ knowledge, threatened against it, before any court, administrative or governmental agency or other regulatory body or tribunal that (i) questions or challenges the validity or enforceability of any of the Program Agreements or any action to be taken in connection with the transactions contemplated hereby, (ii) makes a non-frivolous claim individually in an amount greater than (x) with respect to Seller, [***] and (y) with respect to an Underlying Entity, [***]; provided, that, this clause (ii) shall not include any routine actions brought by or on behalf of an individual Mortgagor with respect to which Seller is acting in its capacity as servicer (which shall include without limitation, contested foreclosures, contested actions or bankruptcy proceedings) or (iii) which, individually or in the aggregate, would be reasonably likely to have a Material Adverse Effect, as of the calendar month ending [DATE].
Beneficial Ownership Certification. To the extent the information contained in the previously delivered Beneficial Ownership Certification is no longer true or correct, an
updated true and correct Beneficial Ownership Certification is attached here to as Schedule 8 hereto.
IN WITNESS WHEREOF, I have set my hand this _____ day of ________, ________.
HOME POINT FINANCIAL CORPORATION, as Seller
By:
Name:
Title:
SCHEDULE 1 TO OFFICER’S COMPLIANCE CERTIFICATE
CALCULATIONS OF FINANCIAL COVENANTS
As of the calendar month ended [DATE] or quarter ended [DATE]
SCHEDULE 2 TO OFFICER’S COMPLIANCE CERTIFICATE
INDEBTEDNESS AS OF _________________________
| | | | | | | | | | | | | | | | | |
| LENDER | TOTAL FACILITY SIZE | FACILITY TYPE (i.e. EFP, Repurchase, etc) | $ AMOUNT COMMITTED | OUTSTANDING INDEBTEDNESS | EXPIRATION DATE |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
SCHEDULE 3 TO OFFICER’S COMPLIANCE CERTIFICATE
CURRENT MONTHLY OVERALL MORTGAGE LOAN [ORIGINATIONS - ORIGNATIONS] [ACQUISITIONS – PURCHASES]
| | | | | | | | | | | |
| [Monthly] | [Quarterly] | [YTD] |
| UPB | UPB | UPB |
| CONV | [__] | [__] | [__] |
| EDGE | [__] | [__] | [__] |
| FHA | [__] | [__] | [__] |
| Other | [__] | [__] | [__] |
| USDA | [__] | [__] | [__] |
| VA | [__] | [__] | [__] |
| Grand Total | [__] | [__] | [__] |
| | | |
| | | |
| | | |
| By Channel | [Monthly] | [Quarterly] | [YTD] |
| Broker | [__]% | [__]% | [__]% |
| Consumer Direct | [__]% | [__]% | [__]% |
| Correspondent Del | [__]% | [__]% | [__]% |
| Correspondent Non Del | [__]% | [__]% | [__]% |
| Grand Total | 100.00% | 100.00% | 100.00% |
| | | |
| | | |
| | | |
| By Type | [Monthly] | [Quarterly] | [YTD] |
| Cash-Out Refinance | [__]% | [__]% | [__]% |
| NoCash-Out Refinance | [__]% | [__]% | [__]% |
| Purchase | [__]% | [__]% | [__]% |
| Grand Total | 100.00% | 100.00% | 100.00% |
SCHEDULE 4 TO OFFICER’S COMPLIANCE CERTIFICATE
INTEREST RATE PROTECTION AGREEMENTS
SCHEDULE 5 TO OFFICER’S COMPLIANCE CERTIFICATE
REPURCHASES AND EARLY PAYMENT DEFAULT REQUESTS
| | | | | | | | | | | |
| Repurchases | YTD UPB | YTD Count |
| Open repurchase requests | $ |
| Open repurchases being contested | $ |
| Repurchases settled YTD | $ |
| Repurchases settled EOY 2019 | $ |
| Repurchases settled EOY 2018 | $ |
| Repurchases settled EOY 2017 | $ |
| | | | |
| Indemnifications | Total # of Loans | Indemnifications ($) | |
| All-Time | | $ |
SCHEDULE 6 TO OFFICER’S COMPLIANCE CERTIFICATE
QUALITY CONTROL RESULTS
SCHEDULE 7 TO OFFICER’S COMPLIANCE CERTIFICATE
LITIGATION SUMMARY
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Case Caption | Filing Date | Court / Regulator | Case No. | Nature of Claims | Damages / Penalties Alleged | Plaintiff's Counsel | Customer's counsel | Status | Customer's Reserve Amount |
| | | | | | | | | |
| | | | | | | | | |
SCHEDULE 8 TO OFFICER’S COMPLIANCE CERTIFICATE
BENEFICIAL OWNERSHIP CERTIFICATION
[ATTACHED]
EXHIBIT D
SCHEDULE OF INDEBTEDNESS
[***]
Exhibit D-1
LEGAL02/41520943v4LEGAL02/41845682v4
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
AMENDMENT NUMBER TEN
to theMASTER REPURCHASE AGREEMENT
Dated as of June 3, 2020,
among
HOME POINT FINANCIAL CORPORATION,
MORGAN STANLEY BANK. N.A.,
and
MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC
This AMENDMENT NUMBER TEN (this “Amendment”) is made this 30th day of June, 2022, among HOME POINT FINANCIAL CORPORATION, a New Jersey corporation, as seller (“Seller”), MORGAN STANLEY BANK, N.A., a national banking association, as buyer (“Buyer”) and MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC, a New York limited liability company, as agent for the Buyer (“Agent”), to the Master Repurchase Agreement, dated as of June 3, 2020, as amended by that certain Amendment Number One to the Master Repurchase Agreement, dated as of August 14, 2020, by that certain Amendment Number Two to the Master Repurchase Agreement, dated as of November 18, 2020, by that certain Amendment Number Three to the Master Repurchase Agreement, dated as of December 23, 2020 and effective as of January 5, 2021, by that certain Amendment Number Four to the Master Repurchase Agreement, dated as of February 11, 2021, by that certain Amendment Number Five to the Master Repurchase Agreement, dated as of March 10, 2021, by that certain Amendment Number Six to the Master Repurchase Agreement, dated as of June 29, 2021, by that certain Amendment Number Seven to the Master Repurchase Agreement, dated as of December 23, 2021, by that certain Amendment Number Eight to the Master Repurchase Agreement, dated as of March 4, 2022, and by that certain Amendment Number Nine to the Master Repurchase Agreement, dated as of March 30, 2022 (as further amended, modified or supplemented from time to time, the “Agreement”), among Seller, Buyer and Agent, as such agreement may be further amended from time to time. Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Agreement.
RECITALS
WHEREAS, Seller, Buyer and Agent have agreed to amend the Agreement as more specifically set forth herein; and
WHEREAS, as of the date hereof, Seller represents to Buyer and Agent that Seller is in full compliance with all of the terms and conditions of the Agreement and each other Repurchase Document and no Default or Event of Default has occurred and is continuing under the Agreement or any other Repurchase Document.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the mutual covenants herein contained, the parties hereto hereby agree as follows:
Section 1.Amendment. Effective as of the Amendment Effective Date, the Agreement is hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in Exhibit A hereto.
Section 2.Effective Date. This Amendment shall become effective as of the date (the “Amendment Effective Date”) that the Agent shall have received counterparts hereof duly executed by each of the parties hereto.
Section 3.Fees and Expenses. Seller agrees to pay to Buyer and Agent all reasonable out-of-pocket costs and expenses incurred by Buyer or Agent in connection with this Amendment (including all reasonable fees and out-of-pocket costs and expenses of Buyer’s or Agent’s legal counsel) in accordance with Section 14.04 and 14.06 of the Agreement.
Section 4.Representations. Seller hereby represents to Buyer and Agent that as of the date hereof:
(1)Seller is in full compliance with all of the terms and conditions of the Agreement and each other Repurchase Document and no Default or Event of Default has occurred and is continuing under the Agreement or any other Repurchase Document; and
(2)Seller has received waivers and/or amendments reasonably equivalent to this Amendment from all of its other lending counterparties (a) if required pursuant to any repurchase agreement, loan and security agreement or similar credit facility or agreement for borrowed funds entered into by Seller, and such counterparty, or (b) if the failure to receive such amendment and/or waiver would result in a default or event of default under any such agreement or facility.
Section 5.Binding Effect; Governing Law. THIS AMENDMENT SHALL BE BINDING AND INURE TO THE BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND PERMITTED ASSIGNS. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF (EXCEPT FOR SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW WHICH SHALL GOVERN).
Section 6.Counterparts. This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument. The parties intend that faxed signatures and electronically imaged signatures such as .pdf files shall constitute original signatures and are binding on all parties.
Section 7.Limited Effect. Except as expressly amended hereby, the Agreement shall continue in full force and effect in accordance with its terms. Reference to this Amendment need not be made in the Agreement or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to, or with respect to, the Agreement, any reference in any of such items to the Agreement being sufficient to refer to the Agreement as amended hereby. The parties hereto have entered into this Amendment solely to amend the terms of the Agreement and do not intend this Amendment or the transactions contemplated hereby to be, and this Amendment and the transactions contemplated hereby shall not be construed to be, a novation of any of the obligations owing by Seller or any other party under or in connection with the Agreement or any of the other Transaction Documents. It is the intention and agreement of each of the parties hereto that (i) the perfection and priority of all security interests securing the payment of the Repurchase Obligations of the parties under the Agreement are preserved, (ii) the liens and security interests granted under the Agreement continue in full force and effect, and (iii) any reference to the Agreement in any such Transaction Documents shall be deemed to reference to this Amendment.
[Signature Page Follows]
IN WITNESS WHEREOF, Sellers, Buyer and Agent have caused this Amendment to be executed and delivered by their duly authorized officers as of the date set forth above.
| | | | | |
| HOME POINT FINANCIAL CORPORATION, as Seller By: /s/ Joseph Ruhlin
Name: Joseph Ruhlin
Title: Senior Managing Director - Treasurer |
| | | | | |
| MORGAN STANLEY BANK, N.A., as Buyer By: /s/ Darius Houseal
Name: Darius Houseal Title: Authorized Signatory |
Morgan Stanley Bank, N.A.
1585 Broadway, 24th Floor
New York, New York 10036
Attention: [***]
Telephone [***]
Email: [***]
With a copy to:
One Utah Center
201 South Main Street
Salt Lake City, Utah 84111
With a copy to:
Morgan Stanley Bank, N.A.
1 New York Plaza, 41st Floor
New York, New York 10004
Attention: [***]
Telephone: [***]
Email: [***]
| | | | | |
| MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC, as Agent
By: /s/ Michael A. Calandra, Jr
Name: Michael A. Calandra, Jr. Title: Authorized Signatory |
Morgan Stanley Mortgage Capital Holdings LLC
1585 Broadway, 24th Floor
New York, New York 10036
Attention: [***]
Telephone No.: [***]
Email: [***]
CONFORMED COPY through:
Amendment No. 1, dated 8/14/2020
Amendment No. 2, dated 11/18/2020
Amendment No. 3, dated 12/23/2020 and effective as of 1/5/2021
Amendment No. 4, dated 2/11/2021
Amendment No. 5, dated 3/10/2021
Amendment No. 6, dated 6/29/2021
Amendment No. 7, dated 12/23/2021
Amendment No. 8, dated 3/4/2022
Amendment No. 9, dated 3/30/2022
Amendment No. 10, dated 6/30/2022
EXHIBIT A
[see attached]
CONFORMED COPY through:
Amendment No. 1, dated 8/14/2020
Amendment No. 2, dated 11/18/2020
Amendment No. 3, dated 12/23/2020 and effective as of 1/5/2021
Amendment No. 4, dated 2/11/2021
Amendment No. 5, dated 3/10/2021
Amendment No. 6, dated 6/29/2021
Amendment No. 7, dated 12/23/2021
Amendment No. 8, dated 3/4/2022
Amendment No. 9, dated 3/30/2022
Amendment No. 10, dated 6/30/2022
MASTER REPURCHASE AGREEMENT AND SECURITIES CONTRACT
Dated as of June 3, 2020
HOME POINT FINANCIAL CORPORATION,
the Seller,
MORGAN STANLEY BANK, N.A.,
the Buyer
and
MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC,
the Agent
TABLE OF CONTENTS
Page
Section 1. Definitions and Accounting Matters 1
1.01 Certain Defined Terms. 1
1.02 Accounting Terms and Determinations 29
1.03 Interpretation 29
Section 2. No Commitment, Initiation of Transactions, Confirmation 30
2.01 No Commitment 30
2.02 Transaction Request Procedure (Transactions other than Wet-Ink Transactions) 31
2.03 Transaction Request Procedure (Wet-Ink Transactions) 32
2.04 [Reserved.] 33
2.05 Repurchase and Repurchase Price 33
2.06 Conversion of Applicable Interest Rates 35
2.07 Margin Maintenance 36
Section 3. Payments; Requirements of Law; Commitment Fee, Non-Utilization Fee, Etc. 36
3.01 Payments 36
3.02 Requirements of Law 38
3.03 Commitment Fee 39
3.04 Non-Utilization Fee 39
Section 4. Purchased Items 40
4.01 Purchased Items; Security Interest 40
4.02 Further Documentation 42
4.03 Changes in Locations, Name, etc 42
4.04 The Buyer’s Appointment as Attorney-in-Fact 42
4.05 Performance by The Buyer of The Seller’s Repurchase Obligations 44
4.06 Proceeds 44
4.07 Remedies 44
4.08 Limitation on Duties Regarding Preservation of Purchased Items 45
4.09 Powers Coupled with an Interest 45
4.10 Release of Security Interest 45
4.11 Cash Reporting 46
4.12 Taxes; Tax Treatment 46
Section 5. Conditions Precedent 48
5.01 Conditions Precedent to Initial Transaction 48
5.02 Conditions Precedent to all Transactions 49
Section 6. Representations and Warranties 52
6.01 Legal Name 52
6.02 Existence 52
6.03 Financial Condition 52
6.04 Litigation 53
6.05 No Breach 53
6.06 Action 53
6.07 Approvals 54
6.08 Margin Regulations 54
6.09 Taxes 54
6.10 Investment Company Act 54
6.11 Purchased Items; Security 54
6.12 Chief Executive Office/Jurisdiction of Organization 55
6.13 Location of Books and Records 55
6.14 Hedging 55
6.15 True and Complete Disclosure 55
6.16 Tangible Net Worth 56
6.17 ERISA 56
6.18 Delivery of Mortgage Loans 56
6.19 Subsidiaries 56
6.20 Regulatory Status 56
6.21 Takeout Commitments; Takeout Assignments 57
6.22 No Prohibited Persons. 57
6.23 Identification of Servicer(s) 57
6.24 Solvency 57
6.25 Massachusetts Subprime Loans, Nevada Subprime Loans and Loans Subject to Consent or Other Orders 58
6.26 [Reserved] 58
6.27 True Sales 58
6.28 Anti-Money Laundering Laws 58
6.29 No Burdensome Restrictions 58
6.30 Origination and Acquisition of Mortgage Loans 58
6.31 No Broker 58
Section 7. Covenants of the Seller 59
7.01 Financial Statements 59
7.02 Litigation 61
7.03 Existence, etc. 61
7.04 Prohibition of Fundamental Changes 62
7.05 Margin Deficiency 62
7.06 Notices 62
7.07 Interest Rate Protection Agreements 63
7.08 Reports 63
7.09 Underwriting Guidelines 63
7.10 Transactions with Affiliates 64
7.11 Limitation on Liens 64
7.12 Limitation on Guarantees 64
7.13 Limitation on Distributions 64
7.14 Maintenance of Tangible Net Worth 64
7.15 Maintenance of Ratio of Total Indebtedness to Tangible Net Worth 65
7.16 Maintenance of Profitability 65
7.17 Servicer; Servicing File 65
7.18 Maintenance of Liquidity 65
7.19 Required Filings 65
7.20 No Adverse Selection 65
7.22 Remittance of Prepayments in Full 65
7.23 Agency Approvals 66
7.24 [Reserved]. 66
7.25 Maintenance of Property; Insurance 66
7.26 MERS Designated Mortgage Loans 66
7.27 Loan Purchase Agreements 66
7.28 Reserved 66
7.29 Power of Attorney 66
7.30 Quality Control 66
7.31 Maintenance of Papers, Records and Files 67
7.32 Taxes, Etc. 67
7.33 Reserved 68
7.34 MERS 68
7.35 [***] 68
7.36 FHA/VA/RHS Loans 68
7.37 Protection of the Buyer’s Interests in the Purchased Loans 68
7.38 Division of Limited Liability Company 68
Section 8. Events of Default. 69
Section 9. Remedies Upon Default 73
Section 10. No Duty of The Buyer 74
Section 11. Recognition of the US Special Resolution Regimes 74
Section 12. Reserved 74
Section 13. The Agent 74
13.01 Appointment 74
13.02 Duties of Agent 75
13.03 Delegation of Duties 75
13.04 Exculpatory Provisions 75
13.05 Reliance by Agent 75
13.06 Notices 76
13.07 Non Reliance by Buyer 76
13.08 Indemnification 77
13.09 Successor Agent 77
Section 14. Miscellaneous 77
14.01 Delay Not Waiver; Remedies Are Cumulative 77
14.02 Notices 78
14.03 Use of Employee Plan Assets 78
14.04 Indemnification and Expenses 78
14.05 Waiver of Redemption and Deficiency Rights 80
14.06 Reimbursement 80
14.07 Termination and Survival 80
14.08 Severability 81
14.09 Amendments and Waivers 81
14.10 Assignments and Participations 82
14.11 Successors and Assigns 83
14.12 Reserved 83
14.13 Captions 84
14.14 Counterparts 84
14.15 Governing Law; Repurchase Agreement Constitutes Security Agreement 84
14.16 Reserved 84
14.17 Electronic Signatures 84
14.18 Submission To Jurisdiction; Waivers 84
14.19 WAIVER OF JURY TRIAL 85
14.20 Acknowledgments 85
14.21 Hypothecation or Pledge of Purchased Items 85
14.22 Servicing 85
14.23 Periodic Due Diligence Review 88
14.24 [Reserved] 89
14.25 Set-Off 89
14.26 Single Agreement 90
14.27 Intent 90
14.28 Confidentiality 91
14.29 Entire Agreement 92
SCHEDULES
SCHEDULE 1 Representations and Warranties re: Eligible Mortgage Loans
SCHEDULE 2 Filing Jurisdictions and Offices
SCHEDULE 3 Previous Names, Assumed Names or Trade Names used by the Seller
SCHEDULE 4 Cooperative Mortgage Loan Documents
SCHEDULE 5 Information for Servicer Reports
SCHEDULE 6 Excluded States
EXHIBITS
EXHIBIT A Takeout Investors
EXHIBIT B Underwriting Guidelines
EXHIBIT C Form of Servicer Notice
EXHIBIT D Form of Takeout Assignment
EXHIBIT E Form of Assignment and Acceptance
EXHIBIT F Form of Takeout Proceeds Identification Letter
EXHIBIT G [RESERVED]
EXHIBIT H Form of Compliance Certificate
MASTER REPURCHASE AGREEMENT AND SECURITIES CONTRACT
MASTER REPURCHASE AGREEMENT AND SECURITIES CONTRACT, dated as of June 3, 2020 (as amended, restated, supplemented or otherwise modified and in effect from time to time, this “Repurchase Agreement”), by and between HOME POINT FINANCIAL CORPORATION, a New Jersey corporation (the “Seller”), MORGAN STANLEY BANK, N.A., a national banking association (the “Buyer”) and MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC, a New York limited liability company, as agent for the Buyer (together with any successor agent appointed from time to time in accordance with the terms of Section 13.09, the “Agent”).
RECITALS
Buyer shall, with respect to the Committed Amount, and may, with respect to the Uncommitted Amount, from time to time, upon the terms and conditions set forth herein, agree to enter into transactions in which Seller transfers to Buyer Eligible Mortgage Loans against the transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such Purchased Loans at a date certain, 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 Repurchase Agreement.
Section 1.Definitions and Accounting Matters.
1.0aCertain Defined Terms. As used herein, the following terms shall have the following meanings (all terms defined in this Section 1.01 or in other provisions of this Repurchase Agreement in the singular to have the same meanings when used in the plural and vice versa):
“1934 Act” shall mean the Securities and Exchange Act of 1934, as amended from time to time.
“Acceptable State” shall mean any state other than those listed on Schedule 6 as such Schedule may be amended, revised or otherwise modified from time to time by mutual written agreement (which may be via email) between the Buyer and the Seller.
“Accepted Servicing Practices” shall mean with respect to any Mortgage Loan, those accepted and prudent mortgage servicing practices (including collection procedures) of prudent mortgage lending institutions that service mortgage loans of the same type as the Eligible Mortgage Loans in the jurisdiction where the related Mortgaged Property is located, and, to the extent related to Agency Mortgage Loans, which are in accordance with the applicable FHA Regulations, VA Regulations, RHS, Ginnie Mae, Freddie Mac or Fannie Mae servicing practices and procedures for MBS pool mortgages, as defined in the applicable FHA, VA, RHS, Ginnie Mae, Freddie Mac and Fannie Mae servicing guides including future updates, and in a manner at least equal in quality to the servicing the Seller or the Seller’s designee provides to mortgage loans which it owns in its own portfolio.
“Accrual Period” shall mean (a) with respect to any Payment Date as to which the Non-Utilization Fee is calculated, the period beginning on a Payment Date and ending on the day before the third following Payment Date, and (b) with respect to the Termination Date, the period beginning on the last Payment Date as to which a Non-Utilization Fee was calculated and ending on the day before the Termination Date.
“Affiliate” shall mean with respect to any Person, any other Person which, directly or indirectly, controls, is controlled by, or is under common control with, such Person; provided that other than the Seller and its Subsidiaries, no other portfolio company of Stone Point Capital LLC or its Affiliates shall be deemed an Affiliate of Seller. For purposes of this definition, “control” (together with the correlative meanings of “controlled by” and “under common control with”) means possession, directly or indirectly, of the power (a) to vote 20% or more of the securities (on a fully diluted basis) having ordinary voting power for the directors or managing general partners (or their equivalent) of such Person, or (b) to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by contract, or otherwise.
“Agency” shall mean Fannie Mae, Freddie Mac, Ginnie Mae, FHA, VA, RHS and any other government mortgage loan program acceptable to the Buyer (or the Agent on the Buyer’s behalf) or any successors thereto.
“Agency Approvals” shall mean approval by the Agencies as an approved issuer in good standing, as more particularly defined in Section 6.07(b) hereof.
“Agency Guide” shall mean, with respect to Fannie Mae securities and Fannie Mae eligible Mortgage Loans, the Fannie Mae Selling Guide and the Fannie Mae Servicing Guide, with respect to Freddie Mac securities and Freddie Mac eligible Mortgage Loans, the Freddie Mac Sellers’ and Servicers’ Guide; and with respect to any other Agency, the relevant guide or guidelines or regulations, in each case including all exhibits thereto, as such guide may be amended, supplemented or otherwise modified from time to time.
“Agency Mortgage Loan” shall mean a Mortgage Loan which is eligible to be sold to Fannie Mae or Freddie Mac or which is a FHA Loan, VA Loan or RHS Loan, or is otherwise eligible to be sold to, or insured by, any other Agency pursuant to any mortgage loan program acceptable to Buyer.
“Agency Renovation Loan” shall mean any Agency Mortgage Loan that is an FHA §203(h) Loan, an FHA §203(k) Loan, a Fannie Mae HomeStyle Loan, or any other Agency Mortgage Loan originated in accordance with an Agency program for construction, renovation or rehabilitation of the related Mortgaged Property.
“Agent” shall have the meaning set forth in the preamble to this Repurchase Agreement.
“Aggregate Utilization Ratio” for any Accrual Period shall mean, as of any date of determination, the ratio obtained by dividing (i) the sum of the Purchase Prices outstanding on each date during such Accrual Period by (ii) the sum of the Maximum Amount in effect on each day during such Accrual Period.
“ALTA” shall mean the American Land Title Association.
“Applicable Law” shall mean, as to any Person, all applicable Laws binding upon such Person or to which such a Person is subject.
“Applicable Pricing Spread” shall mean, for each Type of Eligible Mortgage Loan, the applicable pricing spread set forth in the Pricing Side Letter.
“Applicable Purchase Rate” shall mean, for each Type of Eligible Mortgage Loan, the applicable purchase rate set forth in the Pricing Side Letter.
“Appraised Value” shall mean the value set forth in an appraisal made in connection with the origination of the related Mortgage Loan as the value of the Mortgaged Property.
“Assignment and Acceptance” shall have the meaning set forth in Section 14.10(a) hereof.
“Assignment of Mortgage” shall mean, with respect to any mortgage, an assignment of the mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the related mortgaged property is located to reflect the assignment and pledge of the mortgage.
“Available Tenor” shall mean, as of any date of determination and with respect to the then-current Benchmark, any tenor for such Benchmark or payment period for interest calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of a Calculation Period pursuant to this Repurchase Agreement as of such date.
“Bankruptcy Code” shall mean the United States Bankruptcy Code of 1978, as amended from time to time.
“Benchmark” shall mean, initially, Term SOFR; provided that, if a Benchmark Transition Event and the Benchmark Replacement Date with respect thereto have occurred with respect to the Term SOFR Reference Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 2.06(a).
“Benchmark Floor” shall have the meaning set forth in the Pricing Side Letter.
“Benchmark Replacement” shall mean, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Buyer (or the Agent on behalf of the Buyer) on the applicable Benchmark Replacement Date:
(1) the sum of: (a) either of (i) Compounded SOFR or (ii) Daily Simple SOFR, as selected by the Buyer (or the Agent on behalf of the Buyer) to be the then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for the applicable repurchase facility market and (b) the applicable Benchmark Replacement Adjustment;
(2) the sum of: (a) the alternate rate of interest that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current Benchmark for the applicable Corresponding Tenor and (b) the Benchmark Replacement Adjustment; or
(3) the sum of: (a) the alternate rate of interest that has been selected by the Buyer (or the Agent on behalf of the Buyer) as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to any industry-accepted rate of interest as a replacement for the then-current Benchmark for U.S. dollar denominated secured financings or securitizations relating to the relevant asset class, as applicable at such time and (b) the Benchmark Replacement Adjustment.
If at any time the Benchmark Replacement as determined pursuant to clause (1), (2) or (3) of this definition would be less than the Benchmark Floor, the Benchmark Replacement will be deemed to be the Benchmark Floor for the purposes of this Repurchase Agreement.
“Benchmark Replacement Adjustment” shall mean the first alternative set forth in the order below that can be determined by the Buyer (or the Agent on behalf of the Buyer) as of the Benchmark Replacement Date:
(1) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected, endorsed or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement; or
(2) the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Buyer (or the Agent on behalf of the Buyer) giving due consideration to any industry-accepted spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar denominated secured financing or securitization transactions relating to the relevant asset class, as applicable at such time.
“Benchmark Replacement Conforming Changes” shall mean, with respect to either the use or administration of Term SOFR or any Benchmark Replacement, any technical, administrative or operational changes (including but not limited to changes to the definition of “Business Day,” the definition of “Calculation Period,” timing and frequency of determining rates and making payments of Price Differential, timing of transaction requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions and other technical, administrative or operational matters) that the Buyer (or the Agent on behalf of the Buyer) decides may be appropriate to reflect the adoption and implementation of such rate and to permit the administration thereof by the Buyer (or the Agent on behalf of the Buyer) in a manner substantially consistent with market practice (or, if the Buyer (or the Agent on behalf of the Buyer) decides that adoption of any portion of such market practice is not administratively feasible or if the Buyer (or the Agent on behalf of the Buyer) determines that no market practice for the administration of such rate exists, in such other manner of administration as the Buyer (or the Agent on behalf of the Buyer) determines is reasonably necessary in connection with the administration of this Repurchase Agreement).
“Benchmark Replacement Date” shall mean the earlier to occur of the following events with respect to the then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein.
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in
respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” shall mean the occurrence of one or more of the following events with respect to the then-current Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Best’s” shall mean Best’s Key Rating Guide, as the same shall be amended from time to time.
“BHC Act Affiliate” shall have the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k).
“Blocked Account” shall have the meaning set forth in Section 3.01(b) hereof.
“Blocked Account Agreement” shall mean the collection account control agreement to be entered into by the Buyer, the Agent, the Seller and the related depository bank in form and substance acceptable to Buyer with respect to the Blocked
Account, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Business Day” shall mean any day other than (i) a Saturday or Sunday, (ii) a legal holiday in the State of New York, the State of Texas or the State of Michigan, or (iii) a 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.
“Buyer” shall have the meaning provided in the introductory paragraph hereto.
“Calculation Period” shall mean, with respect to any Transaction, (a) initially, the period commencing on the related Purchase Date to but excluding the first day of the following calendar month; and (b) thereafter, each period commencing on the first day of the calendar month to and including the last day of such calendar month. Notwithstanding the foregoing, no Calculation Period may end after the Termination Date.
“Capital Lease Obligations” shall mean, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Repurchase Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.
“Capital Stock” shall mean any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all similar ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing.
“Cash Equivalents” shall mean (a) securities with maturities of [***] 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 [***] or less from the date of acquisition and overnight bank deposits of any commercial bank having capital and surplus in excess of [***], (c) repurchase obligations of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than seven (7) days with respect to securities issued or fully guaranteed or insured by the United States Government, (d) commercial paper of a domestic issuer rated at least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof by Moody’s and in either case maturing [***] after the day of acquisition, (e) securities with maturities of [***] 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 [***] or less from the date of acquisition backed by standby letters of credit issued by any commercial bank satisfying the requirements of clause (b) of this definition, or (g) shares of money market, mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition.
“Change of Control” shall mean, with respect to Seller, Home Point Capital Inc., ceasing to own directly or indirectly more than [***] of the Equity Interests in and to Seller. For purposes of this definition, “Equity Interests” means, with respect to the Seller, all shares, interests, participations or other equivalents in the equity of the Seller,
including common stock, preferred stock, warrants, membership interests, partnership interests, limited partnership interests, convertible debentures, other debt securities which include voting rights in the Seller referred to, and any and all agreements, instruments and documents convertible, in whole or in part, into any one or more of the foregoing.
“Closing Agent” shall mean, with respect to any Wet-Ink Transaction, an entity reasonably satisfactory to the Buyer (which may be a title company, escrow company or attorney in accordance with local law and practice in the jurisdiction where the related Wet-Ink Mortgage Loan is being originated) to which the proceeds of such Wet-Ink Transaction are to be wired pursuant to the instructions of the Seller. Unless the Buyer notifies the Seller (electronically or in writing) that a Closing Agent is unsatisfactory, each Closing Agent utilized by the Seller shall be deemed satisfactory; provided, that the Buyer shall instruct the Custodian that no funds shall be transferred to the account of any Closing Agent after the date that is five (5) Business Days following the date that notice is delivered to the Seller that such Closing Agent is unsatisfactory, and provided, further, that the Recognized Value shall be deemed to be zero with respect to each Mortgage Loan, for so long as such Mortgage Loan is a Wet-Ink Mortgage Loan, as to which the proceeds of such Mortgage Loan were wired to a Closing Agent with respect to which the Buyer has notified the Seller at any time (both before and after the related Purchase Date without regard to the five (5) Business Day period referenced above) that such Closing Agent is not satisfactory.
“Code” shall mean the Internal Revenue Code of 1986.
“Commitment Fee” shall have the meaning assigned thereto in the Pricing Side Letter.
“Committed Amount” shall have the meaning assigned thereto in the Pricing Side Letter.
“Compliance Certificate” shall have the meaning set forth in Section 7.01 hereof.
“Compounded SOFR” shall mean the compounded average of SOFRs for the applicable Corresponding Tenor, with the rate, or methodology for this rate, and conventions for this rate (which, for example, may be compounded in arrears with a lookback and/or suspension period as a mechanism to determine the interest amount payable prior to the end of each Calculation Period or compounded in advance) being established by the Buyer (or the Agent on behalf of the Buyer) in accordance with:
(1)the rate, or methodology for this rate, and conventions for this rate selected or recommended by the Relevant Governmental Body for determining Compounded SOFR; provided that:
(2)if, and to the extent that, the Buyer (or the Agent on behalf of the Buyer) determines that Compounded SOFR cannot be determined in accordance with clause (1) above, then the rate, or methodology for this rate, and conventions for this rate that have been selected by the Buyer (or the Agent on behalf of the Buyer) giving due consideration to any industry-accepted market practice for similar U.S. dollar denominated secured financing or securitization transactions relating to the relevant asset class, as applicable at such time.
“Confirmation” shall mean, with respect to any Transaction, a confirmation of such Transaction by the Buyer (or the Agent) delivered pursuant to Section 2.02.
“Contractual Obligation” shall mean as to any Person, any provision of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound or any provision of any security issued by such Person.
“Cooperative Corporation” shall mean the cooperative apartment corporation that holds legal title to a Cooperative Project and grants occupancy rights to units therein to stockholders through Proprietary Leases or similar arrangements.
“Cooperative Mortgage Loan” shall mean a Mortgage Loan that is secured by a first lien on a perfected security interest in Cooperative Shares and the related Proprietary Lease granting exclusive rights to occupy the related Cooperative Unit in the building owned by the related Cooperative Corporation.
“Cooperative Mortgage Loan Documents” shall mean the documents listed on Schedule 4 attached hereto, if applicable, or as otherwise mutually agreed.
“Cooperative Mortgage Note” shall mean the original executed promissory note or other evidence of the indebtedness of a Mortgagor with respect to a Cooperative Mortgage Loan.
“Cooperative Project” shall mean all real property owned by a Cooperative Corporation in the State of New York including the land, separate dwelling units and all common elements.
“Cooperative Shares” shall mean the shares of stock issued by a Cooperative Corporation and allocated to a Cooperative Unit and represented by a stock certificate.
“Cooperative Unit” shall mean a specific unit in a Cooperative Project.
“Corresponding Tenor” shall mean, with respect to any Available Tenor, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Custodial and Disbursement Agreement” shall mean the Custodial and Disbursement Agreement, dated as of the date hereof, among the Seller, the Custodian, the Disbursement Agent, the Agent and the Buyer, as the same shall be amended, restated, supplemented or otherwise modified and in effect from time to time, and any other custodial agreement entered into pursuant to this Repurchase Agreement.
“Custodian” shall mean U.S. Bank National Association, as custodian under the Custodial and Disbursement Agreement, and its successors and permitted assigns thereunder.
“Cut-Off Date” shall mean the first day of the month in which the related Purchase Date occurs.
“Daily Simple SOFR” shall mean, for any day, SOFR, with the conventions for this rate (which may include a lookback) being established by the Buyer (or the Agent on
behalf of the Buyer) in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for business loans at such times; provided that, if the Buyer (or the Agent on behalf of the Buyer) decides that any such convention is not administratively feasible for the Buyer, then the Buyer (or the Agent on behalf of the Buyer) may establish another convention in its reasonable discretion.
“Default” shall mean an Event of Default or an event that with notice or lapse of time or both would become an Event of Default.
“Default Right” shall have the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“Disbursement Account” shall mean that certain deposit account established pursuant to the Custodial and Disbursement Agreement and subject to the Disbursement Account Control Agreement.
“Disbursement Account Control Agreement” shall mean a blocked account control agreement entered into among the Buyer, the Agent, the Disbursement Agent and the Seller with respect to the Disbursement Account (as defined in the Custodial and Disbursement Agreement).
“Disbursement Agent” shall mean U.S. Bank National Association, as disbursement agent under the Custodial and Disbursement Agreement, and its successors and permitted assigns thereunder.
“Dollars” and “$” shall mean lawful money of the United States of America.
“Due Date” shall mean the day of the month on which the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace.
“Due Diligence Review” shall mean the performance by the Buyer (or the Agent on behalf of the Buyer) of any or all of the reviews permitted under Section 14.23 hereof with respect to any or all of the Purchased Loans, as desired by the Buyer and the Agent from time to time.
“Early Repurchase Date” shall have the meaning provided in Section 2.05(e) hereof.
“Early Monthly Payment Amount” shall have the meaning provided in Section 3.01(a).
“Effective Date” shall mean the date upon which the conditions precedent set forth in Section 5.01 hereof shall have been satisfied.
“Eighth Amendment Effective Date” shall mean March 4, 2022.
“Electronic Agent” shall mean Merscorp Holdings, Inc., as electronic agent under the Electronic Tracking Agreement, and its successors and permitted assigns thereunder.
“Electronic Tracking Agreement” shall mean the Electronic Tracking Agreement, dated as of June 3, 2020, among the Seller, the Buyer, the Agent, the
Electronic Agent and MERS, as the same shall be amended, restated, supplemented or otherwise modified from time to time.
“Eligible Mortgage Loans” shall have the meaning assigned thereto in the Pricing Side Letter.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ERISA Affiliate” shall mean any Person which, together with the Seller, is treated as a single employer under Section 414(b) or (c) of the Code or solely for purposes of Section 302 of ERISA and Section 412 of the Code is treated as a single employer described in Section 414(b), (c), (m), or (o) of the Code.
“Escrow Payments” shall mean 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.
“Eurocurrency Liabilities” shall have the meaning specified in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.
“Event of Default” shall have the meaning provided in Section 8 hereof.
“Exception” shall have the meaning specified in the Custodial and Disbursement Agreement.
“Exception Report” shall mean the portion of the Mortgage Loan Schedule and Exception Report detailing Exceptions in respect of each Mortgage Loan.
“Excess Proceeds” shall have the meaning provided in Section 2.05(d) hereof.
“Excluded Taxes” shall mean any of the following Taxes imposed on or with respect to or required to be withheld from a payment to the Buyer (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of the recipient 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) that are Other Connection Taxes, (b) in the case of the Buyer, U.S. federal withholding Taxes imposed on amounts payable to or for the account of the Buyer with respect to an applicable interest in each Transaction pursuant to a law in effect on the date on which the Buyer acquires such interest in such Transactions or the Buyer changes its lending office, except, in each case, to the extent such Taxes were payable to either such Buyer’s assignor immediately before such Buyer became a party hereto (c) Taxes attributable to Buyer’s failure to comply with Section 4.12(e), and (d) U.S. federal withholding Taxes imposed under FATCA.
“Fannie Mae” shall mean the Federal National Mortgage Association, or any successor thereto.
“Fannie Mae HomeStyle Loan” shall mean a Mortgage Loan that fully conforms to Fannie Mae’s HomeStyle Renovation mortgage loan program and is referred to as a “HomeStyle® Renovation Mortgage” by Fannie Mae.
“FATCA” shall mean sections 1471 through 1474 of the Code, as of the date of this Repurchase 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, any agreements entered into pursuant to section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such sections of the Code.
“Federal Funds Rate” shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for the day of such transactions received by the Buyer from three federal funds brokers of recognized standing selected by it.
“FHA” shall mean the Federal Housing Administration, an agency within the United States Department of Housing and Urban Development, 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 Approved Mortgagee” shall mean an institution which is approved by FHA to act as servicer and mortgagee of record pursuant to FHA Regulations.
“FHA Insurance Contract” shall mean the contractual obligation of FHA respecting the insurance of an FHA Loan pursuant to the National Housing Act, as amended.
“FHA Loan” shall mean a Mortgage Loan that is the subject of an FHA Insurance Contract as evidenced by a Mortgage Insurance Certificate.
“FHA Regulations” shall mean the regulations promulgated by HUD under the National Housing 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.
“FHA Streamline Loan” shall mean a FHA Loan originated pursuant to the FHA Streamline Refinance” program in compliance with FHA Regulations, including HUD Handbook 4155.1.6.C.
“FHA §203(h) Loan” shall mean a closed-end first lien FHA Loan with the following characteristics:
(i)a portion of the proceeds of which will be used for the purpose of acquiring, rehabilitating or repairing the related single family property;
(i)which satisfies the applicable requirements of Section 203(h) of the National Housing Act and any applicable regulations; and
the payment of which is insured by the FHA under the National Housing Act or with respect to which a current binding and enforceable commitment for such insurance has been issued by the FHA.
“FHA §203(k) Loan” shall mean a closed-end first lien FHA Loan with the following characteristics:
(ii)a portion of the proceeds of which will be used for the purpose of rehabilitating or repairing the related single family property;
(iii)which satisfies the definition of “rehabilitation loan” under 24 C.F.R. 203.50(a); and
(iv)the payment of which is insured by the FHA under the National Housing Act or with respect to which a current binding and enforceable commitment for such insurance has been issued by the FHA.
“FICO Score” shall mean the credit score provided by Fair, Isaac & Company, Inc. or such other organization providing credit scores.
“FMV Adjustments” shall mean adjustments to the capitalized value of Seller’s servicing rights resulting from changes in valuation inputs for assumptions used in the valuation model.
“Freddie Mac” shall mean the Federal Home Loan Mortgage Corporation, or any successor thereto.
“GAAP” shall mean generally accepted accounting principles as in effect from time to time in the United States.
“Ginnie Mae” shall mean the Government National Mortgage Association, or any successor thereto.
“Governmental Authority” shall mean any nation or government, any state or other political subdivision, agency or instrumentality thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator, accounting board or authority having jurisdiction over the Seller, any of its Subsidiaries or any of its properties.
“Gross Margin” shall mean with respect to each adjustable rate Mortgage Loan, the fixed percentage amount set forth in the related Mortgage Note.
“Guarantee” shall mean, as to any Person, any obligation of such Person directly or indirectly guaranteeing any Indebtedness of any other Person or in any manner providing for the payment of any Indebtedness of any other Person or otherwise protecting the holder of such Indebtedness against loss (whether by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, or to take-or-pay or otherwise); provided that the term “Guarantee” shall not include (i) endorsements for collection or deposit in the ordinary course of business, or (ii) obligations to make servicing advances for delinquent Taxes and insurance or other obligations in respect of a Mortgaged Property, to the extent required by the Buyer. The amount of any Guarantee of a Person shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith. The terms “Guarantee” and “Guaranteed” used as verbs shall have correlative meanings.
“Income” shall mean, with respect to any Purchased Loan at any time, any principal and/or interest thereon and all dividends, sale proceeds (including, without limitation, any proceeds from the liquidation or securitization of such Purchased Loan or other disposition thereof), rent and other collections and distributions thereon (including, without limitation, any proceeds received in respect of mortgage insurance), but not including any Escrow Payment or any commitment fees, origination fees and/or servicing fees accrued in respect of periods on or after the initial Purchase Date with respect to such Purchased Loan.
“Indemnified Taxes” shall mean (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Seller under any Repurchase Document and (b) to the extent not otherwise described in (a), Other Taxes.
“Indebtedness” shall mean, for any Person without duplication: (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 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; (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; and (i) indebtedness of general partnerships of which such Person is a general partner.
“Insurance Proceeds” shall mean with respect to each Mortgage Loan, proceeds of insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
“Insured Depository Institution” shall have the meaning ascribed to such term by Section 1813(c)(2) of Title 12 of the United States Code, as amended from time to time.
“Intangible Assets” shall mean the excess of the cost over book value of assets acquired, patents, trademarks, trade names, copyrights, franchises and other intangible assets (excluding in any event the value of any residual securities and the value of any owned or purchased mortgage servicing rights).
“Interest Rate Adjustment Date” shall mean with respect to each adjustable rate Mortgage Loan, the date, specified in the related Mortgage Note and the Mortgage Loan Schedule, on which the Mortgage Note Interest Rate is adjusted.
“Interest Rate Protection Agreement” shall mean, with respect to any or all of the Purchased Loans, any short sale of US Treasury Securities, futures contract, mortgage related security, eurodollar futures contract, options related contract, interest rate swap, cap or collar agreement or similar arrangement providing for protection against
fluctuations in interest rates or the exchange of nominal interest obligations, either generally or under specific contingencies, entered into by the Seller.
“Laws” shall mean, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents 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.
“Lien” shall mean any mortgage, lien, pledge, charge, security interest or similar encumbrance.
“Liquidity” shall mean 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 available to such Person (taking into account applicable haircuts) under committed mortgage loan warehouse and servicer advance facilities for which such Person has unencumbered eligible collateral to pledge thereunder.
“Loan Guaranty Certificate” shall mean, with respect to any VA Loan, the physical or electronic certificate evidencing the VA Loan Guaranty Agreement.
“Loan Loss Reserves” shall mean funds held by the Seller to cover potential losses in connection with the mortgage loans owned in the Seller’s portfolio, including without limitation any amounts required to be maintained and held as a loan loss reserve in accordance with GAAP and any other regulatory requirement applicable to the Seller.
“Loan-to-Value Ratio” or “LTV” shall mean with respect to any Mortgage Loan, as of any date of determination, (i) with respect to any Agency Mortgage Loan, the loan to value ratio of such Mortgage Loan as determined in accordance with the Agency Guides of the Agency which is insuring or guaranteeing such Mortgage Loan or to which such Mortgage Loan is eligible to be sold, or (ii) with respect to any Mortgage Loan that is not an Agency Mortgage Loan, the ratio of (a) the outstanding principal amount of such Mortgage Loan, to (b) the Property Value of the Mortgaged Property securing such Mortgage Loan.
“Margin Base” shall mean the aggregate Recognized Value of all Purchased Loans.
“Margin Deficiency” shall have the meaning provided in Section 2.07(b) hereof.
“Margin Threshold” shall mean an amount equal to [***].
“Market Value” shall mean, as of any date with respect to any Eligible Mortgage Loan or Purchased Loan, the price at which such Eligible Mortgage Loan or Purchased Loan could readily be sold as determined by the Agent in its sole good faith discretion, which price may be determined to be zero. The Agent’s determination of Market Value shall be conclusive upon the parties absent manifest error on the part of the Agent.
“Massachusetts Subprime Loan” shall mean a Mortgage Loan to a Mortgagor with a FICO Score of [***] or less at the time of origination if such Mortgage Loan is secured by a residence located in Massachusetts or made to a Mortgagor whose primary residence is in Massachusetts.
“Master Trust Receipt” shall have the meaning provided thereto in the Custodial and Disbursement Agreement.
“Material Adverse Effect” shall mean a material adverse effect on (a) the Property, business, operations, or financial condition of any Person, (b) the ability of the any Person to perform its obligations under any of the Repurchase Documents to which it is a party, (c) the validity, legality, binding effect, or enforceability of any of the Repurchase Documents or any security interest granted thereunder, (d) the rights and remedies of the Buyer under any of the Repurchase Documents, (e) the timely payment of the Repurchase Price or the Price Differential on the Transactions or other amounts payable in connection therewith or (f) the Purchased Items taken as a whole.
“Maximum Amount” shall have the meaning assigned thereto in the Pricing Side Letter.
“MBA Method of Delinquency” shall mean the methodology used by the Mortgage Bankers Association for calculating the delinquency of mortgage loans. For the avoidance of doubt, in applying the MBA Method of Delinquency, a Mortgage Loan is considered “30 Days Delinquent” if the monthly payment is not received prior to the close of business on the day that immediately precedes the due date on which the next monthly payment is due. For example, a mortgage loan will be considered sixty (60) Days Delinquent if the monthly payment originally due on May 1 is not received by the close of business on June 30.
“MERS” shall mean Mortgage Electronic Registration Systems, Inc. and its successors in interest.
“MERS Designated Mortgage Loan” shall have the meaning assigned to such term in Section 3 of the Electronic Tracking Agreement.
“MERS Procedures Manual” shall mean the MERS Procedures Manual attached as Exhibit B to the Electronic Tracking Agreement, as it may be amended, supplemented or otherwise modified from time to time.
“MERS® System” shall mean the Electronic Agent’s mortgage electronic registry system, as more particularly described in the MERS Procedures Manual.
“Minimum Price Differential” means, for each Accrual Period, the amount obtained by daily application of the Pricing Rate to an amount equal to sixty percent (60%) of the Maximum Amount in effect for each day in such Accrual Period.
“Monthly Payment” shall mean the scheduled monthly payment of principal and interest on a Mortgage Loan as adjusted in accordance with changes in the Mortgage Note Interest Rate pursuant to the provisions of the Mortgage Note for an adjustable rate Mortgage Loan.
“Moody’s” shall mean Moody’s Investors Service, Inc.
“Mortgage” shall mean the mortgage, deed of trust or other instrument securing a Mortgage Note, which creates a first lien on the fee in real property securing the Mortgage Note.
“Mortgage File” shall have the meaning assigned thereto in the Custodial Agreement.
“Mortgage Insurance Certificate” shall mean the physical or electronic certificate evidencing an FHA Insurance Contract.
“Mortgage Loan” shall mean a mortgage loan which the Seller has sold to the Buyer pursuant hereto and which the Custodian has been instructed to hold for the Buyer pursuant to the Custodial and Disbursement Agreement, and which Mortgage Loan includes, without limitation, (i) a Mortgage Note and related Mortgage, (ii) all right, title and interest of the Seller in and to the Mortgaged Property covered by such Mortgage and (iii) the related Servicing Rights.
“Mortgage Loan Data File” shall mean a computer-readable file containing information with respect to each Purchased Loan, to be delivered by the Seller to the Agent pursuant to Section 2.02(a) hereof, the data fields of which are identified on Annex 1 to the Custodial and Disbursement Agreement.
“Mortgage Loan Documents” shall mean, with respect to each Purchased Loan, the documents comprising the Mortgage File for such Purchased Loan, as applicable.
“Mortgage Loan Issue” shall mean, with respect to any Purchased Loan, a breach of the representations and warranties set forth in Section 6.11(a), Section 6.25, or Schedule 1, which, to the extent such representations and warranties prove to have been incorrect, untrue, or false or intentionally misleading in any material respect with respect to one or more individual Purchased Loans (and not all Purchased Loans collectively) shall be considered solely for the purpose of determining the Recognized Value of the Purchased Loans; unless (i) the Seller shall have made any such representations and warranties with knowledge that they were materially false or misleading at the time made or (ii) any such representations and warranties have been determined by the Buyer in its sole discretion to be materially false or misleading on a regular basis.
“Mortgage Loan Schedule” shall have the meaning assigned thereto in the Custodial and Disbursement Agreement.
“Mortgage Loan Schedule and Exception Report” shall mean the mortgage loan schedule and exception report prepared by the Custodian pursuant to the Custodial and Disbursement Agreement.
“Mortgage Note” shall mean the original executed promissory note or other evidence of the indebtedness of a Mortgagor with respect to a Mortgage Loan.
“Mortgage Note Index” shall mean with respect to each adjustable rate Mortgage Loan, the index set forth in the related Mortgage Note for the purpose of calculating the interest rate thereon.
“Mortgage Note Interest Rate” shall mean the annual rate of interest borne on the Mortgage Note, which shall be adjusted from time to time with respect to adjustable rate Mortgage Loans.
“Mortgage Note Interest Rate Cap” shall mean with respect to an adjustable rate Mortgage Loan, the limit on each Mortgage Note Interest Rate adjustment as set forth in the related Mortgage Note.
“Mortgaged Property” shall mean 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 or, in the case of any Cooperative Mortgage Loan, the Cooperative Shares and the Proprietary Lease.
“Mortgagee” shall mean the Seller or any subsequent holder of a Mortgage Loan.
“Mortgagor” shall mean the obligor on a Mortgage Note.
“MS&Co.” shall mean Morgan Stanley & Co. LLC, a registered broker-dealer.
“MS Indebtedness” shall mean any indebtedness of the Seller hereunder and under any other arrangement (other than this Repurchase Agreement) between the Seller on the one hand and the Buyer or an Affiliate of the Buyer on the other hand (including, without limitation, the amount of any loans, interest due and default interest, termination payments, hedging costs, structuring or other facility fees and expenses).
“Multiemployer Plan” shall mean a multiemployer plan defined as such in Section 3(37) of ERISA to which contributions have been (or were required to be made) within the last six (6) years or are currently required to be made by the Seller or any ERISA Affiliate and that is covered by Title IV of ERISA.
“Net Income” shall mean, for any period, the net income of the Seller for such period as determined in accordance with GAAP, excluding FMV Adjustments.
“Nevada Subprime Loan” shall mean a Mortgage Loan to a Mortgagor with a FICO Score of [***] or less at the time of origination if such Mortgage Loan is secured by a residence located in Nevada or made to a Mortgagor whose primary residence is in Nevada.
“Non-QM Mortgage Loan” shall mean a Mortgage Loan that is not a “qualified mortgage” as defined by 12 CFR 1026.43(e) because either (i) the debt-to-income ratio of the related Mortgagor is greater than forty-three percent (43%) or (ii) such Mortgage Loan is an “interest-only” Mortgage Loan.
“Non-Utilization Fee” shall have the meaning provided in Section 3.04 hereof.
“OFAC” shall mean the Office of Foreign Assets Control of the United States Department of the Treasury.
“OFAC-Administered Sanction” shall have the meaning set forth in Section 6.22 hereof.
“Origination Date” shall mean, with respect to each Mortgage Loan, the date of the Mortgage Note relating to such Mortgage Loan, unless such information is not provided by the Seller with respect to such Mortgage Loan.
“Other Connection Taxes” means, with respect to any Buyer, Taxes imposed as a result of a present or former connection between such Buyer and the jurisdiction imposing such Tax (other than connections arising from such Buyer having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Repurchase Document, or sold or assigned an interest in any Purchased Item or Repurchase Document).
“Other Taxes” shall mean all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Repurchase Document.
“Participant Register” shall have the meaning provided in Section 14.10(d) hereof.
“Payment Date” shall mean, with respect to each Transaction, the sixth (6th) Business Day of each calendar month, commencing with the first such date after the related Purchase Date.
“PBGC” shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.
“Person” shall mean any individual, corporation, company, voluntary association, partnership, joint venture, limited liability company, trust, unincorporated association or government (or any agency, instrumentality or political subdivision thereof).
“Plan” shall mean an employee pension benefit plan established or maintained by the Seller or any ERISA Affiliate and subject to Title IV of ERISA, other than a Multiemployer Plan.
“PMI Policy” or “Primary Insurance Policy” shall mean a policy of primary mortgage guaranty insurance issued by a Qualified Insurer.
“Post-Default Rate” shall have the meaning assigned thereto in the Pricing Side Letter.
“Predatory Lending Practices” shall mean any and all underwriting and lending policies, procedures and practices defined or enumerated in any local or municipal ordinance or regulation or any state or federal regulation or statute prohibiting, limiting or otherwise relating to the protection of consumers from such policies, procedures and practices. Such policies, practices and procedures may include, without limitation, charging excessive loan, broker, and closing fees, charging excessive rates of loan interest, making loans without regard to a consumer’s ability to re-pay the loan, refinancing loans with no material benefit to the consumer, charging fees for services not actually performed, discriminating against consumers on the basis of race, gender, or age, failing to make proper disclosures to the consumer of the consumer’s rights under federal and state law, and any other predatory lending policy, practice or procedure as defined by ordinance, regulation or statute.
“Prescribed Laws” shall mean, collectively, (a) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56) (the USA PATRIOT Act), (b) Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism, (c) the International Emergency Economic Power Act, 50 U.S.C. §1701 et. seq. and (d) all other Requirements of Law relating to money laundering or terrorism, including without limitation, the USA PATRIOT Act and all regulations and executive orders promulgated with respect to money laundering or terrorism, including, without limitation, those promulgated by the OFAC.
“Price Differential” shall mean, with respect to any Transaction hereunder as of any date, the aggregate amount obtained by daily application of the Pricing Rate (or, in during the continuation of an Event of Default, the daily application of the Post-Default Rate) for such Transaction to the Purchase Price for such Transaction, calculated on the basis of a three hundred sixty (360) day year and 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 the Seller to the Buyer, prior to such date, with respect to such Transaction).
“Pricing Rate” shall have the meaning assigned thereto in the Pricing Side Letter.
“Pricing Side Letter” shall mean the pricing side letter, dated as of the date hereof, among the Seller, the Buyer and the Agent, as the same may be amended, supplemented or modified from time to time.
“Prime Jumbo Mortgage Loan” shall mean a Mortgage Loan where the original outstanding principal amount of such Mortgage Loan exceeds the eligibility limits for purchases by Freddie Mac or Fannie Mae, but which otherwise would be eligible to be sold to Fannie Mae or Freddie Mac.
“Principal” shall have the meaning assigned thereto in Annex I.
“Prohibited Person” shall have the meaning set forth in Section 6.22 hereof.
“Property” shall mean any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.
“Proprietary Lease” shall mean a lease on (or occupancy agreement with respect to) a Cooperative Unit evidencing the possessory interest of the owner of the Cooperative Shares or the Seller in such Cooperative Unit.
“Purchase Advice” shall have the meaning provided in Section 2.05(d) hereof.
“Purchase Advice Deficiency” shall have the meaning provided in Section 2.05(d) hereof.
“Purchase Date” shall mean the date on which a Transaction is entered into hereunder.
“Purchase Price” shall mean, with respect to each Purchased Loan, (i) on each Purchase Date therefor, an amount equal to the lesser of (a) the product of (x) the Applicable Purchase Rate times (y) the Market Value of such Purchased Loan, and (b) the product of (x) the Applicable Purchase Rate times (y) the outstanding principal balance of such Purchased Loan on such Purchase Date and (ii) thereafter, such amount decreased by the amount of any payments made by the Seller hereunder that are applied in reduction of such amount.
“Purchased Items” shall have the meaning provided in Section 4.01(b) hereof.
“Purchased Loans” shall mean the Mortgage Loans sold by the Seller on a servicing-released basis to the Buyer, in Transactions hereunder that have not been repurchased by the Seller in accordance with the terms of this Agreement (together with any additional Mortgage Loans transferred pursuant to Section 2.07) together with the
related Records, the related Servicing Rights (which, for the avoidance of doubt, were sold by the Seller and purchased by the Buyer on the related Purchase Date), the related Takeout Commitment, if any, and with respect to each Mortgage Loan, any related FHA Insurance Contract, any related VA Loan Guaranty Agreement, any related Rural Housing Service Guaranty, the Seller’s rights under any related escrow letter and/or insured closing letter, the Seller’s rights under any takeout commitment related to the Mortgage Loans and other Purchased Items with respect to the Mortgage Loans, such other property, rights, titles or interest as are specified on a Transaction Request, and all instruments, chattel paper, and general intangibles comprising or relating to all of the foregoing.
“Qualified Insurer” means an insurance company acceptable to Fannie Mae.
“Qualified Mortgage” shall mean a “qualified mortgage” as such term is defined under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended, and any regulations, rulings, interpretations or orders promulgated by any Governmental Authority thereunder.
“Qualified Originator” shall mean the Seller or a correspondent of the Seller approved by the Seller in accordance with the Seller’s correspondent approval process.
“Recognition Agreement” shall mean, with respect to a Cooperative Mortgage Loan, an agreement executed by a Cooperative Corporation which, among other things, acknowledges the lien of the Mortgage on the Mortgaged Property in question.
“Recognized Value” shall mean, with respect to each Purchased Loan the lesser of (a) the Applicable Purchase Rate of the Market Value of such Purchased Loan and (b) the Applicable Purchase Rate of the outstanding principal balance of such Purchased Loan. Recognized Value shall be zero with respect to each Purchased Loan that is not an Eligible Mortgage Loan.
“Records” shall mean, with respect to any Purchased Loan, all instruments, agreements and other books, records, and reports and data generated by other media for the storage of information maintained by the Seller or any other person or entity on behalf of the Seller or the Custodian with respect to a Purchased Loan. Records shall include without limitation, the Mortgage Notes, any Mortgages, the Mortgage Loan Documents, the Servicing File, the Servicing Records and any other instruments necessary to document or service a Mortgage Loan that is a Purchased Loan, including, without limitation, the complete payment and modification history of each Purchased Loan.
“Reference Time” shall mean, with respect to any setting of the then-current Benchmark, (1) if such Benchmark is Term SOFR, the time set forth in the definition of Term SOFR, and (2) if such Benchmark is not Term SOFR, the time determined by the Buyer (or the Agent on behalf of the Buyer) in accordance with the Benchmark Replacement Conforming Changes.
“Register” shall have the meaning provided in Section 14.10(d) hereof.
“Related Credit Enhancement” shall have the meaning assigned to such term in Section 4.01(c).
“Regulation T, U or X” shall mean Regulation T, U or X of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time.
“Relevant Governmental Body” shall mean the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.
“Remittance Amount” shall have the meaning provided in Section 2.05(d) hereof.
“Reportable Event” shall mean any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty (30) day notice period is waived by regulation (provided that a failure to meet the minimum funding standard of Section 412 of the Code or Sections 302 or 303 of ERISA, including, without limitation, 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, shall be a reportable event regardless of the issuance of any waivers in accordance with Section 412(c) of the Code).
“Repurchase Agreement” shall have the meaning assigned in the introductory paragraph hereof.
“Repurchase Date” shall mean with respect to any Purchased Items the earliest to occur of (i) the Termination Date, (ii) any Early Repurchase Date, or (iii) any other date set forth in any Transaction Request, pursuant to the terms of this Repurchase Agreement.
“Repurchase Documents” shall mean, collectively, this Repurchase Agreement, the Custodial and Disbursement Agreement, the Pricing Side Letter, the Electronic Tracking Agreement, each Transaction Request, each Confirmation, if any, the Blocked Account Agreement, the Disbursement Account Control Agreement, any Servicer Notice, and any other related account control agreement.
“Repurchase Obligations” shall mean (a) all of the Seller’s obligation to pay the Repurchase Price on the Repurchase Date and other obligations and liabilities (including, without limitation, the obligation to pay the Commitment Fee, Non-Utilization Fee and any other fees and expenses hereunder) of the Seller to the Buyer, its Affiliates, Custodian or any other Person arising under, or in connection with, the Repurchase Documents or directly related to the Purchased Loans, whether now existing or hereafter arising; (b) any and all sums paid by the Buyer or on behalf of the Buyer following an Event of Default pursuant to the Repurchase Documents in order to preserve any Purchased Loan or its interest therein; (c) in the event of any proceeding for the collection or enforcement of any of the Seller’s indebtedness, obligations or liabilities referred to in clause (a), the reasonable expenses of retaking, holding, collecting, preparing for sale, selling or otherwise disposing of or realizing on any Purchased Loan, or of any exercise by the Buyer, the Agent or any Affiliate of the Buyer of any of their respective rights under the Repurchase Documents, including without limitation, reasonable attorneys’ fees and disbursements and court costs; and (d) all of the Seller’s indemnity obligations to the Buyer and the Agent pursuant to the Repurchase Documents.
“Repurchase Price” shall mean, with respect to each Purchased Loan, the price at which such Purchased Loan is to be transferred from the Buyer or its designee (including the Custodian) to the Seller upon termination of the related Transaction on the Repurchase Date, which price will be determined in each case as the sum of the unpaid Purchase Price related to such Purchased Loan, the amount of any accrued and unpaid Price Differential that has accrued with respect to such Transaction and the amount of any fees or expenses due and payable under the Repurchase Documents.
“Requirement of Law” shall mean as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law (including, without duplication, Prescribed Laws and all laws with respect to unfair and deceptive lending practices and Predatory Lending Practices), treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Responsible Officer” shall mean, as 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; provided, that in the event any such officer is unavailable at any time he or she is required to take any action hereunder, Responsible Officer shall mean any officer authorized to act on such officer’s behalf as demonstrated by a certificate of corporate resolution.
“RHS Loan” shall mean a Mortgage Loan originated in accordance with the Rural Housing Service Section 502 Single Family Housing Guaranteed Loan Program, which Mortgage Loan is subject to a Rural Housing Service Guaranty and eligible for delivery to an Agency for inclusion in a loan pool securitized.
“Rural Housing Service” or “RHS” shall mean the Rural Housing Service of the USDA.
“Rural Housing Service Approved Lender” shall mean a lender which is approved by Rural Housing Service to act as a lender in connection with the origination of RHS Loans.
“Rural Housing Service Guaranty” shall mean with respect to a RHS Loan, the agreements evidencing the guaranty of such Loan by the Rural Housing Service.
“Rural Housing Service Regulations” shall mean the regulations, guidelines, instructions, policies and procedures adopted and implemented by the Rural Housing Service and applicable to (i) the origination and servicing of RHS Loans and (ii) the issuance and validity of Rural Housing Service Guaranties, in each case as such regulations, guidelines, instructions, policies and procedures may be revised or modified and in effect from time to time.
“Section 404 Notice” shall mean the notice required pursuant to Section 404 of the Helping Families Save Their Homes Act of 2009 (P.L. 111-22), which amends 15 U.S.C. Section 1641 et seq., to be delivered by a creditor that is an owner or an assignee of a mortgage loan to the related Mortgagor within thirty (30) days after the date on which such mortgage loan is sold or assigned to such creditor.
“S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.
“Security Agreement” shall mean the specific security agreement creating a security interest on and pledge of the Cooperative Shares and the appurtenant Proprietary Lease securing a Cooperative Mortgage Loan.
“Seller” shall have the meaning provided in the introductory paragraph hereof.
“Servicer” shall have the meaning provided in Section 14.22(d) hereof.
“Servicer Account” shall mean those certain custodial accounts established by a Servicer under the applicable Servicing Agreement and Servicer Notice for the benefit of the Buyer into which all Income collected by such Servicer on the Purchased Items serviced by such Servicer is remitted.
“Servicer Notice and Agreement” shall have the meaning provided in Section 14.22(d) hereof.
“Servicer Report” shall mean a list (in computer readable form) of Purchased Loans serviced by the Servicer, providing as to each such Purchased Loan the applicable information specified in Schedule 5 to this Repurchase Agreement.
“Servicer Termination Event” shall mean the occurrence of any of the following (a) any event of default (howsoever defined) by the Servicer under the Servicing Agreement, (b) a breach by Servicer of the Servicer Notice, (c) the Servicer’s FHA servicing eligibility is suspended, revoked or becomes subject to an investigation by the FHA or (d) the occurrence of an Event of Default that has not been waived.
“Servicing Agreement” shall have the meaning provided in Section 14.22(d) hereof.
“Servicing File” shall mean with respect to each Mortgage Loan, the file retained by or on behalf of the Seller consisting of originals of all documents in the Mortgage File which are not delivered to a Custodian and copies of the Mortgage Loan Documents set forth in Section 2 of the Custodial and Disbursement Agreement and all Servicing Records.
“Servicing Records” shall have the meaning provided in Section 14.22(c) hereof.
“Servicing Rights” shall mean contractual, possessory or other rights of the Seller or any other Person to service or subservice a Mortgage Loan, whether arising under the Servicing Agreement, the Custodial and Disbursement Agreement or otherwise, to administer or service a Purchased Loan or to possess related Servicing Records.
“Settlement Date” shall mean, with respect to any Purchased Loan, the actual date on which the Takeout Price for such Purchased Loan is received by the Buyer, for the benefit of the Buyer, or the Seller pursuant to a Takeout Commitment or on which the purchase price paid for such Purchased Loan by the Takeout Investor is otherwise received by the Buyer, for the benefit of the Buyer, or the Seller.
“SOFR” shall mean, with respect to any day, the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of such benchmark (or a successor administrator) on the Federal Reserve Bank of New York’s website.
“Subsidiary” shall mean, with respect to any Person, any corporation, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.
“System” shall mean all hardware or software, or any system consisting of one or more thereof, including, without limitation, any and all enhancements, upgrades, customizations, modifications and the like utilized by any Person for the benefit of such Person to perform its obligations and to administer and track, store, process, provide, and where appropriate, insert, true and accurate dates and calculations for dates and spans with respect to the Mortgage Loans.
“Takeout Assignment” shall mean an assignment executed by the Seller, whereby the Seller irrevocably assigns its rights and obligations under a Takeout Commitment, and which assignment shall be substantially in the form and content of Exhibit D hereto.
“Takeout Commitment” shall mean a trade confirmation from a Takeout Investor to the Seller confirming the details of a forward trade between the Takeout Investor (as the buyer) and the Seller (as the seller) constituting a valid, binding and enforceable mandatory delivery commitment by a Takeout Investor to purchase on the anticipated Settlement Date and at a given Takeout Price described therein, and with respect to any Takeout Commitment related to Prime Jumbo Mortgage Loans or Non-QM Mortgage Loans, approved by the Buyer.
“Takeout Investor” shall mean a securities broker-dealer, Agency or other institution set forth on Exhibit A attached hereto or such other institution as mutually agreed in writing (which may be via email) by the Agent and the Seller.
“Takeout Price” shall mean as to each Takeout Commitment the purchase price (expressed as a percentage of par) set forth therein.
“Takeout Proceeds” shall mean as to each Purchased Loan which is subject to a Takeout Commitment, the actual amount of proceeds delivered to the Buyer, for the account of the Buyer, by the applicable Takeout Investor for the purchase of such Purchased Loan.
“Takeout Proceeds Identification Letter” shall mean a takeout proceeds identification letter, substantially in the form of Exhibit F hereto.
“Tangible Net Worth” shall mean, as of a particular date,
(ii)all amounts which would be included under equity on a balance sheet of the Seller at such date, determined in accordance with GAAP, less
(i)(i) amounts owing to the Seller from Affiliates and (ii) Intangible Assets.
“Tax” or “Taxes” means all 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.
“Term SOFR” shall mean, with respect to any Transaction for any day, the Term SOFR Reference Rate for a tenor of one month, as such rate is published by the Term SOFR Administrator for such day at 6:00 a.m. (New York City time); provided, however, that if as of 5:00 p.m. (New York City time) the Term SOFR Reference Rate for the
foregoing tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator.
“Term SOFR Adjustment” shall mean a percentage equal to [***].
“Term SOFR Administrator” shall mean CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Agent in its reasonable discretion).
“Term SOFR Reference Rate” shall mean the forward-looking term rate based on SOFR.
“Termination Date” shall mean the earliest of (i) March 3, 2023, or (ii) such earlier date on which this Repurchase Agreement shall terminate in accordance with the provisions hereof or by operation of law.
“Total Indebtedness” shall mean, for any period, the aggregate Indebtedness of the Seller during such period less the amount of any nonspecific balance sheet reserves maintained in accordance with GAAP.
“Transaction” shall have the meaning provided in the Recitals hereof.
“Transaction Request” shall mean a Transaction Request submitted electronically in a form acceptable to the Buyer, including through the Buyer’s FTP site.
“Type” shall mean each type of Mortgage Loan identified in the definition of Applicable Pricing Spread.
“Unadjusted Benchmark Replacement” shall mean the applicable Benchmark Replacement excluding the Benchmark Replacement Adjustment with respect thereto.
“Uncommitted Amount” shall have the meaning assigned thereto in the Pricing Side Letter.
“Underwriting Guidelines” shall mean the underwriting guidelines attached as Exhibit B hereto, pursuant to which the Mortgage Loans were underwritten or acquired, which to the extent related to (i) Agency Mortgage Loans, conform to, and comply with, all current requirements of the applicable Agency, and (ii) Prime Jumbo Mortgage Loans or Non-QM Mortgage Loans, comply with all requirements of the related Takeout Investor, in each case, in effect as of the date of this Repurchase Agreement, as the same may be amended, supplemented or otherwise modified from time to time in accordance with terms of this Repurchase Agreement.
“Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided that if by reason of mandatory provisions of law, the perfection or the effect of perfection or non-perfection of the security interest or the renewal or enforcement thereof in any Purchased Items is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, “Uniform Commercial Code” shall mean the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection.
“U.S. Government Securities Business Day” shall mean any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“U.S. Special Resolution Regime” shall mean each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.
“USDA” shall mean the United States Department of Agriculture.
“VA” shall mean 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 Approved Lender” shall mean a lender which is approved by VA to act as a lender in connection with the origination of VA loans.
“VA Loan” shall mean a Mortgage Loan that, as of the closing of such Mortgage Loan, is the subject of a VA Loan Guaranty Agreement and that will be evidenced by a physical or electronic Loan Guaranty Certificate delivered after closing of such Mortgage Loan.
“VA Loan Guaranty Agreement” shall mean 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.
“VA Regulations” shall mean the regulations promulgated by the Veterans Administration pursuant to the Serviceman’s Readjustment Act, as amended, codified in 36 Code of Federal Regulations, and other VA issuances relating to VA loans, including related Handbooks, Circulars and Notices.
“VA Streamline Loan” shall mean a VA Loan originated pursuant to the VA “Interest Rate Reduction Refinance Loan” program and in compliance with VA Regulations.
“Wet-Aged Report” shall have the meaning specified in the Custodial and Disbursement Agreement.
“Wet-Ink Mortgage Loan” shall mean a Mortgage Loan for which the related Mortgage File (i) has not been delivered to Custodian or (ii) has been delivered to Custodian but has a Fatal Exception(s) (as such term is defined in the Custodial and Disbursement Agreement).
“Wet-Ink Transaction” shall mean a Transaction in which a Wet-Ink Mortgage Loan is the Purchased Loan. A Wet-Ink Transaction shall cease to be a Wet-Ink Transaction on the date that the underlying Wet-Ink Mortgage Loan ceases to be a Wet-Ink Mortgage Loan (in accordance with the definition thereof).
“Whole Loan Transfer” shall mean the sale or transfer of some or all of the Mortgage Loans to a Takeout Investor in a whole loan transaction.
1.0aAccounting Terms and Determinations. Except as otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Buyer hereunder shall be prepared, in accordance with GAAP.
1.0bInterpretation. The following rules of this subsection 1.03 apply unless the context requires otherwise or as otherwise provided in this Repurchase Agreement. A gender includes all genders. Where a word or phrase is defined, its other grammatical forms have a corresponding meaning. A reference to a subsection, Section, Annex or Exhibit is, unless otherwise specified, a reference to a Section of, or annex or exhibit to, this Repurchase Agreement. A reference to an agreement or document (including any Repurchase Document) is to the agreement or document as amended, modified, novated, supplemented or replaced, except to the extent prohibited thereby or by any Repurchase Document and in effect from time to time in accordance with the terms thereof. A reference to legislation or to a provision of legislation includes any amendment, modification or re-enactment of it, a legislative provision substituted for it and a regulation or statutory instrument issued under it. A reference to conduct includes, without limitation, an omission, statement or undertaking, whether or not in writing. The words “hereof,” “herein,” “hereunder” and similar words refer to this Repurchase Agreement as a whole and not to any particular provision of this Repurchase Agreement. The term “including” is not limiting and means “including without limitation.” In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including,” the words “to” and “until” each mean “to but excluding,” and the word “through” means “to and including.”
Except where otherwise provided in this Repurchase Agreement, any determination, consent, approval, statement or certificate made or confirmed in writing with notice to the Seller by the Buyer or the Agent on the Buyer’s behalf or an authorized officer of the Buyer or the Agent provided for in this Repurchase Agreement shall be made in good faith and is conclusive and binds the parties in the absence of manifest error. A reference to an agreement includes a security interest, guarantee, agreement or legally enforceable arrangement whether or not in writing related to such agreement.
This Repurchase Agreement is the result of negotiations among, and has been reviewed by counsel to, the Buyer, the Agent and the Seller, and is the product of all parties. In the interpretation of this Repurchase Agreement, no rule of construction shall apply to disadvantage one party on the ground that such party proposed or was involved in the preparation of any particular provision of this Repurchase Agreement or this Repurchase Agreement itself. Except where otherwise expressly stated, the Buyer or the Agent on behalf of the Buyer may give or withhold, or give conditionally, approvals and consents and may form opinions and make determinations at its absolute discretion. Any requirement of good faith, discretion or judgment by the Buyer or the Agent shall not be construed to require the Buyer or the Agent to request or await receipt of information or documentation not immediately available from or with respect to the Seller, a servicer of the Purchased Loans, any other Person or the Purchased Loans themselves.
With respect to any Transaction, the Buyer and the Agent may conclusively rely upon, and shall incur no liability to the Seller in acting upon, any request or other communication that the Buyer or the Agent reasonably believes to have been given or made by a person authorized to enter into a Transaction on the Seller’s behalf.
Section 2.No Commitment, Initiation of Transactions, Confirmation.
1.0cNo Commitment.
(i)It is acknowledged and agreed that, notwithstanding any other provision of this Repurchase Agreement to the contrary, except with respect to the Committed Amount and solely with respect to Agency Mortgage Loans, the facility provided under this Repurchase Agreement is an uncommitted facility, and the Buyer shall have no obligation to enter into any Transactions hereunder in excess of the Committed Amount. Subject to the terms and conditions of the Repurchase Documents and provided that no Default or Event of Default shall have occurred and be continuing hereunder, the Buyer shall, with respect to Agency Mortgage Loans up to the Committed Amount, and may, with respect to the Uncommitted Amount, at the sole discretion of the Buyer or the Agent, from time to time as requested by the Seller, enter into Transactions with an aggregate Purchase Price for all Purchased Loans acquired by the Buyer not to exceed the lesser of (i) the Maximum Amount and (ii) the Margin Base as in effect from time to time (after giving effect to the purchase of such Eligible Mortgage Loans). The Buyer shall have the obligation, subject to the terms and conditions of the Repurchase Documents, to enter into Transactions up to the Committed Amount solely with respect to Agency Mortgage Loans, and shall have no obligation to enter into Transactions with respect to the Uncommitted Amount or with respect to Prime Jumbo Mortgage Loans or Non-QM Mortgage Loans, which Transactions shall be entered into in the sole discretion of Buyer. All purchases of Mortgage Loans hereunder, including with respect to Prime Jumbo Mortgage Loans and Non-QM Mortgage Loans, shall be first deemed committed up to the Committed Amount and then the remainder, if any, shall be deemed uncommitted up to the Uncommitted Amount.
(ii)A Confirmation (including all schedules related thereto), together with this Repurchase Agreement, may, at the option of Buyer, be executed by Buyer and Seller and if so executed shall constitute conclusive evidence of the terms agreed between the Seller and the Buyer (or the Agent on behalf of the Buyer) with respect to the Transaction to which such Confirmation relates, and the Seller’s acceptance of the related proceeds of a Transaction shall constitute Seller’s agreement to the terms of such Confirmation. It is the intention of the parties that each Confirmation shall not be separate from this Repurchase Agreement but shall be made a part hereof. In the event of any conflict between this Repurchase Agreement and a Confirmation, the terms of this Repurchase Agreement shall control with respect to the related Transaction. A Confirmation, and any terms and conditions therein, shall be applicable solely with respect to the related Transaction and shall not constitute a course of dealing between the Seller and the Buyer.
1.0dTransaction Request Procedure (Transactions other than Wet-Ink Transactions).
(i)The Seller may request a Transaction hereunder, which request shall be submitted electronically through Buyer’s FTP site, on any Business Day during the period from and including the Effective Date to and including the Termination Date by delivering to the Agent, with a copy to the Custodian, a Transaction Request, which Transaction Request must be received by the Agent no later than [***], New York City time, on the Business Day of the requested Purchase Date. Such Transaction Request shall (i) attach a schedule identifying the Eligible Mortgage Loans that the Seller proposes to sell to the Buyer hereunder in connection with such Transaction, (ii) specify the requested Purchase Date, and (iii) include (unless the same has been submitted previously) a Mortgage Loan Data File containing information with respect to the Eligible Mortgage Loans that the Seller proposes to sell to the Buyer hereunder in connection with such Transaction.
(ii)Upon receipt from the Seller of a Transaction Request pursuant to Section 2.02(a), upon satisfaction of all applicable conditions precedent set forth in Sections 5.01 and 5.02 hereof and provided that no Default or Event of Default shall have occurred and be continuing, the Buyer may, with respect to the Uncommitted Amount and shall, with respect to the Committed Amount, enter into such Transaction with the Seller. In the event that the Buyer (or the Agent on behalf of the Buyer) determines, in its sole discretion with respect to the Uncommitted Amount, to enter into a Transaction, the Buyer (or the Agent) shall specify the terms for such proposed Transaction, including the Purchase Price for the applicable Eligible Mortgage Loans, the Pricing Rate for the Transaction, the Market Value for the applicable Eligible Mortgage Loans, the Repurchase Date in respect of such Transaction and any additional terms or conditions of the Transaction, in a Confirmation to be delivered to the Seller on or prior to the applicable Purchase Date.
(iii)The Seller shall deliver to the Custodian, in accordance with the terms and conditions of the Custodial and Disbursement Agreement, the Mortgage File pertaining to each Eligible Mortgage Loan to be sold to the Buyer hereunder on the requested Purchase Date.
(iv)[Reserved].
(v)Subject to Section 5 hereof and provided that no Default or Event of Default shall have occurred and be continuing, and the Buyer determines, with respect to the Uncommitted Amount, in its sole discretion to enter into a Transaction, such Transaction will then be entered into by the Buyer on the terms set forth in the Transaction Request or as otherwise agreed by Buyer and Seller, which agreement may be set forth in a Confirmation, transferring, via wire transfer, to the account specified by Seller on a Transaction Request, an amount equal to the aggregate Purchase Price for such Transaction in funds immediately available to the Seller, less any amount retained by the Buyer to cure an outstanding Margin Deficiency.
1.0eTransaction Request Procedure (Wet-Ink Transactions).
(ii)Seller may request a Wet-Ink Transaction hereunder, which request shall be submitted electronically through Buyer’s FTP site, on any Business Day during the period from and including the Effective Date to and excluding the Termination Date.
(iii)On the requested Purchase Date for a Wet-Ink Transaction, the Seller may deliver to the Agent with a copy to the Custodian, no more than nine (9) transmissions, which transmissions shall (i) attach a Transaction Request, (ii) attach a schedule identifying the Eligible Mortgage Loans that the Seller proposes to sell to the Buyer hereunder in connection with such Transaction, and (iii) be accompanied by a Mortgage Loan Data File from the Custodian, pursuant to the Custodial and Disbursement Agreement, in respect of all Wet-Ink Mortgage Loans sold to the Buyer on such Purchase Date. The latest transmission must be received by the Agent no later than 4:30 p.m. New York City time, on such Purchase Date. Such Transaction Request shall specify the requested Purchase Date.
(iv)The Seller shall deliver (or cause to be delivered) and release to the Custodian the Mortgage File pertaining to such Wet-Ink Mortgage Loan on the next Business Day following receipt of such Mortgage File by the Seller, but in any event no later than [***] Business Days following the applicable Origination Date in accordance with the terms and conditions of the Custodial and Disbursement Agreement. On the applicable Purchase Date and on each Business Day following the applicable Purchase Date, no later than [***], New York City time, pursuant to the Custodial and Disbursement Agreement, the Custodian shall deliver to the Agent a schedule listing each Wet-Ink Mortgage Loan with respect to which the complete Mortgage File has not been received by the Custodian (the “Wet-Aged Report”). The Agent may confirm that
the information in the Wet-Aged Report is consistent with the information provided to the Agent pursuant to Section 2.03(b).
(v)Upon the Seller’s request for a Transaction pursuant to Section 2.03(a), and upon satisfaction of all conditions precedent set forth in Sections 5.01 and 5.02 hereof, and provided that no Default or Event of Default shall have occurred and be continuing, the Buyer may, with respect to the Uncommitted Amount and shall, with respect to the Committed Amount, enter into a Transaction with the Seller on the requested Purchase Date, in the amount so requested.
(vi)Subject to Section 5 hereof, such Purchase Price will then be made available by the Custodian transferring at the direction of the Buyer (or the Agent on behalf of the Buyer), via wire transfer, the amount of such Purchase Price from the account of the Buyer maintained with the Custodian to the account of the designated Closing Agent pursuant to disbursement instructions provided by the Seller on the electronic system maintained by the Custodian; provided, however, that (i) the Buyer (or the Agent on behalf of the Buyer) has been provided such disbursement instructions and shall not have rejected, in its sole discretion, any wiring location, (ii) the Custodian shall not, in any event, (A) transfer funds to the Seller or any Affiliate of the Seller or (B) transfer funds in excess of the original principal balance of the related Wet-Ink Mortgage Loan. Upon notice from the Closing Agent to the Seller that the related Wet-Ink Mortgage Loan was not originated, the Wet-Ink Mortgage Loan shall be removed from the list of Eligible Mortgage Loans and the Closing Agent shall immediately return the funds via wire transfer to the account of the Buyer maintained with the Custodian. The Seller shall notify the Agent if a Wet-Ink Mortgage Loan was not originated and has been removed from the list of Eligible Mortgage Loans.
1.0f[Reserved.]
1.0gRepurchase and Repurchase Price. The Seller hereby promises to pay in full on the Termination Date the aggregate Repurchase Price of all Transactions then outstanding. In addition, as of any date of determination, to the extent that the Purchase Price of all Transactions then outstanding exceeds the Maximum Amount, then the Seller shall either remit an amount to the Buyer equal to such excess in accordance with Section 3 hereof or repurchase the Purchased Items in an amount equal to such excess. Such obligation to make a payment or repurchase exists without regard to any prior or intervening liquidation or foreclosure with respect to any Purchased Loan or liquidation with respect to any Mortgage Loan; provided, that any liquidation proceeds received by the Buyer shall be applied to reduce the Purchase Price for the Mortgage Loans on the date received by the Buyer except as otherwise provided herein.
(vi)The Seller hereby promises to pay in full on the Termination Date the aggregate Repurchase Price of all Transactions then outstanding. In addition, the Seller shall repurchase the related Purchased Loans from Buyer on each related Repurchase Date. Each obligation to repurchase exists without regard to any prior or intervening liquidation or foreclosure with respect to any Purchased Loan. The Seller is obligated to obtain the related Purchased Loans from the Buyer or its designee (including Custodian) at Seller’s expense on (or after) the related Repurchase Date.
(vii)The Seller hereby promises to pay to the Buyer, Price Differential on the unpaid Repurchase Price of each Transaction on a monthly basis pursuant to Section 3.01 at a rate per annum equal to the Pricing Rate; provided, that in no event shall such rate per annum exceed the maximum rate permitted by law. Notwithstanding the foregoing, the Seller hereby promises to pay to the Buyer, interest at the applicable Post-Default Rate on any Repurchase Price (without duplication of any application Post-Default Rate under the definition of “Price Differential”) and on any other amount payable by the Seller hereunder that shall not be paid in full when due (whether at stated maturity, by acceleration or by mandatory prepayment or otherwise) for the
period from and including the due date thereof to but excluding the date the same is paid in full. Notwithstanding anything to the contrary herein, costs and expenses of the Buyer incurred for on-site due diligence of the Seller and fees and expenses of the Buyer’s outside counsel, in each case, incurred but not paid prior the occurrence of an Event of Default, shall not accrue interest at the Post-Default Rate. Accrued Price Differential on each Transaction shall be payable monthly on or before the Payment Date each month and for the last month of the Repurchase Agreement on the Payment Date of such last month and on the Termination Date; provided, that the Buyer may, in its sole discretion, require accrued Price Differential to be paid simultaneously with any prepayment of Repurchase Price that is made by the Seller on a day other than the Termination Date, including any Early Repurchase Date. Interest payable at the Post-Default Rate shall accrue daily and shall be payable upon such accrual. Promptly after the determination of any interest rate provided for herein or any change therein, the Buyer (or the Agent on behalf of the Buyer) shall give notice thereof to the Seller.
(viii)It is understood and agreed that, unless and until a Default or Event of Default shall have occurred and be continuing, the Seller shall be entitled to the proceeds of the Purchased Loans subject to Transactions outstanding hereunder subject to the terms and provisions of this Repurchase Agreement.
(ix)With respect to each Purchased Loan subject to a Takeout Commitment, the Seller shall instruct the related Takeout Investor to remit directly to the Buyer no later than [***], New York City time, on a Business Day all Takeout Proceeds in an amount equal to the Repurchase Price for such Purchased Loan. Simultaneously, the Seller shall deliver to the Buyer via facsimile or electronic mail a purchase advice (the “Purchase Advice”) and shall indicate on such Purchase Advice the Mortgage Loan identification number which identified the applicable Eligible Mortgage Loan when it was purchased by the Buyer hereunder. A portion of the Takeout Proceeds in an amount equal to the Recognized Value of such Purchased Loan shall be applied to the Repurchase Price of the outstanding Transactions. Upon receipt by the Buyer of payment of the Repurchase Price in respect of such Purchased Loan, the Buyer shall release and remit to the Seller the amount of any Takeout Proceeds in excess of the Recognized Value of such Purchased Loans (the “Remittance Amount”); provided, that, both immediately before and after giving effect to such release and remittance, (i) there is no Default or Event of Default under this Repurchase Agreement or any other Repurchase Document and (ii) there is no Margin Deficiency. To the extent that a Margin Deficiency exists or would be created by the release of the Remittance Amount or a Default or an Event of Default has occurred and is continuing, the Buyer shall be entitled to retain the Remittance Amount, and the Seller thereupon shall have no further rights, title, or interest in and to such Remittance Amount. In the event that the Purchase Advice indicates that some of the proceeds forwarded to the Buyer do not belong to the Buyer or the Seller (such amount, the “Excess Proceeds”), then (i) the Seller shall provide the Buyer with a Takeout Proceeds Identification Letter, and (ii) upon confirmation by the Buyer that the information set forth in the Purchase Advice matches the information that the Buyer has in its possession with respect to the Purchased Loans, the Buyer shall promptly remit by wire transfer the Excess Proceeds in accordance with the Seller’s instructions. If funds are received after [***], New York City time on a Business Day, but either (A) no Purchase Advice is received or (B) such funds are not properly identified on the related Purchase Advice (a “Purchase Advice Deficiency”), then such funds shall be retained by the Buyer, and the Transactions made in respect of the related Purchased Loans shall continue to accrue Price Differential under this Repurchase Agreement, until such Purchase Advice Deficiency is remedied, and the Mortgage Loan subject to such Purchase Advice shall not be released until such Purchase Advice Deficiency is remedied. In no event shall such Purchase Advice be back-dated to the date of its issuance. The Buyer shall not be liable to the Seller or any other Person to the extent that the Buyer follows instructions given to it by the Seller in a Takeout Proceeds Identification Letter
(x)In addition, the Seller may repurchase any related Purchased Loan on any date (the date of such repurchase, an “Early Repurchase Date”) without any penalty or premium to the extent there is no Default (unless such Default is solely caused by either (i) a Purchased Loan no longer being an Eligible Mortgage Loan or (ii) a Margin Deficiency, and such Default would no longer exists after such repurchase) or Event of Default that has not been waived by Buyer. If Seller intends to effect a repurchase or a partial repurchase, Seller shall give at least [***] prior written notice to the Buyer, designating the Purchased Loans to be repurchased. If such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, and, on receipt, such amount shall be applied to the Repurchase Price for the designated Purchased Loans and the Buyer shall release its ownership interest hereunder in the Purchased Loans and shall authorize the related Custodian to release any related Mortgage File to Seller pursuant to the related Custodial and Disbursement Agreement as provided in Section 2.05(c).
(xi)On the Repurchase Date, termination of such Transaction will be effected by reassignment to the applicable Seller or its designee of the related Purchased Loans and any Income in respect thereof received by the Buyer not previously credited or transferred to, or applied to the obligations of, the Seller pursuant to Section 3.01 against the simultaneous transfer of the Repurchase Price for such Transaction an account of the Buyer in each case without any further action by the Buyer or any other Person and such Purchased Loan shall be transferred to Seller free and clear of any liens, pledges or encumbrances. Upon receipt of the Repurchase Price for such Purchased Loan, Buyer shall authorize the applicable Custodian to release any related Mortgage File to such Seller pursuant to the related Custodial and Disbursement Agreement.
(xii)Any such transfer or release shall be without recourse to the Buyer and without representation or warranty by the Buyer, except that the Buyer shall represent to the Seller, to the extent that good title was transferred and assigned by Seller to the Buyer hereunder on the related Purchase Date, that Buyer is the sole owner of such Purchased Loan, free and clear of any other interests or Liens caused by the Buyer’s actions. Prior to an Event of Default that is continuing, any Income with respect to such repurchased Purchased Loan received by the Buyer after receipt of the Repurchase Price in full therefor shall be remitted to the Seller. Buyer shall reasonably cooperate with respect to sales of the related Purchased Loans by Seller to third party purchasers, including, without limitation, acceptance of wire transfers of the Repurchase Price related thereto through escrow arrangements acceptable to the Buyer.
1.0hConversion of Applicable Interest Rates.
(iii)Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Repurchase Document, if (A) a Benchmark Transition Event and (B) a Benchmark Replacement Date with respect thereto have occurred prior to the Reference Time in connection with any setting of the then-current Benchmark, then such Benchmark Replacement will replace the then-current Benchmark for all purposes under this Repurchase Agreement and under any other Repurchase Document in respect of such Benchmark setting and subsequent Benchmark settings without requiring any amendment to, or requiring any further action by or consent of any other party to, this Repurchase Agreement or any other Repurchase Document.
(iv)Benchmark Replacement Conforming Changes. In connection with the implementation of or administration of Term SOFR or a Benchmark Replacement, the Buyer (or the Agent on behalf of the Buyer) will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Repurchase Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without requiring any further action by or consent of any other party to this Repurchase Agreement or any other Repurchase Document.
(v)Notices; Standards for Decisions and Determinations. The Buyer (or the Agent on behalf of the Buyer) will promptly notify all the parties hereto of (i) any occurrence of (A) a Benchmark Transition Event and (B) the Benchmark Replacement Date with respect thereto, (ii) the implementation of any Benchmark Replacement, and (iii) the effectiveness of any Benchmark Replacement Conforming Changes.
Any determination, decision or election that may be made by the Buyer (or the Agent on behalf of the Buyer) pursuant to this Section 2.06, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, shall also be made by the Buyer (or the Agent on behalf of the Buyer) with respect to other repurchase facilities with similarly situated counterparties and with substantially similar assets subject thereto and shall be conclusive and binding absent manifest error and may be made in the Buyer’s (or the Agent’s on behalf of the Buyer) sole discretion and without consent from any other party to this Repurchase Agreement or any other Repurchase Document.
1.0iMargin Maintenance.
(xiii)The Buyer shall have the right to determine and re-determine the Market Value of any of the Purchased Loans on a daily basis in its sole discretion, which determination shall be conclusive and may affect the Recognized Value of such Purchased Loans,
(xiv)If, at any time, the aggregate Purchase Price of all Transactions then outstanding hereunder exceeds the aggregate Recognized Value of all Purchased Loans subject to such Transactions as of such date (a “Margin Deficiency”), as determined by the Buyer (or the Agent on behalf of the Buyer) in its sole discretion and as to which the Buyer (or the Agent) notifies the Seller on any Business Day, and such Margin Deficiency exceeds the Margin Threshold, the Seller shall no later than one (1) Business Day after receipt of such notice, either make a payment in cash or Cash Equivalents to the Buyer, in respect of the aggregate Purchase Price or at the Seller’s option, but with the Buyer’s written consent, to transfer to the Buyer additional Eligible Mortgage Loans that are in all respects acceptable to the Buyer in its sole discretion (which additional Eligible Mortgage Loans shall be deemed to be Purchased Loans subject to the then existing Transaction under the Repurchase Documents) such that after giving effect to such payment or transfer no Margin Deficiency shall then exist.
(xv)If at any time the aggregate Purchase Price of all Transactions then outstanding hereunder exceeds the Maximum Amount then in effect, the Seller shall at such time make a payment to the Buyer, in respect of the aggregate Repurchase Price such that, after giving effect to such payment, the aggregate Repurchase Price of all Transactions then outstanding hereunder shall not exceed the Maximum Amount then in effect.
Section 3.Payments; Requirements of Law; Commitment Fee, Non-Utilization Fee, Etc.
1.0aPayments.
(i)The Seller promises to pay to the Buyer on or before each Payment Date, the Price Differential on the unpaid Repurchase Price of all outstanding Transactions for the prior calendar month or, if the Purchase Date for any such Transactions occurred on any day during the prior calendar month, from the applicable Purchase Date for such Transactions through the last day of such calendar month, at a rate per annum equal to the Pricing Rate until the date on which the Repurchase Price is paid in full; provided, that in no event shall such rate per annum exceed the maximum rate permitted by law. Notwithstanding the foregoing, the Seller shall pay to the Buyer, interest at the applicable Post-Default Rate on any Repurchase Price, any Price
Differential (without duplication of any application of the Post-Default Rate under the definition of “Price Differential”), and on any other amount payable by the Seller hereunder that shall not be paid in full when due (whether at stated maturity, by acceleration or by mandatory prepayment or otherwise) for the period from and including the due date thereof to but excluding the date the same is paid in full. Notwithstanding anything to the contrary herein, costs and expenses of the Buyer incurred for on-site due diligence of the Seller and fees and expenses of the Buyer’s outside counsel, in each case, incurred but not paid prior the occurrence of an Event of Default, shall not accrue interest at the Post-Default Rate. The Buyer shall provide an invoice to the Seller on a monthly basis by no later than [***] prior to the related Payment Date setting forth the accrued and unpaid Price Differential in immediately available funds for the related period and any other amounts then due and owing under this Agreement (collectively the “Early Monthly Payment Amount”); provided, that the failure of the Buyer to provide any such invoice by such time shall not limit the Seller’s Repurchase Obligations or obligation to make a timely payment on the related Payment Date in any way; provided, further, that the Buyer may, in its sole discretion, require accrued Price Differential to be paid simultaneously with any prepayment of Repurchase Price that is made by the Seller on a day other than the Termination Date, including on any Early Repurchase Date. Seller shall pay to the Buyer each Early Monthly Payment Amount on or before 3:00 p.m. New York City time on the related Payment Date. Interest payable at the Post-Default Rate shall accrue daily and shall be payable upon such accrual. Promptly after the determination of any interest rate provided for herein or any change therein, the Buyer (or the Agent) shall give notice thereof to the Seller.
(ii)Within thirty (30) days following the Effective Date (or such later date as approved by the Buyer in writing), Seller shall establish and maintain a segregated time or demand deposit account for the benefit of the Buyer (the “Blocked Account”) with the Buyer or an Insured Depository Institution acceptable to the Buyer in its reasonable discretion, with respect to which Merchants Bank of Indiana and TIAA, FSB shall each be deemed acceptable. The Blocked Account shall be named “Home Point Financial Corporation in trust for the benefit of Morgan Stanley Bank, N.A.” and such account shall be subject to the Blocked Account Agreement. Upon the occurrence of an Event of Default that is continuing, the Seller shall deposit into the Blocked Account, within two (2) Business Days of receipt, all Income received with respect to each Mortgage Loan hereunder. Under no circumstances shall the Seller deposit any of its own funds into the Blocked Account or otherwise comingle its own funds into the Blocked Account.
(iii)Notwithstanding any provision to the contrary in this Section 3.01, if an Event of Default shall have occurred and be continuing, all Income on deposit in the Blocked Account in respect of the Purchased Items shall be applied as determined in the Buyer’s sole discretion until all such Repurchase Obligations have been paid in full, and thereafter to the Seller.
(iv)Except to the extent otherwise provided herein, all payments of Repurchase Price, Price Differential, and other amounts to be paid by the Seller under this Repurchase Agreement, shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to the Agent, at the following account maintained by the Agent: [***], not later than [***], New York City time, on the date on which such payment shall become due (and each such payment made after such time on such due date shall be deemed to have been made on the next succeeding Business Day). The Seller acknowledges that it has no rights of withdrawal from the foregoing account.
(v)Except to the extent otherwise expressly provided herein, if the due date of any payment under this Repurchase Agreement would otherwise fall on a day that is not a Business Day, such date shall be extended to the next succeeding Business Day, and Price Differential shall accrue with respect to the amount of any Purchase Price so extended for the period of such extension.
1.0aRequirements of Law.
(vi)If the introduction or adoption of or any change in any Requirement of Law (other than with respect to any amendment made to the Buyer’s certificate of incorporation and by-laws or other organizational or governing documents) or any change in the interpretation or application thereof or compliance by the Buyer with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof:
(1)shall subject the Buyer and the Agent (or the Buyer or the Agent, as the case may be) to any Tax of any kind whatsoever with respect to this Repurchase Agreement or any Transaction entered into by it (excluding Indemnified Taxes, Other Connection Taxes that are imposed on or measured by net income (however determined) or that are franchise Taxes or branch profits Taxes, and clauses (b)-(d) of Excluded Taxes);
(2)shall impose, modify or hold applicable to any Transaction 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, Transactions or other extensions of credit by, or any other acquisition of funds by, any office of the Buyer and the Agent (or the Buyer or the Agent, as the case may be);
(3)shall impose on the Buyer and the Agent (or the Buyer or the Agent, as the case may be) any other condition;
and the result of any of the foregoing is to increase the cost to the Buyer and the Agent (or the Buyer or the Agent, as the case may be), by an amount which the Buyer and the Agent (or the Buyer or the Agent, as the case may be) deem to be material, of making, participating in, continuing or maintaining any Transaction or to reduce any amount due or owing hereunder in respect thereof, then, to the extent similar increased costs have been imposed by the Buyer or the Agent on similarly situated sellers, in any such case, the Seller shall promptly pay the Buyer and the Agent (or the Buyer or the Agent, as the case may be) such additional amount or amounts as will compensate the Buyer and the Agent (or the Buyer or the Agent, as the case may be) for such increased cost or reduced amount receivable, and thereafter, the Seller may elect to terminate the Repurchase Agreement in order to not incur additional increased costs.
(vii)If the Buyer and the Agent (or the Buyer or the Agent, as the case may be) shall have determined that the adoption of or any change in any Requirement of Law applicable to the Buyer and the Agent (or the Buyer or the Agent, as the case may be)(other than with respect to any amendment made to the Buyer’s or the Agent’s certificate of incorporation and by-laws or other organizational or governing documents) regarding capital adequacy or in the interpretation or application thereof or compliance by the Buyer and the Agent (or the Buyer or the Agent, as the case may be) or any corporation controlling the Buyer and the Agent (or the Buyer or the Agent, as the case may be) with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on the Buyer’s or the Agent’s, as applicable, or such corporation’s capital as a consequence of its actions hereunder to a level below that which the Buyer and the Agent (or the Buyer or the Agent, as the case may be) or such corporation could have achieved but for such adoption, change or compliance (taking into consideration the Buyer’s or the Agent’s, as applicable, or such corporation’s policies with respect to capital adequacy) by an amount deemed by the Buyer and the Agent (or the Buyer or the Agent, as the case may be) to be material, then from time to time, to the extent similar increased costs have been imposed by the Buyer or the Agent on similarly situated sellers, the Seller shall promptly pay to the Buyer and the Agent (or the Buyer or the Agent, as the case may be) such additional amount or amounts as will compensate the Buyer and the Agent (or the
Buyer or the Agent, as the case may be) for such reduction, and thereafter, the Seller may elect to terminate the Repurchase Agreement in order to not incur additional increased costs.
(viii)If the Buyer and the Agent (or the Buyer or the Agent, as the case may be) become entitled to claim any additional amounts pursuant to this Section 3.02, it shall promptly notify the Seller of the event by reason of which it has become so entitled; provided that Seller shall only be obligated to pay those amounts pursuant to this Section 3.02 to the extent incurred by Buyer or Agent during the 90-day period prior to Seller’s receipt of written notice thereof. A certificate as to any additional amounts payable pursuant to this Section 3.02 submitted by the Buyer or the Agent, as applicable, to the Seller shall be conclusive in the absence of manifest error.
1.0bCommitment Fee.
The Seller agrees to pay the Commitment Fee to the Buyer, such payment to be made in Dollars in immediately available funds, without deduction, set off or counterclaim, to Buyer as provided in the Pricing Side Letter. The Seller also hereby agrees to pay to the Buyer any other fees provided in the Pricing Side Letter as specified therein. Each of such fees shall be deemed to be fully earned and non-refundable when paid; provided, that notwithstanding the foregoing or anything else to the contrary here, to the extent that the Buyer elects not to enter into any Transaction in respect of the Committed Amount solely due to the occurrence of one of the events described in Section 5.02(k), Section 5.02(p) or Section 8(p) the Buyer shall promptly refund to the Seller a pro-rated portion of the Committed Amount for the period from the date of such election through the Termination Date. Notwithstanding anything to the contrary in this Section 3.03, any portion of the Commitment Fee that was paid prior to the Eighth Amendment Effective Date, but not yet recognized as of the Eighth Amendment Effective Date (the “Applicable Commitment Fee”), will be deemed to be credited to the account of Sellers and such amount shall then be immediately applied by Buyer in payment of such Applicable Commitment Fee on the Eighth Amendment Effective Date. Such payment shall not be made available in cash but shall be effected by way of book-entry by Buyer in full and final payment of such Applicable Commitment Fee. Once deemed to be credited pursuant to this paragraph, the parties hereto agree that such Applicable Commitment Fee shall have been fully earned as of the Eighth Amendment Effective Date.
1.0cNon-Utilization Fee.
On the Payment Date occurring in September 2020, and on each third Payment Date thereafter and on the Termination Date, the Buyer shall determine the Aggregate Utilization Ratio for the related Accrual Period and, if such Aggregate Utilization ratio is less than [***], the Seller shall promptly pay to the Buyer following Seller’s receipt of an invoice therefor on such Payment Date or Termination Date, as applicable, a fee (the “Non-Utilization Fee”) equal to the difference, if greater than $0, between (i) the Minimum Price Differential for the related Accrual Period and (ii) the actual Price Differential paid by the Seller to the Buyer for the related Accrual Period. All such payments shall be made to the Buyer in Dollars, in immediately available funds, without deduction, setoff or counterclaim. Solely to the extent that the Non-Utilization Fee remains unpaid for [***] Business Days following the related due date therefor, the Buyer may, in its sole discretion, net such Non-Utilization Fee from the proceeds of any Purchase Price paid to the Seller. Notwithstanding the foregoing or anything else to the contrary here, to the extent that the Buyer elects not to enter into any Transaction solely due to the occurrence of one of the events described in Section 5.02(k), Section 5.02(p) or Section 8(p), no Non-Utilization Fee shall accrue from the date of such election through the earlier of (i) the Termination Date or (ii) the first date after such election when the Seller enters into a new Transaction.
Section 4.Purchased Items.
1.0bPurchased Items; Security Interest.
(i)Pursuant to the Custodial and Disbursement Agreement, the Custodian shall hold the Mortgage Loan Documents as exclusive bailee and agent for the benefit of the Buyer pursuant to terms of the Custodial and Disbursement Agreement and shall deliver to the Buyer the Master Trust Receipt to the effect that it has reviewed such Mortgage Loan Documents in the manner and to the extent required by the Custodial and Disbursement Agreement and identifying any deficiencies in such Mortgage Loan Documents as so reviewed.
(ii)All of the Seller’s right, title and interest in, to and under each of the following items of property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located, is hereinafter referred to as the “Purchased Items.”
(1)all Purchased Loans (including, without limitation, the related Servicing Rights);
(2)all Mortgage Loan Documents, including without limitation all promissory notes, and all Servicing Records, any Servicing Agreements and any other collateral pledged or otherwise solely relating to such Purchased Loans, together with all files, documents, instruments, surveys, certificates, correspondence, appraisals, computer programs, computer storage media, accounting records and other books and records relating thereto, including electronic records;
(3)all rights of Seller to receive from any third party or to take delivery of any Servicing Records or other documents which constitute a part of the Mortgage File related to such Purchased Loans or Servicing File, all rights of Seller to receive from any third party or to take delivery of any Records or other documents which constitute a part of the Mortgage File related to such Purchased Loans;
(4)to the extent assignable, all mortgage guaranties and insurance (issued by governmental agencies or otherwise) and any mortgage insurance certificate or other document evidencing such mortgage guaranties or insurance relating to any Purchased Loan and all claims and payments thereunder;
(5)to the extent assignable, all other insurance policies and insurance proceeds relating to any Purchased Loan or the related Mortgaged Property;
(6)to the extent assignable, all purchase agreements or other agreements, contracts (and all rights to receive documentation relating thereto) or any related Takeout Commitments now existing or hereafter arising, solely covering any part of the foregoing Purchased Items, all rights to deliver such Mortgage Loans to Takeout Investors or to permanent investors and other purchasers pursuant thereto and all proceeds resulting from the disposition of such Purchased Items pursuant thereto, including the Seller’s right and entitlement to receive the entire Takeout Price specified in each Takeout Commitment;
(7)[Reserved];
(8)the Blocked Account and the Disbursement Account and all monies from time to time on deposit in the Blocked Account and the Disbursement Account;
(9)[Reserved];
(10)[Reserved];
(11)all “accounts,” “chattel paper,” “commercial tort claims,” “deposit accounts,” “documents,” “equipment,” “general intangibles,” “goods,” “instruments,” “inventory,” “investment property,” “letter of credit rights,” and “securities’ accounts” as each of those terms is defined in the Uniform Commercial Code and all cash and Cash Equivalents and all products and proceeds solely relating to any or all of the foregoing; and
(12)any and all replacements, substitutions, distributions on or proceeds of to the extent solely related to any and all of the foregoing.
(iii)The Seller and the Buyer intend that the Transactions hereunder be sales to the Buyer of the Purchased Items (including, without limitation, the related Servicing Rights) and not loans from the Buyer to the Seller secured by the Purchased Items. However, in order to preserve the Buyer’s rights under this Repurchase Agreement and the other Repurchase Documents in the event that a court or other forum recharacterizes the Transactions hereunder as loans, and as security for the performance by the Seller of all of the Seller’s obligations to the Buyer under the Repurchase Documents and the Transactions entered into hereunder, the Seller hereby assigns, pledges and grants a fully perfected, first priority security interest in all of its right, title and interest in, to and under the Purchased Items to the Buyer, to secure the payment of the Repurchase Price on all Transactions and all other amounts owing to the Buyer hereunder and under the other Repurchase Documents (collectively, and together with the pledge of 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. The Seller agrees to mark its computer records and tapes to evidence the interests granted to the Buyer hereunder. For the avoidance of doubt, it is acknowledged and agreed by the Seller that the grant of a security interest by the Seller to the Buyer in any Purchased Loan shall not be released or otherwise affected solely due to the fact that any Purchased Loan is not an Eligible Mortgage Loan or that the Recognized Value thereof is zero dollars or is reduced, including if it is reduced to zero dollars, at any time.
(iv)Without limiting the generality of the foregoing clauses (b) and (c) and for the avoidance of doubt, in the event that the Seller deemed to retain any residual Servicing Rights, such Seller Entity, as applicable, grants, assigns, and pledges to the Buyer a security interest in such Servicing Rights and proceeds related thereto in all instances, whether now owned or hereafter acquired, now existing or hereafter created. The foregoing provision is intended to constitute a security agreement or other arrangement or other credit enhancement related to this Repurchase Agreement and Transactions hereunder as defined in Sections 101(47)(A)(v) and 741(7)(A)(xi) of the Bankruptcy Code.
1.0aFurther Documentation. At any time and from time to time, upon the written request of the Buyer (or the Agent on behalf of the Buyer), and at the sole expense of the Seller, the Seller will promptly and duly execute and deliver, or will promptly cause to be executed and delivered, such further instruments and documents and take such further action as the Buyer (or the Agent on behalf of the Buyer) may reasonably request for the purpose of obtaining or preserving the full benefits of this Repurchase Agreement and of the rights and powers herein granted, including, without limitation, the filing of any financing or continuation statements under the Uniform Commercial Code in effect in any jurisdiction with respect to the Liens created hereby. The Seller also hereby authorizes the Buyer to file any such financing or continuation statement without the signature of the Seller to the extent permitted by applicable law. A photographic or other reproduction of this Repurchase Agreement shall be sufficient as a financing statement for filing in any jurisdiction.
1.0bChanges in Locations, Name, etc. The Seller shall not (i) change the location of its chief executive office/chief place of business or mailing address from that specified in Section 6 hereof, (ii) change its name, identity or corporate structure (or the equivalent) or change the location where it maintains its records with respect to the Purchased Items or (iii) reincorporate or reorganize under the laws of another jurisdiction unless it shall have given the Buyer at least thirty (30) days prior written notice thereof and shall have delivered to the Buyer all Uniform Commercial Code financing statements and amendments thereto as the Buyer shall reasonably request and taken all other actions deemed reasonably necessary by the Buyer to continue its perfected status in the Purchased Items with the same or better priority. The Seller shall promptly notify the Buyer of any change in such federal tax identification number.
1.0cThe Buyer’s Appointment as Attorney-in-Fact.
(v)The Seller hereby irrevocably constitutes and appoints the Buyer and any officer or agent thereof, following the occurrence of an Event of Default that has not been waived with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Seller and in the name of the Seller or in its own name, from time to time in the Buyer’s discretion, for the purpose of carrying out the terms of this Repurchase Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Repurchase Agreement, and, without limiting the generality of the foregoing, the Seller hereby gives the Buyer the power and right, on behalf of the Seller, without assent by, but with notice to, the Seller, if an Event of Default shall have occurred and be continuing, to do the following:
(13)in the name of the Seller or its own name, or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any mortgage insurance or payable on or on account of any other Purchased Items and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Buyer for the purpose of collecting any and all such moneys due under any such mortgage insurance or with respect to any other Purchased Items whenever payable;
(14)to pay or discharge Taxes and Liens levied or placed on or threatened against the Purchased Items; and
(15)(A) to direct any party liable for any payment under any Purchased Items to make payment of any and all moneys due or to become due thereunder directly to the Buyer or as the Buyer shall direct, including, without limitation, to send “goodbye” letters and Section 404 notices on behalf of the Seller and any applicable Servicer; (B) to ask or demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Purchased Items; (C) to sign and endorse any invoices, assignments, verifications, notices and other documents in connection with any of the Purchased Items; (D) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Purchased Items or any portion thereof or proceeds thereof and to enforce any other right in respect of any Purchased Items; (E) to defend any suit, action or proceeding brought against the Seller with respect to any Purchased Items; (F) to settle, compromise or adjust any suit, action or proceeding described in clause (E) above and, in connection therewith, to give such discharges or releases as the Buyer may deem appropriate; and (G) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Purchased Items as fully and completely as though the Buyer were the absolute owner thereof for all purposes, and to do, at the Buyer’s option and the Seller’s expense, at any time, and from time to time, all acts and things which the Buyer
deems necessary to protect, preserve or realize upon the Purchased Items and the Buyer’s Liens thereon and to effect the intent of this Repurchase Agreement, all as fully and effectively as the Seller might do.
The Seller hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable, shall have no expiration date and shall survive termination of this Repurchase Agreement. This power of attorney shall not revoke any prior powers of attorney granted by the Seller.
(vi)The Seller also authorizes the Buyer, at any time and from time to time, following the occurrence of an Event of Default that has not been waived (i) to execute, in connection with any sale provided for in Section 4.07 hereof, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Purchased Items and (ii) to file any initial financing statements, amendments thereto and continuation statements with or without the signature of the Seller as authorized by applicable law, as applicable to all or any part of the Purchased Items.
(vii)The powers conferred on the Buyer are solely to protect the interests of the Buyer in the Purchased Items and shall not impose any duty upon the Buyer to exercise any such powers. The Buyer shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither the Buyer nor any of its officers, directors, employees or agents shall be responsible to the Seller for any act or failure to act hereunder, except for its own gross negligence or willful misconduct.
1.0cPerformance by The Buyer of The Seller’s Repurchase Obligations. If after the occurrence of an Event of Default that has not been waived, the Seller fails to perform or comply with any of its agreements contained in the Repurchase Documents and the Buyer itself performs or complies, or otherwise causes performance or compliance, with such agreement, the out-of-pocket expenses of the Buyer incurred in connection with such performance or compliance, together with interest thereon at a rate per annum equal to the Post-Default Rate, shall be payable by the Seller to the Buyer upon five (5) days’ notice that such amounts are due and payable, unless an Event of Default shall have occurred and is continuing, in which case such amounts shall be due and payable on demand and, in either case, shall constitute Repurchase Obligations. Notwithstanding the foregoing, costs and expenses of the Buyer incurred for on-site due diligence of the Seller and fees and expenses of the Buyer’s outside counsel, in each case, incurred but not paid prior the occurrence of an Event of Default, shall not accrue interest at the Post-Default Rate.
1.0dProceeds. If an Event of Default shall occur and be continuing, (a) all Income and other proceeds of Purchased Items received by the Seller consisting of cash, checks and other near-cash items shall be held by the Seller in trust for the Buyer, segregated from other funds of the Seller, and shall forthwith upon receipt by the Seller be turned over to the Buyer in the exact form received by the Seller (duly endorsed by the Seller to the Buyer, if required) and (b) any and all such proceeds received by the Buyer (whether from the Seller or otherwise) may, in the sole discretion of the Buyer, be held by the Buyer as collateral security for, and/or then or at any time thereafter may be applied by the Buyer against, the Repurchase Obligations (whether matured or unmatured), such application to be in such order as the Buyer shall elect. Any balance of such proceeds remaining after the Repurchase Obligations shall have been paid in full and this Repurchase Agreement shall have been terminated shall be paid over to the Seller or to whomsoever may be lawfully entitled to receive the same. For purposes hereof, proceeds shall include, but not be limited to, all principal and interest payments, all prepayments and payoffs, insurance claims, condemnation awards, sale proceeds, real estate owned rents and any other income and all other amounts received with respect to the Purchased Items.
1.0eRemedies. If a Default shall occur and be continuing, the Buyer may, at its option, enter into one or more interest rate protection agreements or other hedging arrangements covering all or a portion of the Purchased Loans purchased by the Buyer hereunder, and the Seller shall be responsible for all damages, judgments, costs and expenses of any kind which may be imposed on, incurred by or asserted against the Buyer relating to or arising out of such Interest Rate Protection Agreements, including without limitation any net losses (after giving effect to any gain in the sale of the related Mortgage Loans) resulting from such Interest Rate Protection Agreements. If an Event of Default shall occur and be continuing, the Buyer may exercise, in addition to all other rights and remedies granted to it in this Repurchase Agreement and in any other instrument or agreement securing, evidencing or relating to the Repurchase Obligations, all rights and remedies of a secured party under the Uniform Commercial Code. Without limiting the generality of the foregoing, the Buyer without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon the Seller or any other Person (each and all of which demands, presentments, protests, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Purchased Items, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Purchased Items or any part thereof (or contract to do any of the foregoing), in one or more parcels or as an entirety at public or private sale or sales, at any exchange, broker’s board or office of the Buyer or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Buyer shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Purchased Items so sold, free of any right or equity of redemption in the Seller, which right or equity is hereby waived or released. The Seller further agrees, at the Buyer’s request, to assemble the Purchased Items and make them available to the Buyer at places which the Buyer shall reasonably select, whether at the Seller’s premises or elsewhere. The Buyer shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all costs and expenses of every kind incurred therein or incidental to the care or safekeeping of any of the Purchased Items or in any way relating to the Purchased Items or the rights of the Buyer hereunder, including without limitation attorneys’ fees and disbursements, to the payment in whole or in part of the Repurchase Obligations, in such order as the Buyer may elect, and only after such application and after the payment by the Buyer of any other amount required or permitted by any provision of law, including without limitation Sections 9-608(a) and 9-615(a) of the Uniform Commercial Code, need the Buyer account for the surplus, if any, to the Seller. To the extent permitted by applicable law, the Seller waives all claims, damages and demands the Seller may acquire against the Buyer arising out of the exercise by the Buyer of any of its rights hereunder, other than those claims, damages and demands arising from the gross negligence or willful misconduct of the Buyer. If any notice of a proposed sale or other disposition of Purchased Items shall be required by law, such notice shall be deemed reasonable and proper if given at least ten (10) Business Days before such sale or other disposition. The Seller shall remain liable for any deficiency (plus accrued interest thereon at the Post-Default Rate) if the proceeds of any sale or other disposition of the Purchased Items are insufficient to pay the Repurchase Obligations and the fees and disbursements of any attorneys employed by the Buyer to collect such deficiency.
1.0fLimitation on Duties Regarding Preservation of Purchased Items. The Buyer’s duty with respect to the custody, safekeeping and physical preservation of the Purchased Items in its possession, under Section 9-207 of the Uniform Commercial Code or otherwise, shall be to deal with it in the same manner as the Buyer deals with similar property for its own account. Subject to the immediately preceding sentence, neither the Buyer nor any of its respective directors, officers or employees shall be liable for failure to demand, collect or realize upon all or any part of the Purchased Items or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Purchased Items upon the request of the Seller or otherwise.
1.0gPowers Coupled with an Interest. All authorizations and agencies herein contained with respect to the Purchased Items are irrevocable and are powers coupled with an interest.
j.Release of Security Interest. Upon termination of this Repurchase Agreement and payment to the Buyer of all Repurchase Obligations and the performance of all obligations under the Transactions and the Repurchase Documents the Buyer shall be deemed to have been reconveyed all Purchased Items to the Seller and release its security interest in any remaining Purchased Items.
k.Cash Reporting. Upon the written request of the Buyer, the Seller shall provide, or cause to be provided, to the Buyer, a report of all cash and other collections activity with respect to each Purchased Loan and the amount of the Loan Loss Reserves maintained by the Seller. Such report shall be delivered to Buyer not later than three (3) Business Days following the Buyer’s written request therefor.
l.Taxes; Tax Treatment.
(viii)All payments made by the Seller under this Repurchase Agreement shall be made free and clear of, and without deduction or withholding for or on account of any Taxes except as required by Applicable Law. If the Seller is required by Applicable Law to deduct or withhold any Taxes from or in respect of any amount payable hereunder, it shall: (1) make such deduction or withholding; (2) pay the amount so deducted or withheld to the appropriate Governmental Authority not later than the date when due; (3) deliver to the Buyer, promptly, original Tax receipts and other evidence satisfactory to the Buyer of the payment when due of the full amount of such Taxes; and (4) in the case of Indemnified Taxes as defined herein, pay to the Buyer such additional amounts as may be necessary so that the Buyer receives, free and clear of all Indemnified Taxes, a net amount equal to the amount it would have received under this Repurchase Agreement, as if no such deduction or withholding had been made. In addition, the Seller agrees to pay to the relevant Governmental Authority in accordance with Applicable Law any Other Taxes.
(ix)The Seller agrees to indemnify and hold the Buyer harmless for the full amount of Indemnified Taxes (including additional amounts payable hereunder with respect thereto), and the full amount of Indemnified Taxes of any kind imposed by any jurisdiction on amounts payable under this Section 4.12, and any liability (in each case, including penalties, interest, additions thereto and expenses) arising therefrom or with respect thereto, provided that the Buyer shall have provided the Seller with evidence, reasonably satisfactory to the Seller, of payment of Indemnified Taxes.
(x)Without prejudice to the survival or any other agreement of the Seller hereunder, the agreements, covenants and obligations of the Seller contained in this Section 4.12 shall survive the termination of this Repurchase Agreement. Nothing contained in this Section 4.12 shall require the Buyer to make available any of its Tax returns or other information that it deems to be confidential or proprietary or to incur additional costs or regulatory burdens that the Buyer considers in its good faith reasonable judgment to be material.
(xi)Each party to this Repurchase Agreement acknowledges that it is its intent for purposes of U.S. federal, and relevant state and local income and franchise Taxes to treat each Transaction as indebtedness of the Seller that is secured by the Purchased Loans and that the Purchased Loans are owned by the Seller in the absence of an Event of Default or any event
under Section 14.21 of this Repurchase Agreement which the Buyer determines to be inconsistent with such treatment. All parties to this Repurchase Agreement agree to such treatment and agree to take no action inconsistent with this treatment, unless required by Law.
(xii)Buyer or any assignee in respect of a Transaction that is entitled to an exemption from or reduction of withholding Tax with respect to payments made, or deemed made, by Seller in respect of such Transaction shall deliver to the Seller, at the time or times reasonably requested by the Seller, such properly completed and executed documentation reasonably requested by the Seller as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, Buyer or any assignee, if reasonably requested by the Seller, shall deliver such other documentation prescribed by Applicable Law or reasonably re-quested by the Seller as will enable the Seller to determine whether such Buyer or assignee is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation shall not be required if in the Buyer’s or assignee’s reasonable judgment such completion, execution or submission would subject such Buyer or assignee to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Buyer or assignee.
Without limiting the generality of the foregoing, in the event that the Seller is a U.S. Person, if a payment made, or deemed made, to a Buyer or an assignee hereunder 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 the Seller at the time or times prescribed by Law and at such time or times reasonably requested by the Seller such documentation prescribed by Applicable Law (including as prescribed by to determine that such Buyer or assignee has complied with such Buyer’s or assignee’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this clause (1), “FATCA” shall include any amendments made to FATCA after the date of this Repurchase Agreement.
The Buyer and each assignee agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Seller in writing of its legal inability to do so.
(xiii)If the Buyer, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section (including by the payment of additional amounts pursuant to this Section 4.12), it shall pay to the Seller an amount equal to such refund (but only to the extent of indemnity payments made under this Section 4.12 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of the Buyer and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). The Seller, upon the request of the Buyer, shall repay to the Buyer the amount paid over pursuant to this Section 14.12(f) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that the Buyer is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 14.12(f), in no event will the Buyer be required to pay any amount to the Seller pursuant to this Section 14.12(f) the payment of which would place the Buyer in a less favorable net after-Tax position than the Buyer would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This Section 14.12(f) shall not be construed to require Buyer to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the Seller or any other Person.
Section 5.Conditions Precedent.
1.0aConditions Precedent to Initial Transaction. The Buyer’s agreement to enter into the initial Transaction hereunder is subject to the satisfaction, immediately prior to or concurrently with the making of such Transaction, of the condition precedent that the Buyer shall have received all of the following documents, each of which shall be satisfactory to the Buyer and its counsel in form and substance:
(i)Repurchase Documents. The Repurchase Documents (other than the Blocked Account Agreement, which shall be executed and delivered in accordance with Section 3.01(b)), duly executed and delivered by the parties thereto;
(ii)Organizational Documents. An officer’s certificate of the Seller, together with good standing certificates dated as of a recent date, but in no event more than ten (10) days prior to the date hereof and certified copies of the charter and by-laws (or equivalent documents) of the Seller and of all corporate or other authority for the Seller with respect to the execution, delivery and performance of the Repurchase Documents and each other document to be delivered by the Seller from time to time in connection herewith (and the Buyer may conclusively rely on such certificate until it receives notice in writing from the Seller to the contrary);
(iii)Legal Opinion. Opinions of outside counsel to the Seller as to such matters as the Buyer may request, in form and substance reasonably satisfactory to the Buyer including, without limitation, with respect to (i) the Buyer’s perfected lien on the Purchased Items, (ii) non-contravention with applicable laws, enforceability, corporate matters opinions with respect to the Seller, (iii) [reserved], (iv) the inapplicability of the Investment Company Act of 1940, as amended, (v) the applicability of the Bankruptcy Code safe harbors to this Repurchase Agreement;
(iv)Master Trust Receipt and Mortgage Loan Schedule and Exception Report. A Master Trust Receipt, substantially in the form of Annex 2 of the Custodial and Disbursement Agreement, dated the Effective Date, from the Custodian, duly completed, with a Mortgage Loan Schedule and Exception Report attached thereto;
(v)Approval of Servicing Agreement; Servicer Notice. The Buyer shall have, in its sole discretion, approved (i) each Servicing Agreement, and such Servicing Agreement shall have been certified as a true, correct and complete copy of the original, and (ii) each fully executed Servicer Notice, and, if the Servicer is not the Seller or an Affiliate of the Seller, a letter, acceptable to the Buyer in its sole discretion, from the applicable Servicer consenting to termination of such Servicing Agreement upon the occurrence of an Event of Default that has not been waived or Servicer Termination Event;
(vi)Filings, Registrations, Recordings; Lien Searches. (i) Any documents (including, without limitation, financing statements) required to be filed, registered or recorded in order to create, in favor of the Buyer, a perfected, first-priority security interest in the Purchased Items, subject to no Liens other than those created hereunder, shall have been properly prepared and executed for filing (including the applicable county(ies) if the Buyer determines such filings are necessary in its sole discretion), registration or recording in each office in each jurisdiction in which such filings, registrations and recordations are required to perfect such first-priority security interest;
(1)UCC lien searches in such jurisdictions as shall be applicable to the Seller and the Purchased Items, the results of which shall be satisfaction to the Buyer;
(i)Financial Statements. The financial statements referenced in Section 6.03;
(ii)Underwriting Guidelines. A copy of the Underwriting Guidelines;
(iii)Consents, Licenses, Approvals, etc. The Buyer shall have received copies of all consents, licenses and approvals, if any, required in connection with the execution, delivery and performance by the Seller of, and the validity and enforceability of, the Mortgage Loan Documents and Repurchase Documents, which consents, licenses and approvals shall be in full force and effect, including but not limited to, evidence of the following, to the extent applicable, Fannie Mae, Freddie Mac, Ginnie Mae, VA and RHS approval as lender, evidence of FHA approval as Mortgagee and FHA, Fannie Mae, Freddie Mac, Ginnie Mae, RHS and VA approval as servicer of the Mortgage Loans, as well as approval by FHA, Fannie Mae, Freddie Mac, Ginnie Mae, RHS and VA of any Servicer of the Mortgage Loans;
(iv)Insurance. The Buyer shall have received evidence in form and substance satisfactory to the Buyer showing compliance by the Seller as of such initial Purchase Date with Section 7.25 hereof;
(v)Demonstration of Liquidity. The Buyer shall have received evidence in form and substance satisfactory to the Buyer that Seller has Liquidity in an amount of not less than [***], of which Liquidity at least [***] is unrestricted cash;
(vi)Commitment Fee. The Buyer shall have received the Commitment Fee; and
(vii)[Reserved]; and
(viii)KYC. The Buyer has completed to its satisfaction such due diligence (including the Buyer’s “Know Your Customer” and Prescribed Laws diligence) and modeling as the Buyer may require, in its sole discretion.
1.0bConditions Precedent to all Transactions. Upon satisfaction of the conditions set forth in this Section 5.02, the Buyer shall, with respect to the Committed Amount, or may, in its sole discretion, with respect to the Uncommitted Amount, enter into a Transaction with the Seller. The entering into by the Buyer of each Transaction (including the initial Transaction) on any Business Day is subject to the satisfaction of the following further conditions precedent, both immediately prior to the entering into of such Transaction and also after giving effect thereto and to the intended use of the Purchase Price paid to the Seller in respect thereof:
(i)No Default. No Default or Event of Default shall have occurred and be continuing;
(ii)Representations and Warranties. Both immediately prior to the entering into of such Transaction and also after giving effect thereto and to the intended use of the Purchase Price paid to the Seller in respect thereof, the representations and warranties made by the Seller in Section 6 and Schedule 1 hereof, and elsewhere in each of the Repurchase Documents, shall be true and correct in all material respects on and as of the date of the making of such Transaction (in the case of the representations and warranties in Section 6.11, Section 6.24 and Schedule 1, solely with respect to Purchased Loans subject to outstanding Transactions) with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date);
(iii)Margin Maintenance. Either (i) No Margin Deficiency in excess of the Margin Threshold shall exist or (ii) if a Margin Deficiency in excess of the Margin Threshold shall exist on such Business Day, (x) the Buyer (or the Agent on behalf of the Buyer) has provided the Seller with written consent (which may be via electronic transmission) to enter into Transactions
on such Business Day notwithstanding the existence of such Margin Deficiency in excess of the Margin Threshold, and (y) the Buyer (or the Agent on behalf of the Buyer) has not revoked the consent identified in clause (x) above;
(iv)Due Diligence. Subject to the Buyer’s right to perform one or more Due Diligence Reviews pursuant to Section 14.23 hereof, the Buyer (or the Agent on behalf of the Buyer) shall have completed its due diligence review of the Mortgage Loan Documents for each Transaction and such other documents, records, agreements, instruments, mortgaged properties or information relating to such Mortgage Loans as the Buyer (or the Agent on behalf of the Buyer) in its sole discretion deems appropriate to review and such review shall be satisfactory to the Buyer (or the Agent on behalf of the Buyer) in its sole discretion;
(v)Mortgage Loan Schedule and Exception Report. The Buyer shall have received from the Custodian a Mortgage Loan Schedule and Exception Report with Exceptions as are acceptable to the Buyer in its sole discretion in respect of Eligible Mortgage Loans to be purchased hereunder on such Business Day;
(vi)Release Letter. The Agent shall have received from the Seller a Warehouse Lender’s Release Letter (as defined in the Custodial and Disbursement Agreement), if applicable, in form and substance acceptable to the Buyer or the Agent covering each Eligible Mortgage Loan to be sold to the Buyer;
(vii)Chief Executive Officer. Willie Newman shall be the Chief Executive Officer of the Seller;
(viii)Fees and Expenses. The Buyer shall have received all invoiced fees and expenses payable by the Seller that are then due and owing (including, without limitation the amount of any Commitment Fee and Non-Utilization Fee then due and owing, and all of the Buyer’s reasonable attorney fees and expenses as contemplated by Section 14.04(c) and due diligence expenses then due and owing) which amount, at the Buyer’s option, may be netted from the amount of Purchase Price to be paid to the Seller in connection with any Transaction entered into under this Repurchase Agreement;
(ix)Takeout Assignment. Upon the reasonable request of the Buyer and to the extent not expressly prohibited under the terms of such Takeout Commitment, the Buyer shall have received a Takeout Assignment for each Takeout Commitment relating to any Purchased Loan subject to a Transaction outstanding as of the Purchase Date;
(x)Master Trust Receipt and Mortgage Loan Schedule and Exception Report. A Master Trust Receipt, substantially in the form of Annex 2 of the Custodial and Disbursement Agreement, dated as of the related Purchase Date, from the Custodian, duly completed, with a Mortgage Loan Schedule and Exception Report attached thereto;
(xi)No Market Events. None of the following shall have occurred and/or be continuing:
(1)an event or events shall have occurred resulting in the effective absence of a “repo market” or comparable “lending market” for financing debt obligations secured by mortgage loans or securities or an event or events shall have occurred resulting in the Buyer not being able to finance any Mortgage Loans through the “repo market” or “lending market” with traditional counterparties at rates which would have been reasonable prior to the occurrence of such event or events;
(2)an event or events shall have occurred resulting in the effective absence of a “securities market” for securities backed by mortgage loans or an event or events shall have occurred resulting in the Buyer not being able to sell securities backed by mortgage loans at prices which would have been reasonable prior to such event or events;
(3)there shall have occurred a material adverse change in the financial condition of the Buyer which affects (or can reasonably be expected to affect) materially and adversely the ability of the Buyer to fund its obligations under this Repurchase Agreement; or
(4)an event beyond the control of the Buyer which the Buyer reasonably determines may result in the Buyer’s inability to perform its obligations under this Repurchase Agreement including, without limitation, acts of God, strikes, lockouts, riots, acts of war or terrorism, epidemics, nationalization, expropriation, currency restrictions, fire, communication line failures, computer viruses, power failures, earthquakes, or other disasters of a similar nature to the foregoing shall have occurred or be continuing.
(ix)Filings, Registrations, Recordings. Any documents (including, without limitation, financing statements) required to be filed, registered or recorded in order to create and maintain, in favor of the Buyer, a perfected, first-priority security interest in the Purchased Items, subject to no Liens other than those created hereunder, shall have been properly prepared and executed for filing (including the applicable county(ies) if the Buyer determines such filings are necessary in its sole discretion), registration or recording in each office in each jurisdiction in which such filings, registrations and recordations are required to create and maintain such perfected, first-priority security interest; provided, that assignments of the Mortgages securing or related to the Mortgage Loans shall not be required to be recorded prior to the occurrence of an Event of Default that has not been waived.
(x)No Adverse Litigation. The Buyer (or the Agent) shall not have determined that there is any action, proceeding or investigation by or before any Governmental Authority affecting the Seller, or any of its Affiliates or Property (including, without limitation, any Purchased Loan), which is reasonably likely to be adversely determined and which, if decided adversely, would have a reasonable likelihood of having a Material Adverse Effect with respect to Seller.
(xi)Legal Sale. With respect to any Mortgage Loan that was funded in the name of an Affiliate of the Seller, the Buyer may, in its sole discretion, require the Seller to provide evidence sufficient to satisfy the Buyer that such Mortgage Loan was acquired in a legal sale, including without limitation, an opinion, in form and substance and from an attorney, in both cases, acceptable to the Buyer in its sole discretion, that such Mortgage Loan was acquired in a legal sale.
(xii)No Material Adverse Effect. None of the following has occurred, as determined by Buyer in its sole discretion: (i) a Material Adverse Effect with respect to Seller or (ii) a Material Adverse Effect solely with respect to clause (a) of the definition thereof with respect to Seller or any of its Affiliates.
(xiii)Other Documents. Such other documents related to the financial condition of the Seller or the Mortgage Loans subject to the proposed Transaction as the Buyer may reasonably request consistent with market practices in form and substance acceptable to the Buyer.
(xiv)Compare Ratio. The “compare ratio” assigned to the Seller by FHA under its “Neighborhood Watch” program is less than or equal to [***].
Each request for a Transaction by the Seller hereunder shall constitute a certification by the Seller that all the conditions set forth in this Section 5 (other than Section 5.02(i) and (j)) have been satisfied (both as of the date of such notice, Transaction Request or Confirmation and as of the Purchase Date therefor).
Section 6.Representations and Warranties. The Seller represents and warrants to the Buyer as of the Effective Date and as of each Purchase Date that:
1.0hLegal Name. On the Effective Date, the exact legal name of the Seller is Home Point Financial Corporation, and since March 31, 2015 the Seller has not used any previous names, assumed names or trade names except as set forth on Schedule 3 attached hereto.
1.0iExistence. The Seller (a) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization; (b) has all requisite corporate or other power, and has all governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on its business as now being or as proposed to be conducted, except where the lack of such licenses, authorizations, consents and approvals would not be reasonably likely to have a Material Adverse Effect with respect to Seller; and (c) is qualified to do business and is in good standing in all other jurisdictions in which the nature of the business conducted by it makes such qualification necessary, except where failure so to qualify would not be reasonably likely (either individually or in the aggregate) to have a Material Adverse Effect with respect to Seller.
1.0jFinancial Condition. The Seller has heretofore furnished to the Buyer a copy of (a) its consolidated balance sheet and the consolidated balance sheets of its consolidated Subsidiaries for the fiscal year of the Seller ended December 31, 2019 (the “Financial Statement Date”) and the related consolidated statements of income and retained earnings and of cash flows for the Seller and its consolidated Subsidiaries for such fiscal year, setting forth in each case in comparative form the figures for the previous year, with the opinion thereon of BDO and (b) its consolidated balance sheet and the consolidated balance sheets of its consolidated Subsidiaries for the quarterly fiscal periods of the Seller ended March 31, 2020, and the related consolidated statements of income and retained earnings and of cash flows for the Seller and its consolidated Subsidiaries for such quarterly fiscal periods, setting forth in each case in comparative form the figures for the previous year. All such financial statements are complete and correct and fairly present, in all material respects, the consolidated financial condition of the Seller and its Subsidiaries and the consolidated results of their operations as at such dates and for such fiscal periods, all in accordance with GAAP applied on a consistent basis. Since the Financial Statement Date, there has been no material adverse change in the consolidated business, operations or financial condition of the Seller and its consolidated Subsidiaries taken as a whole from that set forth in the financial statements delivered for the fiscal year of the Seller ending on such date.
1.0kLitigation. There are no actions, suits, arbitrations, investigations (including, without limitation, any of the foregoing which are pending or threatened) or other legal or arbitrable proceedings affecting the Seller or any of its Subsidiaries or affecting any of the Property of any of them before any Governmental Authority or any material developments in any of the foregoing that (i) questions or challenges the validity or enforceability of any of the Repurchase Documents or any action to be taken in connection with the transactions contemplated hereby, (ii) individually or in the aggregate, if adversely determined against Seller, would result in a judgment against Seller in excess of [***] (provided that this Section 6.04(ii) shall not include any routine actions brought by or on behalf of an individual Mortgagor with respect to which Seller is acting in its capacity as servicer (which shall include without limitation, contested foreclosures, contested actions or bankruptcy proceedings), except putative
class action proceedings and proceedings commenced by any Governmental Authority), (iii) individually or in the aggregate, if adversely determined, could reasonably be likely to have a Material Adverse Effect with respect to Seller, or (iv) requires filing with the Securities and Exchange Commission in accordance with the 1934 Act or any rules thereunder.
1.0lNo Breach. Neither (a) the execution and delivery of the Repurchase Documents nor (b) the consummation of the transactions therein contemplated in compliance with the terms and provisions thereof will conflict with or result in a breach of the charter or by-laws of the Seller, or any applicable law (including, without limitation, Prescribed Laws), rule or regulation, or any order, writ, injunction or decree of any Governmental Authority, or any Servicing Agreement or other material agreement or instrument to which the Seller or any of its Subsidiaries is a party or by which any of them or any of their Property is bound or to which any of them is subject, or constitute a default under any such material agreement or instrument or result in the creation or imposition of any Lien (except for the Liens created pursuant to this Repurchase Agreement) upon any Property of the Seller or any of its Subsidiaries pursuant to the terms of any such agreement or instrument.
1.0mAction. The Seller has all necessary corporate or other power, authority and legal right to execute, deliver and perform its obligations under each of the Repurchase Documents; the execution, delivery and performance by the Seller of each of the Repurchase Documents have been duly authorized by all necessary corporate or other action on its part; and each Repurchase Document has been duly and validly executed and delivered by the Seller and constitutes a legal, valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms.
1.0nApprovals.
(i)No authorizations, approvals or consents of, and no filings or registrations with, any Governmental Authority or any securities exchange are necessary for the execution, delivery or performance by the Seller of the Repurchase Documents or for the legality, validity or enforceability thereof, except for filings and recordings in respect of the Liens created pursuant to this Repurchase Agreement.
(ii)The Seller is approved by Fannie Mae, Freddie Mac and Ginnie Mae as an approved lender, the Seller and each Servicer is approved by Fannie Mae, Freddie Mac and Ginnie Mae as an approved seller and servicer and the Seller has all other approvals required with respect to the FHA, VA, RHS and any other Agency, in each case is in good standing (such collective approvals and conditions, “Agency Approvals”), with no event having occurred or the Seller having any reason whatsoever to believe or suspect will occur (including, without limitation, a change in insurance coverage) which would either make the Seller (or any Servicer) unable to comply with the eligibility requirements for maintaining all such applicable Agency Approvals or which would require notification to the relevant Agency of the occurrence of any event that would impact the Seller’s good standing or otherwise materially restrict Seller’s Agency Approvals in any manner: provided that the foregoing representations with respect to RHS Agency Approvals, shall only apply when any RHS Loan is subject to a Transaction, except for the representation that Seller is in good standing with RHS, which shall apply at all times that any Purchased Loan is subject to a Transaction. The Seller (and any Servicer) has adequate financial standing, servicing facilities, procedures and experienced personnel necessary to service mortgage loans of the same types as may from time to time constitute Mortgage Loans in accordance with Accepted Servicing Practices.
1.0aMargin Regulations. Neither the making of any Transaction hereunder, nor the use of the proceeds thereof, will violate or be inconsistent with the provisions of Regulation T, U or X.
1.0bTaxes. The Seller and its Subsidiaries have timely filed all federal Tax and all state and local income Tax returns and all other material Tax returns that are required to be filed by them and have paid all Taxes due and payable (whether or not reflected on such tax returns), except (a) for any such Taxes as are being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been provided, or (b) to the extent the failure to do so could not reasonably be expected to have a Material Adverse Effect with respect to Seller. The charges, accruals and reserves on the books of the Seller and its Subsidiaries in respect of Taxes and other governmental charges are, in the reasonable opinion of the Seller, adequate.
1.jInvestment Company Act. Neither the Seller nor any of its Subsidiaries is an “investment company,” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.
1.kPurchased Items; Security.
(iii)The Seller has not assigned, pledged, or otherwise conveyed or encumbered any Purchased Loan to any other Person, and immediately prior to the sale of such Purchased Loan to the Buyer, the Seller was the sole owner of such Purchased Loan and had good and marketable title thereto, free and clear of all Liens, in each case except for Liens to be released simultaneously with the sale to the Buyer hereunder and Liens granted in favor of the Buyer hereunder. No Purchased Loan sold to the Buyer hereunder was acquired (by purchase or otherwise) by the Seller from an Affiliate of the Seller.
(iv)The provisions of this Repurchase Agreement are effective to create in favor of the Buyer a valid security interest in all right, title and interest of the Seller in, to and under the Purchased Items.
(v)Upon (i) receipt by the Custodian of each Mortgage Note endorsed in blank, and each assignment of the related Mortgage, assigned in blank, by a duly authorized officer of the Seller unless the related Mortgage Loan is registered in the MERS System in which case the Seller shall provide evidence of such registration, and (ii) the issuance by the Custodian to the Buyer of the Master Trust Receipt and Mortgage Loan Schedule therefor, the Buyer shall have a fully perfected first priority security interest therein, in the Purchased Loan evidenced thereby and in the Seller’s interest in the related Mortgaged Property, in the event that any Transaction was construed to constitute a financing rather than a sale.
(vi)Upon the filing of financing statements on Form UCC-1 naming the Buyer as “Secured Party” and the Seller as “Debtor,” and describing the Purchased Items as the “Collateral,” in the jurisdictions and recording offices listed on Schedule 2 attached hereto, the security interests granted hereunder in the Purchased Items will constitute fully perfected first priority security interests under the Uniform Commercial Code in all right, title and interest of the Seller in, to and under such Purchased Items which can be perfected by filing under the Uniform Commercial Code, in the event that any Transaction is construed to constitute a financing rather than a sale.
m.Chief Executive Office/Jurisdiction of Organization. On the Effective Date, the Seller’s chief executive office is located at 2211 Old Earhart Road, Suite 250, Ann Arbor, Michigan 48105. On the Effective Date, the Seller’s jurisdiction of organization is New Jersey.
n.Location of Books and Records. The location where the Seller keeps its physical books and records, including all computer tapes and records relating to the Purchased Items but excluding the Mortgage Files is its chief executive office.
o.Hedging. The Seller has entered into Interest Rate Protection Agreements, having a notional amount not less than required by reasonable market practices taking into account the aggregate unpaid principal amount of the Purchased Loans.
p.True and Complete Disclosure. The information, reports, financial statements, exhibits and schedules furnished in writing by or on behalf of the Seller to the Buyer in connection with the negotiation, preparation or delivery of this Repurchase Agreement and the other Repurchase Documents or included herein or therein or delivered pursuant hereto or thereto, 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 the Seller to the Buyer in connection with this Repurchase Agreement and the other Repurchase Documents and the transactions contemplated hereby and thereby will be true and accurate in every material respect, or (in the case of projections) based on reasonable estimates, on the date as of which such information is stated or certified. There is no fact known to a Responsible Officer of the Seller that could reasonably be expected to have a Material Adverse Effect with respect to Seller that has not been disclosed herein, in the other Repurchase Documents or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to the Buyer for use in connection with the transactions contemplated hereby. No fraud that involves management or other employees who have a significant role in the internal controls of the Seller over financial reporting has occurred.
q.Tangible Net Worth. On the Effective Date, the Tangible Net Worth of the Seller is not less than [***].
r.ERISA. Each Plan to which the Seller or its Subsidiaries make direct contributions, and, to the Seller’s knowledge, each other Plan, is in compliance in all material respects with, and has been administered in all material respects in compliance with, the applicable provisions of ERISA, the Code and any other applicable Federal or State law. Seller and its Subsidiaries, and to Seller’s knowledge, its ERISA Affiliates, are in substantial compliance with its respective contribution obligations with respect to any Multiemployer Plan. No event or condition has occurred and is continuing as to which the Seller would be under an obligation to furnish a report to the Buyer under Section 7.01(e) hereof and which is reasonably expected to result in a Material Adverse Effect with respect to Seller. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of ACS 715) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all Plans (based on the assumptions used for purposes of ACS 715) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of all such Plans in an amount that would reasonably be expected to result in a Material Adverse Effect with respect to Seller. The Seller and its Subsidiaries do not provide any material medical or health benefits to former employees other than as required by the Consolidated Omnibus Budget Reconciliation Act, as amended, or similar state or local law at no cost to the employer.
s.Delivery of Mortgage Loans. The Seller has no reason to believe, after reasonable and diligent inquiry respecting (among other things) the relevant Mortgage Loan Documents, the characteristics and quality of the Mortgage Loans, that the transfer will not occur as required pursuant to this Repurchase Agreement.
t.Subsidiaries. As of the Effective Date, the Seller has no Subsidiaries other than NM Holdings LLC. On or after the Effective Date, the Seller has no Subsidiaries other than those disclosed to Buyer in writing in accordance with Section 7.06(f).
u.Regulatory Status. The Seller is not a “bank holding company” or a direct or indirect subsidiary of a “bank holding company” as defined in the Bank Holding Company Act of 1956, as amended, and Regulation Y thereunder of the Board of Governors of the Federal Reserve System.
v.Takeout Commitments; Takeout Assignments. Each Takeout Commitment (if any) has been delivered by the Seller and constitutes a valid, binding and existing obligation of a Takeout Investor, enforceable against the Seller and the Takeout Investor, respectively, in accordance with its terms (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 relating to specific performance). If requested by the Buyer and to the extent not expressly prohibited under the terms of such Takeout Commitment, each Takeout Commitment (if any) has been duly and validly assigned by the Seller to the Buyer pursuant to a Takeout Assignment.
w.No Prohibited Persons. Neither the Seller, to the knowledge of the Seller, any director, officer, or employee of the Seller, or any of its subsidiaries is an individual or entity (“Prohibited Person”) that is currently the subject of any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC-Administered Sanctions”), or is located, organized or resident in a country or territory that is the subject of OFAC-Administered Sanctions, and the Seller will not use the proceeds of the Transactions under the Repurchase Agreement, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Prohibited Person, to fund activities of or business with any Prohibited Person, or in any country or territory, that at the time of such funding or facilitation, is the subject of OFAC-Administered Sanctions.
x.Identification of Servicer(s). Each Servicer of any Mortgage Loans shall be identified in writing to the Buyer and must be acceptable to the Buyer in its sole reasonable discretion.
y.Solvency. After giving effect to each Transaction (i) the amount of the “present fair saleable value” of the assets of the Seller and of the Seller and its Subsidiaries, taken as a whole, will, as of such date, exceed the amount of all “liabilities of the Seller and of the Seller and its Subsidiaries, taken as a whole, contingent or otherwise,” as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (ii) the present fair saleable value of the assets of the Seller and of the Seller and its Subsidiaries, taken as a whole, will, as of such date, be greater than the amount that will be required to pay the liabilities of the Seller and of the Seller and its Subsidiaries, taken as a whole, on their respective debts as such debts become absolute and matured, (iii) neither the Seller, nor the Seller and its Subsidiaries, taken as a whole, will have, as of such date, an unreasonably small amount of capital with which to conduct their respective businesses, and (iv) the Seller and the Seller and its Subsidiaries, taken as a whole, will be able to pay their respective debts as they mature. The Seller does not intend to incur, or believe that it has incurred, debts beyond its ability to pay such debts as they mature. The Seller is not contemplating the commencement of insolvency, bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official in respect of the Seller or any of its assets. The Seller is not transferring any Mortgage Loans with any intent to hinder, delay or defraud any of its creditors. For purposes of this Section, “debt” means “liability on a claim,” “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured, and (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.
z.Massachusetts Subprime Loans, Nevada Subprime Loans and Loans Subject to Consent or Other Orders. No Purchased Loan which is a Massachusetts Subprime Loan violates the Massachusetts Borrower’s Best Interest Statute (M.G.L. 183 § 28c) or is presumptively unfair under M.G.L. c 93A, as such term is defined in Massachusetts law and court decisions, no Purchased Loan is a Nevada Subprime Loan.
aa.[Reserved].
ab.True Sales. Any and all interest of a Qualified Originator in, to and under any Mortgage funded in the name of or acquired by such Qualified Originator or seller which is an Affiliate of the Seller has been sold, transferred, conveyed and assigned to the Seller pursuant to a legal sale and such Qualified Originator retains no interest in such Loan, and if so requested by the Buyer, such sale is covered by an opinion of counsel to that effect in form and substance acceptable to the Buyer.
ac.Anti-Money Laundering Laws. The Seller and each of the Seller’s Affiliates has complied with all Prescribed Laws.
ad.No Burdensome Restrictions. No Requirement of Law or Contractual Obligation of the Seller has a Material Adverse Effect with respect to Seller.
ae.Origination and Acquisition of Mortgage Loans. The Mortgage Loans were originated by the Seller or a Qualified Originator, and the origination and collection practices used by the Seller or Qualified Originator, as applicable, with respect to the Mortgage Loans have been, in all material respects legal and in compliance with all laws with respect to unfair and deceptive lending practices and Predatory Lending Practices, proper, prudent and customary in the residential mortgage loan origination and servicing business, and in accordance with FHA, VA, RHS, Ginnie Mae, Fannie Mae and Freddie Mac standards as applicable, and in accordance with the Underwriting Guidelines. All Mortgage Loans are in conformity with the Underwriting Guidelines and, with respect to Agency Mortgage Loans, are eligible for sale to Ginnie Mae, Fannie Mae or Freddie Mac or for guaranty by the VA or the RHS or for insurance by the FHA, and satisfy all applicable requirements for delivery to the appropriate Agency. Each of the Agency Mortgage Loans complies with the representations and warranties listed in Schedule 1 hereto.
af.No Broker. The Seller has not dealt with any broker, investment banker, agent, or other person, except for the Buyer, who may be entitled to any commission or compensation in connection with the sale of Purchased Loans pursuant to this Repurchase Agreement; provided, that if the Seller has dealt with any broker, investment banker, agent, or other person, except for the Buyer, who may be entitled to any commission or compensation in connection with the sale of Purchased Loans pursuant to this Repurchase Agreement, such commission or compensation shall have been paid in full by the Seller.
Section 7.Covenants of the Seller. The Seller covenants and agrees with the Buyer that at all times, so long as any Transaction is outstanding and until payment in full of all Repurchase Obligations:
1.0cFinancial Statements. The Seller shall deliver to the Buyer:
(i)as soon as available, and in any event not later than thirty (30) days after the end of each calendar month (other than months that are also the end of a calendar quarter), the unaudited consolidated balance sheet of the Seller and its consolidated Subsidiaries as at the end of such month and the related unaudited consolidated statement of income and retained earnings and consolidated statement of equity of the Seller and its consolidated Subsidiaries for such
month and the portion of the fiscal year through the end of such month, setting forth in each case in comparative form the figures for the previous year, accompanied by a certificate of a Responsible Officer of the Seller, which certificate shall state that said consolidated financial statements fairly present the consolidated financial condition and results of operations of the Seller and its consolidated Subsidiaries in accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal year-end audit adjustments);
(ii)as soon as available and in any event within forty-five (45) days after the end of each of the first three quarterly fiscal periods of each fiscal year of the Seller, the unaudited consolidated balance sheet of the Seller and its consolidated Subsidiaries as at the end of such period and the related unaudited consolidated statement of income and retained earnings, consolidated statement of 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, accompanied by a certificate of a Responsible Officer of the Seller, which certificate shall state that said consolidated financial statements fairly present the consolidated financial condition and results of operations of the Seller and its consolidated Subsidiaries in accordance with GAAP, consistently applied, as at the end of, and for, such period (subject to normal year-end audit adjustments);
(iii)as soon as available and in any event within ninety (90) days after the end of each fiscal year of the Seller, the consolidated balance sheet of the Seller and its consolidated Subsidiaries as at the end of such fiscal year and the related consolidated statement of income and retained earnings, consolidated statement of cash flows and consolidated statement of equity for the Seller and its consolidated Subsidiaries for such year, setting forth in each case in comparative form the figures for the previous year, accompanied by 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 consolidated financial statements fairly present the consolidated financial condition and results of operations of the Seller and its consolidated Subsidiaries as at the end of, and for, such fiscal year in accordance with GAAP, and a certificate of such accountants stating that, in making the examination necessary for their opinion, they obtained no knowledge, except as specifically stated, of any Default or Event of Default;
(iv)from time to time such other information regarding the financial condition, operations, or business of the Seller as the Buyer may reasonably request; and
(v)as soon as reasonably possible, and in any event within thirty (30) days after a Responsible Officer of the Seller knows, or with respect to any Plan or Multiemployer Plan to which the Seller or any of its Subsidiaries makes direct contributions, has reason to believe, that any of the events or conditions specified below with respect to any Plan or Multiemployer Plan has occurred or exists, a statement signed by a senior financial officer of the Seller setting forth details respecting such event or condition and the action, if any, that the Seller or its ERISA Affiliate proposes to take with respect thereto (and a copy of any report or notice required to be filed with or given to PBGC by the Seller or an ERISA Affiliate with respect to such event or condition):
(1)any Reportable Event; and any request for a waiver under Section 412 of the Code for any Plan;
(2)the distribution under Section 4041(c) of ERISA of a notice of intent to terminate any Plan or any action taken by the Seller or an ERISA Affiliate to terminate any Plan;
(3)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 the Seller 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;
(4)the complete or partial withdrawal from a Multiemployer Plan by the Seller 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 the Seller or any ERISA Affiliate of notice from a Multiemployer Plan that it is insolvent pursuant to Section 4245 of ERISA or that it intends to terminate or has terminated under Section 4041A of ERISA; and
(5)the institution of a proceeding by a fiduciary of any Multiemployer Plan against the Seller or any ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is not dismissed within thirty (30) days.
The Seller will furnish to the Buyer, at the time it furnishes each set of financial statements pursuant to paragraphs (a) above, an officer’s certificate in the form of Exhibit H hereto (each a “Compliance Certificate”) signed by a Responsible Officer of the Seller (i) certifying that, both immediately prior to the entering into of each Transaction that has been entered into during the period since the delivery to the Buyer of the immediately preceding Compliance Certificate (or, with respect to the first such certificate, since the Effective Date) and also after giving effect to each such Transaction and to the intended use of the Purchase Price paid to the Seller in respect thereof, the representations and warranties made by the Seller in Section 6 and Schedule 1 hereof, and elsewhere in each of the Repurchase Documents, were true and correct in all material respects on and as of the date of the making of each such Transaction (in the case of the representations and warranties in Section 6.11, Section 6.25 and Schedule 1, solely with respect to Purchased Loans subject to such outstanding Transactions) with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date), (ii) certifying that Seller is, and as of the date of each Transaction that was entered during the period since the delivery to Buyer of the immediately preceding Compliance Certificate (or, with respect to the first such certificate, since the Effective Date) was, in compliance with all governmental licenses and authorizations, statutory and regulatory requirements, and qualified to do business and in good standing in all required jurisdictions, in each case, except where failure to be so licensed, authorized or qualified would not be reasonably likely to result in a Material Adverse Effect with respect to Seller, (iii) stating that, to the best of such Responsible Officer’s knowledge, the Seller during such fiscal period or year has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in this Repurchase Agreement and the other Repurchase Documents to be observed, performed or satisfied by it, and that such Responsible Officer has obtained no knowledge of any Default or Event of Default that has not been waived except as specified in such certificate (and, if any Default or Event of Default has occurred and is continuing, describing the same in reasonable detail and describing the action the Seller has taken or proposes to take with respect thereto), and (iv) showing in detail the calculations supporting such Responsible Officer’s certification of the Seller’s compliance with the requirements of Sections 7.14, 7.15, 7.16 and 7.18.
1.0aLitigation. The Seller will promptly, and in any event within ten (10) days after service of process on any of the following, give to the Buyer notice of all litigation, actions, suits, arbitrations, investigations (including, without limitation, any of the foregoing which, to the knowledge of a Responsible Officer of the Seller, are pending or threatened) or other legal or arbitrable proceedings affecting the Seller or any of its Subsidiaries or affecting any of the Property of any of them before any Governmental Authority or any material developments of any of the foregoing that (i) questions or challenges the validity or enforceability of any of the
Repurchase Documents or any action to be taken in connection with the transactions contemplated hereby, (ii) individually or in the aggregate, if adversely determined against Seller, would result in a judgment against Seller in excess of [***] (provided that this Section 7.02 shall not include any routine actions brought by or on behalf of an individual Mortgagor with respect to which Seller is acting in its capacity as servicer (which shall include without limitation, contested foreclosures, contested actions or bankruptcy proceedings), except putative class action proceedings and proceedings commenced by any Governmental Authority), (iii) individually or in the aggregate, if adversely determined, could reasonably be likely to have a Material Adverse Effect with respect to Seller, or (iv) requires filing with the Securities and Exchange Commission in accordance with the 1934 Act or any rules thereunder.
1.0bExistence, etc. The Seller will:
(i)preserve and maintain its legal existence and all of its material rights, privileges, licenses and franchises (including, but not limited to, any FHA, VA or RHS licenses; provided that the foregoing obligation with respect to RHS licenses, shall only apply when any RHS Loan is subject to a Transaction) or approvals (provided that nothing in this Section 7.03(a) shall prohibit any transaction expressly permitted under Section 7.04 hereof), except where failure to do so, with respect to any rights, privileges, licenses or franchises, would not be reasonably likely to result in a Material Adverse Effect with respect to Seller;
(ii)comply with the requirements of all applicable laws, rules, regulations and orders of Governmental Authorities (including, without limitation, Prescribed Laws, all environmental laws, all laws with respect to unfair and deceptive lending practices and Predatory Lending Practices) if failure to comply with such requirements would be reasonably likely (either individually or in the aggregate) to have a Material Adverse Effect with respect to Seller;
(iii)keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied;
(iv)not change its jurisdiction of organization from the jurisdiction referred to in Section 6.12 unless it shall have provided the Buyer thirty (30) days’ prior written notice of such change;
(v)[reserved]; and
(vi)subject to the limitations set forth in Section 14.23, permit representatives of the Buyer, during normal business hours, to examine, copy and make extracts from its books and records, to inspect any of its Properties, and to discuss its business and affairs with its officers, all to the extent reasonably requested by the Buyer.
1.0cProhibition of Fundamental Changes. The Seller shall not (i) enter into any transaction of merger or consolidation or amalgamation unless Seller will be the surviving entity and provided that Seller provides notice of such transaction within five (5) Business Days of the occurrence thereof, or (ii) liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or dissolution). The Seller shall not, without the prior written consent of the Buyer, directly or indirectly make any material change in the nature of its business as carried on at the date hereof. The Seller shall not convey, sell, lease, assign, transfer or otherwise dispose of (collectively, “Transfer”), all or substantially all of its Property, business or assets (including, without limitation, receivables and leasehold interests) whether now owned or hereafter acquired or allow any Subsidiary to Transfer substantially all of its assets to any Person (except as contemplated in ordinary course whole loan sales, servicing rights sales or securitizations); provided, that the Seller may after prior written notice to the Buyer allow such action with respect to any Subsidiary which is not a material part of the Seller’s overall business operations.
1.0dMargin Deficiency. If at any time there exists a Margin Deficiency, the Seller shall cure such Margin Deficiency in accordance with Section 2.07 hereof.
1.0eNotices. The Seller shall give notice to the Buyer and the Agent:
(xii)promptly upon receipt of notice or knowledge of the occurrence of any Default or Event of Default;
(xiii)with respect to any Purchased Loan sold to the Buyer hereunder, within three (3) Business Days following receipt of any payment in full of principal relating to such Purchased Loan;
(xiv)with respect to any Purchased Loan sold to the Buyer hereunder, promptly upon receipt of notice or knowledge that the underlying Mortgaged Property has been damaged by waste, fire, earthquake or earth movement, windstorm, flood, tornado or other casualty, or otherwise damaged so as to affect adversely the Market Value of such Purchased Loan or that such Purchased Loan breaches any representation or warranty listed on Schedule 1 hereto;
(xv)promptly upon receipt of notice or knowledge of (i) any default related to any Purchased Items, (ii) any Lien or security interest (other than security interests created hereby or by the other Repurchase Documents) on, or claim asserted against, any of the Purchased Items or (iii) any event or change in circumstances which could reasonably be expected to have a Material Adverse Effect with respect to Seller, or (iv) any fraud that involves management or other employees who have a significant role in the internal controls of Seller over financial reporting;
(xvi)promptly upon any material change in the market value of any Purchased Loan or a material portion of the Seller’s assets, including Seller’s servicing rights portfolio;
(xvii)in the event the Seller creates a Subsidiary after the Effective Date, such notice to be provided to the Buyer in the Seller’s next Compliance Certificate delivered to the Buyer following the date when such Subsidiary was created;
(xviii)promptly upon notice or knowledge of the occurrence of any material Reportable Event; and
(xix)promptly upon any change in the name or ownership of Seller.
Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of the Seller setting forth details of the occurrence referred to therein and stating what action the Seller has taken or proposes to take with respect thereto.
1.0fInterest Rate Protection Agreements. The Seller shall at all times maintain Interest Rate Protection Agreements with MS&Co. or any other counterparty that enters into Interest Rate Protection Agreement in the ordinary course of its business, having terms with respect to protection against fluctuations in interest rates reasonably comparable to other Interest Rate Protection Agreement that may exist in the industry for similarly situated counterparties. The Seller shall deliver to the Buyer monthly a written summary of the notional amount of all outstanding Interest Rate Protection Agreements.
1.0gReports. The Seller shall provide the Buyer with a quarterly report, which report shall include, among other items, a summary of the Seller’s delinquency and loss experience with respect to mortgage loans serviced by the Seller, any Servicer or any designee of either, plus any such additional reports as the Buyer may reasonably request with respect to the Seller’s or any Servicer’s servicing portfolio or pending originations of mortgage loans. The
Seller shall provide notice upon becoming aware of any penalties, sanctions or charges levied, or threatened to be levied, against it or any change or threatened change in approval status, or the commencement of any Agency audit (other than an audit conducted for due diligence purposes in the normal course of business by an Agency in accordance with the Agency’s policies) or investigation, or the institution of any action or the threat of institution of any action against Seller by any Agency, HUD or any other agency, or any supervisory or regulatory Governmental Authority supervising or regulating the origination or servicing of mortgage loans by, or the issuer or seller status of, the Seller.
1.0hUnderwriting Guidelines.
(vii)In the event that the Seller makes any amendment or modification to the Underwriting Guidelines that relate to Prime Jumbo Mortgage Loans or Non-QM Mortgage Loans, the Seller shall immediately notify the Agent of such change and shall promptly deliver to the Agent a complete copy of the amended or modified Underwriting Guidelines. If the Buyer (or the Agent on behalf of the Buyer) determines, in its sole discretion, that a proposed amendment or modification to the Underwriting Guidelines with respect to Prime Jumbo Mortgage Loans or Non-QM Mortgage Loans is material, the Buyer shall have no obligation to enter into any Transactions with respect to any Mortgage Loans acquired pursuant to the such modified or amended Underwriting Guidelines.
(viii)The Seller shall originate Mortgage Loans in a manner which is consistent with sound underwriting and appraisal practices, and in compliance with applicable federal and state consumer protection laws including, without limitation, all laws with respect to unfair or deceptive practices and all laws relating to Predatory Lending Practices.
1.jTransactions with Affiliates. The Seller will not enter into any transaction, including without limitation any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate unless such transaction is (a) otherwise not prohibited under this Repurchase Agreement, (b) in the ordinary course of the Seller’s business and (c) upon fair and reasonable terms no less favorable to the Seller than it would obtain in a comparable arm’s length transaction with a Person which is not an Affiliate, or make a payment that is not otherwise permitted by this Section 7.10 to any Affiliate. In no event shall the Seller sell to the Buyer hereunder any Purchased Loan acquired by the Seller from an Affiliate of the Seller.
1.kLimitation on Liens. The Seller will defend the Purchased Items against, and will take such other action as is necessary to remove, any Lien, security interest or claim on or to the Purchased Items, other than the security interests created under this Repurchase Agreement, and the Seller will defend the right, title and interest of the Buyer in and to any of the Purchased Items against the claims and demands of all persons whomsoever.
1.lLimitation on Guarantees. The Seller shall not create, incur, assume or suffer to exist any Guarantees.
1.mLimitation on Distributions. Following the occurrence of a Default or Event of Default that has not been waived, the Seller shall not declare or pay any dividends upon any shares of the Seller’s stock, including Capital Stock, now or hereafter outstanding, nor shall the Seller set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of any equity or partnership interest of the Seller, whether now or hereafter outstanding, or make any other distribution in respect of any of the foregoing or to any shareholder or equity owner of the Seller, either directly or indirectly, whether in cash or property or in obligations of the Seller or any of the Seller’s consolidated Subsidiaries.
1.nMaintenance of Tangible Net Worth. The Seller shall not permit its Tangible Net Worth at any time to be less than [***].
1.oMaintenance of Ratio of Total Indebtedness to Tangible Net Worth. The Seller shall not permit the ratio of Total Indebtedness to Tangible Net Worth at any time to be greater than [***].
1.pMaintenance of Profitability. The Seller shall not permit Net Income (before income Taxes), generated over a consecutive three-month period, measured on the last day of each fiscal quarter, to be less than (x) for the fiscal quarter ending on June 30, 2022, [***], and (y) for each fiscal quarter ending after June 30, 2022, [***].
1.qServicer; Servicing File. The Seller shall provide to the Agent on the tenth (10th) calendar day of each month a computer readable file containing servicing information, including without limitation those fields specified by the Agent from time to time, on a loan-by-loan basis and in the aggregate, with respect to the Mortgage Loans serviced hereunder by the Seller or any Servicer. The Seller shall not cause the Mortgage Loans to be serviced by any servicer other than a Servicer expressly approved in writing by the Buyer.
1.rMaintenance of Liquidity. The Seller shall ensure that it maintains unrestricted cash and Cash Equivalents in an amount of not less than [***].
1.sRequired Filings. The Seller shall promptly provide the Buyer and the Agent with copies of all documents which the Seller or any Affiliate of the Seller is required to file with the Securities and Exchange Commission in accordance with the 1934 Act or any rules thereunder.
1.tNo Adverse Selection. The Seller has not selected any Purchased Item in a manner so as to adversely affect the Buyer’s interests when compared to mortgage loans similar to the Eligible Loans.
1.uMassachusetts Subprime Loans, Nevada Subprime Loans and Loans subject to Consent or Other Orders. If the Buyer determines, in its sole discretion, that any Purchased Loan breaches the representation and warranty in Section 6.25 of this Repurchase Agreement (whether or not such breach is material), or if the Buyer determines, in its sole discretion, that a Purchased Loan is a Massachusetts Subprime Loan or a Nevada Subprime Loan which suffers from a compliance exception resulting from a systematic or recurring fault in the Seller’s or any Qualified Originator’s origination practices, then the Seller shall immediately, and in no case later than three (3) Business Days following notice to Seller of such breach, repurchase such Mortgage Loan at the related Repurchase Price. The date on which the Seller repurchases such Mortgage Loan will be considered the “Repurchase Date” for such Mortgage Loan.
1.vRemittance of Prepayments in Full. Following an Event of Default that is continuing, the Seller shall remit, or cause to be remitted, to the Blocked Account, all principal prepayments in full that the Seller has received with in two (2) Business Days of receipt. Following an Event of Default that is continuing, on each Thursday (or the next Business Day if such Thursday is not a Business Day), the Seller shall provide to buyer information in sufficient detail to enable the Buyer to appropriately identify the Purchased Loan to which any remitted principal amount applies for all remittances made during the previous week, if any.
1.wAgency Approvals. Should the Seller, for any reason, cease to possess all applicable Agency Approvals, the Seller shall so notify the Buyer immediately in writing; provided that the foregoing obligation shall only apply to Approval with respect to RHS when
any RHS Loan is subject to a Transaction. Notwithstanding the preceding sentence, the Seller shall take all necessary action to maintain all of its applicable Agency Approvals at all times during the term of this Repurchase Agreement and so long as any Transaction remains outstanding.
1.x[Reserved].
1.yMaintenance of Property; Insurance. The Seller shall keep all property useful and necessary in its business in good working order and condition. The Seller shall maintain errors and omissions insurance and/or mortgage impairment insurance and blanket bond coverage in such amounts as are in effect on the Effective Date and are customarily required by Fannie Mae and Freddie Mac (as disclosed to the Buyer in writing). Seller shall maintain endorsements for theft of warehouse lender money and collateral naming the Buyer as a loss payee under its bond coverage or other fidelity insurance and as a direct loss payee/right of action under its bond or other fidelity insurance policy.
1.zMERS Designated Mortgage Loans. With respect to each MERS Designated Mortgage Loan, the Seller shall not identify, or permit to be identified, any party other than Buyer in the field “interim funder” on the MERS® system without the express written consent of the Buyer. Seller shall identify Buyer in the field “interim funder” on the MERS system within ten (10) days of the related Purchase Date. The Buyer shall have the right to require the Seller, at the sole cost and expense of the Seller, to deregister each MERS Designated Mortgage Loan from the MERS® system and require MERS to prepare assignments of mortgage as specified by the Buyer.
1.aaLoan Purchase Agreements. With respect to each Purchased Loan that is subject to a Takeout Commitment, the Seller shall maintain at least one whole loan purchase agreement with at least one third party purchaser or Agency, pursuant to which such third party purchaser or Agency has agreed to purchase Eligible Mortgage Loans from the Seller. The Seller shall not be in default under any purchase agreement with any third party purchaser or Agency. The Seller shall ensure that each Mortgage Loan sold to the Buyer in a Transaction hereunder which is subject to a Takeout Commitment with a third party purchaser is eligible for sale to such third party purchaser or Agency pursuant to the related purchase agreement.
1.abReserved.
1.acPower of Attorney. The Seller shall, from time to time at the reasonable request of the Buyer, deliver to the Buyer any powers of attorney or other documentation required by the Buyer to ensure the enforceability under applicable law of any rights and/or powers granted to the Buyer in Section 4.04 of this Repurchase Agreement.
1.adQuality Control. The Seller shall maintain an internal quality control program that evaluates and monitors, on a regular basis, the overall quality of (i) its origination activities (including its compliance with all requirements of the Freddie Mac Loan Prospector (LP) or the Fannie Mae DeskTop Underwriting (DU) program, and all applicable laws and regulations with respect to unfair and deceptive lending practices, including Predatory Lending Practices and (ii) its servicing activities and that ensures that the Mortgage Loans are serviced in accordance with Accepted Servicing Practices and are serviced in accordance with all applicable Agency Guides; guards against dishonest, fraudulent or negligent acts; and guards against (i) dishonest, fraudulent, or negligent acts; and (ii) errors, omissions, by its employees, officers, directors, and other persons authorized to act on behalf of the Seller.
1.aeMaintenance of Papers, Records and Files.
(i)The Seller shall acquire, and the Seller shall build, maintain and have available, a complete imaged file in accordance with lending industry custom and practice for each Purchased Loan. The Seller shall maintain imaged copies of all such Records not in the possession of Custodian or the Buyer in good and complete condition for so long as the related Mortgage Loan is subject to a Transaction hereunder and preserve them against loss or destruction.
(ii)The Seller shall collect and maintain or cause to be collected and maintained all Records relating to the Purchased Loans in accordance with industry custom and practice, including those maintained pursuant to subsection (a), and all such Records to the extent they are part of the Mortgage File shall be in Custodian’s possession unless permitted to be in the possession of a third-party in accordance with the terms of the Custodial and Disbursement Agreement.
(iii)For so long as the Buyer has an interest in or lien on any Purchased Loan, the Seller will hold or cause to be held all related Records in trust for the Buyer.
(iv)Subject to the limitations set forth in Section 14.23, upon reasonable advance notice from Custodian or the Buyer, the Seller shall (x) make any and all such Records available to Custodian or the 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, (y) permit the Buyer or its authorized agents to discuss the affairs, finances and accounts of the Seller with its respective chief operating officer and chief financial officer and to discuss the affairs, finances and accounts of the Seller with its independent certified public accountants.
ag.Taxes, Etc. (i) The Seller shall pay and discharge or cause to be paid and discharged, when due, all Taxes, assessments and governmental charges or levies imposed upon the Seller or upon its income and profits or upon any of its property, real, personal or mixed (including without limitation, the Purchased Loans) or upon any part thereof, as well as any other lawful claims which, if unpaid, might become a Lien upon such properties or any part thereof, unless any such Taxes, assessments and governmental charges, levies or claims as are appropriately contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves are provided, except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect with respect to Seller. (ii) The Seller shall file on a timely basis all federal, state and local Tax and information returns, reports and any other information statements or schedules required to be filed by or in respect of it.
ah.Reserved.
ai.MERS. The Seller (and the Servicer, if any) is a member of MERS in good standing and current in the payment of all fees and assessments imposed by MERS, and shall comply with all rules and procedures of MERS in connection with the servicing of MERS Loans for as long as such Purchased Loans are registered with MERS.
aj.[***].
ak.FHA/VA/RHS Loans. The Seller will maintain the FHA insurance on any FHA Loan, the Rural Housing Service Guaranty on any RHS Loan and the VA guaranty on any VA Loan, including without limitation, the payment of any premium owed thereunder. Seller shall make, or cause to be made, all advances and other payments and provide all such reports and notices as are required under the FHA Regulations, Rural Housing Service Regulations or VA Regulations, as applicable, and otherwise take all actions necessary to maintain and keep in full force and effect, during the term of this Repurchase Agreement, the FHA Insurance Contract,
Rural Housing Service Guaranty or VA Guaranty Agreement, as applicable, including providing any notices required to be delivered to the FHA, RHS or the VA, as the case may be, in connection with the servicing of the Purchased Loans pursuant hereto.
al.Protection of the Buyer’s Interests in the Purchased Loans. The Seller will promptly at its expense, execute and deliver such instruments and documents and take such other actions as the Agent may reasonably request from time to time in order to perfect, protect, evidence, exercise and enforce the Agent’s and the Buyer’s rights and remedies under and with respect to the Repurchase Documents, the Transactions, the Purchased Loans). The Seller shall, promptly upon the Agent’s request, deliver documentation in form and substance reasonably satisfactory to the Agent.
am.Division of Limited Liability Company. The Seller shall not effect a “Division” into two or more domestic limited liability companies pursuant to and in accordance with Section 18-217 of Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101 et seq., as amended.
Section 8.Events of Default. Each of the following events shall constitute an event of default (an “Event of Default”) hereunder:
(ix)the Seller shall fail to repurchase one or more Purchased Items on the Repurchase Date;
(x)the Seller shall fail to pay any Repurchase Price or Price Differential on any Transaction when due (whether at stated maturity, upon acceleration or at mandatory or optional prepayment or repurchase) or any Price Differential on any Transaction or any Margin Deficiency when due; or
(xi)[reserved]; or
(xii)the Seller shall default in the payment of any other amount (other than Repurchase Price, Price Differential, Margin Deficiency, or required under Section 3.01) payable by it hereunder or under any other Repurchase Document after notification by the Buyer of such default, and such default shall have continued unremedied for [***]; or
(xiii)(i) any representation, warranty or certification made or deemed made herein by the Seller or any certificate furnished to the Buyer pursuant to the following provisions shall prove to have been incorrect, untrue, or false or intentionally misleading in any material respect as of the time made, repeated, or furnished (other than a Mortgage Loan Issue): Sections 6.02 (Existence)(except with respect to Seller’s good standing), 6.04(i), (iii) and (iv) (Litigation), 6.05 (No Breach), 6.06 (Action), 6.08 (Margin Regulations), 6.10 (Investment Company Act), 6.17 (ERISA), 6.22 (No Prohibited Person), 6.24 (Solvency), 6.28 (Anti-Money Laundering Laws); or (ii) any representation, warranty or certification made or deemed made herein by the Seller or any certificate furnished to the Buyer pursuant to the following provisions and not identified in Section 8(e)(i) shall prove to have been incorrect, untrue, or false or intentionally misleading in any material respect as of the time made, repeated, or furnished (other than a Mortgage Loan Issue) and if such default is capable of being remedied, such failure to observe or perform shall continue unremedied for a period of [***]: Sections 6.02 (Existence)(solely with respect to Seller’s good standing), 6.07 (Approvals), and 6.15 (True and Complete Disclosure); or
(xiv)any representation, warranty or certification made or deemed made herein or in any other Repurchase Document and not identified in Section 8(e) by the Seller or any certificate furnished to the Buyer pursuant to the provisions hereof or thereof or any information with respect to any Purchased Items furnished in writing by or on behalf of the Seller shall prove to
have been incorrect, untrue, or false or intentionally misleading in any material respect as of the time made, repeated, or furnished, and if such default is capable of being remedied, such failure to observe or perform shall continue unremedied for a period of [***] (other than a Mortgage Loan Issue); or
(xv)the Seller shall fail to comply with the requirements of Section 7.03(a), Section 7.04, Section 7.05, Section 7.06, Sections 7.10 through 7.16, or Section 7.18 through 7.25, Section 7.27 through 7.30, Section 7.32(i), or Section 7.35 through 7.36 hereof; or the Seller shall otherwise fail to comply with the requirements of Section 7.03, Section 7.17, Section 7.26, Section 7.32(ii) or Section 7.34 hereof and such default, if capable of being remedied, shall continue unremedied for a period of five (5) Business Days; or the Seller shall fail to comply with the requirements of Section 7.01, Section 7.02, Section 7.03(b), (c), (d), (e), and (f), or Section 7.07 and such default or failure, if capable of being remedied, shall continue unremedied for a period of ten (10) Business Days, or the Seller shall fail to observe or perform any other covenant or agreement contained in this Repurchase Agreement or any other Repurchase Document and such default or failure to observe or perform, if capable of being remedied, shall continue unremedied for a period of [***]; or
(xvi)a final judgment or judgments for the payment of money in excess of [***] in the aggregate shall be rendered against the Seller or any of its Affiliates other than Longbridge Financial LLC by one or more courts, administrative tribunals or other bodies having jurisdiction and the same shall not be satisfied, discharged (or provision shall not be made for such discharge) or bonded, or a stay of execution thereof shall not be procured, within [***] from the date of entry thereof, and the Seller or any such Affiliate shall not, within said period of [***], or such longer period during which execution of the same shall have been stayed or bonded, appeal therefrom and cause the execution thereof to be stayed during such appeal; or
(xvii)a Responsible Officer of the Seller shall admit in writing the Seller’s inability to pay its debts as such debts become due; or
(xviii)the Seller or any of its Subsidiaries shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, examiner or liquidator or the like of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the Bankruptcy Code, (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or winding-up, or composition or readjustment of debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the Bankruptcy Code or (vi) take any corporate or other action for the purpose of effecting any of the foregoing; or
(xix)a proceeding or case shall be commenced, without the application or consent of the Seller or any of its Subsidiaries, in any court of competent jurisdiction, seeking (i) its reorganization, liquidation, dissolution, arrangement or winding-up, or the composition or readjustment of its debts, (ii) the appointment of, or the taking of possession by, a receiver, custodian, trustee, examiner, liquidator or the like of the Seller or any such Subsidiaries or of all or any substantial part of its property, or (iii) similar relief in respect of the Seller or any such Subsidiaries under any law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of [***]; or an order for relief against the Seller or any such Subsidiaries shall be entered in an involuntary case under the Bankruptcy Code; or
(xx)the Custodial and Disbursement Agreement or any Repurchase Document shall for whatever reason be terminated or cease to be in full force and effect, or the enforceability thereof shall be contested by the Seller; provided that it shall not be an Event of Default under this Section 8(l) if Buyer terminates or otherwise directly causes such Custodial and Disbursement Agreement or other Repurchase Agreement to cease to be in full force and effect; or
(xxi)the Seller shall grant, or suffer to exist, any Lien on any Purchased Items except the Liens contemplated hereby; or the Liens contemplated hereby shall cease to be first priority perfected Liens on the Purchased Items in favor of the Buyer, or shall be Liens in favor of any Person other than the Buyer; or
(xxii)the Seller or any of the Seller’s Affiliates shall be in default under, or fail to perform as required under, any note, indenture, repurchase agreement, loan and security agreement, credit facility, guaranty, swap agreement or any other Indebtedness contract to which it is a party in excess of [***], including, without limitation, any MS Indebtedness in any amount, which default (i) involves the failure to pay a matured obligation, or (ii) permits the acceleration of the maturity of obligations or will obligate the prepayment of any indebtedness thereunder by any other party to or beneficiary of such note, indenture, repurchase agreement, guaranty, swap agreement or other contract; or
(xxiii)[reserved]; or
(xxiv)the discovery by the Buyer of a condition or event which existed at or prior to the execution hereof and which the Buyer, in its sole good faith discretion, determines materially and adversely affects: (i) the condition (financial or otherwise) of the Seller, its Subsidiaries or Affiliates; or (ii) the ability of either the Seller or the Buyer to fulfill its respective obligations under this Repurchase Agreement; or
(xxv)(1) Seller, or to the Seller’s knowledge, any other Person shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Internal Revenue Code) involving any Plan, (2) failure to satisfy the minimum funding standards of Section 302 of ERISA, whether or not waived, shall exist with respect to any Plan, (3) 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 institution of proceedings is, in the reasonable opinion of the Buyer, likely to result in the termination of such Plan for purposes of Title IV of ERISA, and, in the case of a Reportable Event, the continuance of such Reportable Event unremedied for [***] after notice of such Reportable Event pursuant to Section 4043(a), (c) or (d) of ERISA is given or the continuance of such proceedings for [***] after commencement thereof, as the case may be, (4) any Plan shall terminate for purposes of Title IV of ERISA, (5) any withdrawal liability to a Multiemployer Plan shall be incurred by the Seller or any of its Subsidiaries or (6) any other event or condition involving a Plan or Multiemployer Plan shall occur or exist; and in each case in clauses (1) through (6) above, such event of condition, together with all other such events or conditions, if any, is likely to subject the Seller or any of its Subsidiaries to any tax, penalty or other liabilities in the aggregate material in relation to the business, operations, property or financial or other condition of the Seller or any of its Subsidiaries; or
(xxvi)the Electronic Tracking Agreement shall for whatever reason be terminated or cease to be in full force and effect or the Seller’s membership in MERS is terminated for any reason and the Buyer shall not have received an Assignment of Mortgage with respect to each MERS Designated Mortgage Loan identified by the Buyer, in blank, in recordable form, but unrecorded; or
(xxvii)a Change of Control of the Seller shall have occurred without the prior consent of the Buyer; or
(xxviii)the Buyer shall reasonably request, specifying the reasons for such request, reasonable information, and/or written responses to such requests, regarding the financial well-being of the Seller (including but not limited to any information regarding any repurchase and indemnity requests or demands made upon the Seller by any third-party investors (including any Agency)) and such reasonable information and/or responses shall not have been provided within five (5) Business Days or such longer period agreed to by Buyer in writing; or
(xxix)[reserved]; or
(xxx)[reserved]; or
(xxxi)[reserved]; or
(xxxii)[reserved]; or
(xxxiii)[reserved]; or
(xxxiv)a Servicer Termination Event has occurred and a successor servicer approved in writing by the Buyer in its sole discretion has not been (i) appointed within [***] of the date of such Servicer Termination Event and (ii) assumed the servicing obligations within [***] of such Servicer Termination Event or such longer period approved by the Buyer in writing; or
(xxxv)any Agency terminates, revokes or suspends the Seller’s approval to sell and service loans to such Agency (including but not limited to its approval to use DU or LP to underwrite mortgage loans); or
(xxxvi)the Seller shall cease to be approved by or its approval shall be revoked, suspended, rescinded, halted, eliminated, withdrawn, annulled, repealed, voided or terminated by (i) Ginnie Mae as an approved issuer, (ii) HUD, pursuant to Sections 203 and 211 of the National Housing Act, (iii) the FHA, as an FHA Approved Mortgagee or servicer, (iv) the VA as a VA Approved Lender or servicer, or (v) Fannie Mae, Freddie Mac or RHS as an approved seller, servicer or lender; or
(xxxvii)[reserved]; or
(xxxviii)all or a material portion of the Seller’s servicing portfolio consisting of Fannie Mae or Freddie Mac loans is seized or the servicing of all or a portion of such loans is otherwise transferred away from the Seller; or
(xxxix)[reserved]; or
(xl)the Seller’s status as an FHA Approved Mortgagee is suspended, revoked by the FHA; or
(xli)the Seller’s status as an VA Approved Lender is suspended, revoked by the VA; or
(xlii)to the extent that any Purchased Loan at such time is an RHS Loan, the Seller’s status as a Rural Housing Service Approved Lender is suspended or revoked; or
(xliii)[reserved]; or
(xliv)[reserved]; or
(xlv)[reserved]; or
(xlvi)[reserved]; or
(xlvii)the “compare ratio” assigned to the Seller by FHA under its “Neighborhood Watch” program is greater than [***]; provided, however, that the Buyer may, by providing prior written notice to the Seller in the Buyer’s sole discretion, adopt a different threshold for such ratio or other statistic based upon the adoption by FHA of any change in the methodology under such program, and in such event, there shall be an Event of Default hereunder if the “compare ratio” or such other statistic assigned to the Seller by FHA is less favorable than such threshold adopted by the Buyer.
Section 9.Remedies Upon Default.
(i)An Event of Default shall be deemed to be continuing unless expressly waived in writing by the Buyer; provided that an Event of Default shall be deemed to be no longer continuing once expressly waived by the Buyer in writing. Upon the occurrence and during the continuance of one or more Events of Default hereunder, the Buyer’s obligation to enter into any additional Transactions hereunder shall automatically terminate without further action by any Person. Upon the occurrence and during the continuance of one or more Events of Default other than those referred to in Section 8(i) or (j), the Buyer may immediately declare the Repurchase Price of the Transactions then outstanding to be immediately due and payable, together with all Price Differential thereon and fees and expenses accruing under this Repurchase Agreement. Upon the occurrence and during the continuance of an Event of Default referred to in Section 8(i) or (j), such amounts shall immediately and automatically become due and payable without any further action by any Person. Upon such declaration or such automatic acceleration, the balance then outstanding shall become immediately due and payable, without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Seller.
(ii)Upon the occurrence and during the continuance of one or more Events of Default and if the Buyer shall have exercised its rights to accelerate or an automatic acceleration shall have occurred pursuant to Section 9(a) hereof, the Buyer shall have the right to obtain physical possession of, for the benefit of the Buyer, the Servicing Records and all other files of the Seller relating to the Purchased Items and all documents relating to the Purchased Items which are then or may thereafter come in to the possession of the Seller or any third party acting for the Seller and the Seller shall deliver to the Buyer such assignments as the Buyer shall request. The Buyer shall be entitled to specific performance of all agreements of the Seller contained in this Repurchase Agreement.
Section 10.No Duty of The Buyer. The powers conferred on the Buyer hereunder are solely to protect the Buyer’s interests in the Purchased Items and shall not impose any duty upon it to exercise any such powers. The Buyer shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to the Seller for any act or failure to act hereunder, except for its or their own gross negligence or willful misconduct.
Section 11.Recognition of the US Special Resolution Regimes.
(xlviii)In the event that the Buyer becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from the Buyer of this Repurchase Agreement and/or the Repurchase Documents, and any interest and obligation in or under this Repurchase Agreement
and/or the Repurchase Documents, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Repurchase Agreement and/or the Repurchase Documents, and any such interest and obligation, were governed by the laws of the United States or a state of the United States.
(xlix)In the event that the Buyer or a BHC Act Affiliate of the Buyer becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Repurchase Agreement and/or the Repurchase Documents that may be exercised against the Buyer are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Repurchase Agreement and/or the Repurchase Documents were governed by the laws of the United States or a state of the United States.
Section 12.Reserved.
Section 13.The Agent.
1.0dAppointment. The Buyer hereby irrevocably designates and appoints Morgan Stanley Mortgage Capital Holdings LLC as its Agent under this Repurchase Agreement and the other Repurchase Documents, and the Buyer irrevocably authorizes the Agent, in such capacity, to take such action on its behalf under the provisions of this Repurchase Agreement and the other Repurchase Documents and to exercise such powers and perform such duties as are expressly delegated to the Agent by the terms of this Repurchase Agreement and the other Repurchase Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Repurchase Agreement, the Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with the Buyer, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Repurchase Agreement or any other Repurchase Document or otherwise exist against the Agent. The provisions of this Section 12 are solely for the benefit of the Agent and the Buyer, and the Seller shall not have rights as a third party beneficiary of any of such provisions.
1.0eDuties of Agent. In accordance with the terms of this Repurchase Agreement, the Agent shall:
(i)upon receipt of a Transaction Request pursuant to and in accordance with Section 2.02, promptly transmit such Transaction Request to the Buyer and, upon approval by and at the instruction of the Buyer, enter into the Transactions and purchase the applicable Loans on the Buyer’s behalf;
(ii)upon receipt of a Confirmation from the Buyer pursuant to and in accordance with Section 2.02(d), promptly transmit such Confirmation to the Seller; and
(iii)upon receipt of any payments of Repurchase Price and other amounts to be paid by the Seller or any other party under the Repurchase Agreement or the other Repurchase Documents, promptly deliver such payments to the Buyer at the following account (or such other account of which the Buyer may from time to time notify the Agent pursuant to Section 13.06): [***].
1.0dDelegation of Duties. The Agent may execute any of its duties under this Repurchase Agreement and the other Repurchase Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
1.0eExculpatory Provisions. Neither the Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Repurchase Agreement or any other Repurchase Document (except for its or such Person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to the Buyer for any recitals, statements, representations or warranties made by the Seller or any officer thereof contained in this Repurchase Agreement or any other Repurchase Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Repurchase Agreement or any other Repurchase Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Repurchase Agreement or any other Repurchase Document or for any failure of the Seller to perform its obligations hereunder or thereunder. The Agent shall not be under any obligation to the Buyer to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Repurchase Agreement or any other Repurchase Document, or to inspect the properties, books or records of the Seller.
1.0fReliance by Agent. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, facsimile, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Seller), independent accountants and other experts selected by the Agent. As between the Agent and the Buyer, the Agent shall be fully justified in failing or refusing to take any action under this Repurchase Agreement or any other Repurchase Document unless it shall first receive such advice or concurrence of the Buyer as it deems appropriate or it shall first be indemnified to its satisfaction by the Buyer against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. As between the Agent and the Buyer, the Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Repurchase Agreement and the other Repurchase Documents in accordance with a request of the Buyer, and such request and any action taken or failure to act pursuant thereto shall be binding upon the Buyer and all future holders of the Purchased Loans.
1.0gNotices. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Agent has received notice from the Buyer or the Seller referring to this Repurchase Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default.” In the event that the Agent receives such a notice, the Agent shall give notice thereof to the Buyer. The Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Buyer; provided that unless and until the Agent shall have received such directions, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Buyer. Seller hereby acknowledges that all notices and other communications required to be delivered by the Seller to the Agent will not be valid if delivered solely to the Buyer; such notices and communications must be delivered as required herein. Notices that are be delivered to Agent shall be delivered to 1585 Broadway, 24th Floor, New York, New York 10036, Attention: [***], Telephone No.: [***], email: [***].
1.0hNon Reliance by Buyer. The Buyer expressly acknowledges that neither the Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Agent hereinafter taken, including any review of the affairs of the Seller, shall be deemed to constitute any representation or warranty by the Agent to the Buyer. The Buyer represents to the Agent that it has, independently and without reliance upon the Agent, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and creditworthiness of the Seller and made its own decision to enter into Transactions and enter into this Repurchase Agreement. The Buyer also represents that it will, independently and without reliance upon the Agent, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Repurchase Agreement and the other Repurchase Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Seller. Except for notices, reports and other documents expressly required to be furnished by the Seller to the Agent hereunder or under the other Repurchase Documents, which the Agent must distribute promptly to the Buyer, the Agent shall not have any duty or responsibility to provide the Buyer with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of the Seller which may come into the possession of the Agent or any of its officers, directors, employees, attorneys-in-fact or Affiliates.
1.0iIndemnification. The Buyer agrees to indemnify the Agent (to the extent not reimbursed by the Seller and without limiting the obligation of the Seller to do so) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Repurchase Price) be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of, the Transactions, this Repurchase Agreement, any of the other Repurchase Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Agent under or in connection with any of the foregoing; provided that the Buyer shall not be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the Agent’s gross negligence or willful misconduct. The agreements in this Section 13.08 shall survive the payment of the Repurchase Prices and all other amounts payable hereunder.
1.0jSuccessor Agent. The Agent may resign as Agent upon thirty (30) calendar days’ notice to the Buyer and the Seller. If the Agent shall resign as Agent under this Repurchase Agreement and the other Repurchase Documents, then the Buyer shall appoint a successor Agent, which successor Agent shall be approved by the Seller (unless an Event of Default has occurred and is continuing), and any such successor Agent shall succeed to the rights, powers and duties of the Agent, and the term “Agent” shall mean such successor Agent effective upon such appointment and approval, and the former Agent’s rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such former Agent or any of the parties to this Repurchase Agreement or any holders of the Purchased Loans. If no successor Agent has been appointed and shall have accepted such appointment within thirty (30) calendar days after the retiring Agent’s giving notice of its resignation, then the retiring Agent, on behalf of the Buyer, may appoint an Agent which shall (unless an Event of Default has occurred and is continuing) be reasonably acceptable to the Seller. Upon the acceptance of any appointment as the Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations, under this Repurchase Agreement and the other Repurchase Documents. After any retiring Agent’s resignation as Agent, the provisions of this Section 13 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Repurchase Agreement and the other Repurchase Documents.
1.jReturn of Certain Payments.
(iv)Buyer hereby acknowledges and agrees that if the Agent notifies Buyer that the Agent has determined in its sole discretion that any funds (or any portion thereof) received by Buyer or any of its Affiliates (any of the foregoing, a “Recipient”) from the Agent (or any of its Affiliates) were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Recipient (whether or not known to such Recipient) (whether as a payment, prepayment or repayment of principal, interest, fees or otherwise; individually and collectively, a “Payment”) and demands the return of such Payment, such Recipient shall promptly, but in no event later than one (1) Business Day thereafter, return to the Agent the amount of any such Payment as to which such a demand was made. A notice of the Agent to any Recipient under this Section 13.10 shall be conclusive, absent manifest error.
(v)Without limitation of clause (a) above, each Recipient further acknowledges and agrees that if such Recipient receives a Payment from the Agent (or any of its Affiliates) (x) that is in an amount, or on a date different from the amount and/or date specified in a notice of payment sent by the Agent (or any of its Affiliates) with respect to such Payment (a “Payment Notice”), (y) that was not preceded or accompanied by a Payment Notice, or (z) that such Recipient otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), in each case, it understands and agrees at the time of receipt of such Payment that an error has been made (and that it is deemed to have knowledge of such error) with respect to such Payment. Each Recipient agrees that, in each such case, it shall promptly notify the Agent of such occurrence and, upon demand from the Agent, it shall promptly, but in no event later than one (1) Business Day thereafter, return to the Agent the amount of any such Payment (or portion thereof) as to which such a demand was made.
(vi)Any Payment required to be returned by a Recipient under this Section 13.10 shall be made in same day funds in the currency so received, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Recipient to the date such amount is repaid to the Agent at the greater of the Federal Funds Rate and a rate determined by the Agent in accordance with banking industry rules on interbank compensation from time to time in effect. Each Recipient hereby agrees that it shall not assert and, to the fullest extent permitted by applicable law, permitted by applicable law, hereby waives, any right to retain such Payment, and any claim, counterclaim, defense or right of set-off or recoupment or similar right to any demand by the Agent for the return of any Payment received, including without limitation any defense based on “discharge for value” or any similar doctrine.
(vii)The Seller hereby agrees that (x) in the event any Payment (or portion thereof) is not recovered from Buyer that has received such Payment (or portion thereof) for any reason, the Agent shall be subrogated to all the rights of Buyer with respect to such amount and (y) the receipt by any Recipient of a Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Repurchase Obligations owed to Buyer by Seller.
(viii)Each party’s obligations under this Section 13.10 shall survive the resignation or replacement of the Agent and the repayment, satisfaction or discharge of all Repurchase Obligations (or any portion thereof) under any Repurchase Document.
Section 14.Miscellaneous.
1.0aDelay Not Waiver; Remedies Are Cumulative. No failure on the part of the Buyer and the Agent (or the Buyer or the Agent, as the case may be) to exercise, and no delay in exercising, and no course of dealing with respect to, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the Buyer and the Agent (or the Buyer or the Agent, as the case may be) of any right, power or remedy under any Repurchase Document preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All rights and remedies of the Buyer provided for herein are cumulative and in addition to any and all other rights and remedies provided by law, the Repurchase Documents and the other instruments and agreements contemplated hereby and thereby, and are not conditional or contingent on any attempt by the Buyer and the Agent (or the Buyer or the Agent, as the case may be) to exercise any of its rights under any other related document. The Buyer and the Agent (or the Buyer or the Agent, as the case may be) may exercise at any time after the occurrence of an Event of Default one or more remedies, as they so desire, and may thereafter at any time and from time to time exercise any other remedy or remedies. For the avoidance of doubt, neither (x) the failure of the Buyer (or the Agent on behalf of the Buyer), on any one or more occasions, to exercise its rights under this Repurchase Agreement with respect to a Margin Deficiency nor (y) the election of the Buyer (or the Agent on behalf of the Buyer), on any one or more occasions, to enter into Transactions notwithstanding the existence of a Margin Deficiency in excess of the Margin Threshold in accordance with Section 5.02(c)(ii) of this Repurchase Agreement, shall change or alter the terms and conditions to which this Repurchase Agreement is subject or limit the right of Buyer (or the Agent on behalf of the Buyer) to exercise its rights under this Repurchase Agreement with respect to such Margin Deficiency at a later date.
1.0bNotices. Except as otherwise expressly permitted by this Repurchase Agreement, all notices, requests and other communications provided for herein and under the Custodial and Disbursement Agreement (including without limitation any modifications of, or waivers, requests or consents under, this Repurchase Agreement) shall be given or made in writing (including without limitation by email or facsimile) delivered to the intended recipient at the “Address for Notices” specified below its name on the signature pages hereof or thereof); or, as to any party, at such other address as shall be designated by such party in a written notice to each other party provided, that a copy of all notices given under Section 7.01 shall simultaneously be delivered to Credit Department, Morgan Stanley, 1585 Broadway, 24th Floor, New York, New York 10036, Attention: [***], with a copy to Morgan Stanley Bank, N.A., One Utah Center, 201 South Main Street, Salt Lake City, Utah 84111, with a copy to Morgan Stanley Bank, N.A., 1 New York Plaza, 41st Floor, New York, NY 10004, Attention: Except as otherwise provided in this Repurchase Agreement and except for notices given under Section 1 (which shall be effective only on receipt), all such communications shall be deemed to have been duly given when transmitted by email or facsimile (unless an electronic notice of non-delivery is received) or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as aforesaid.
1.0cUse of Employee Plan Assets. No assets of an employee benefit plan subject to any provision of ERISA shall be used by either party hereto in a Transaction.
1.0dIndemnification and Expenses.
(iii)Except to the extent expressly set forth in Section 4.12 and Section 3.02 (to the extent such Indemnified Party’s rights under this Section 14.04(a) would arise as a result of amounts being incurred prior to the 90-day period set forth in Section 3.02(c) or as a result of costs not being imposed on similarly situated sellers in Sections 3.02(a) or (b)), and without duplication of any amounts paid to Buyer by Seller under Section 3.02 or Section 4.12, the Seller agrees to hold the Buyer and the Agent (or the Buyer or the Agent, as the case may be) and each of its Affiliates and their officers, directors, employees, agents and advisors (each an “Indemnified Party”) harmless from and indemnify any Indemnified Party against all liabilities, losses, damages, judgments, costs and expenses of any kind which may be imposed on, incurred by or asserted against such Indemnified Party (collectively, the “Costs”) relating to or arising out of this Repurchase Agreement, any other Repurchase Document or any transaction contemplated hereby or thereby, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Repurchase Agreement, any other Repurchase Document or any
transaction contemplated hereby or thereby (including, without limitation, any Takeout Proceeds Identification Letter), that, in each case, results from anything other than any Indemnified Party’s gross negligence or willful misconduct. Without limiting the generality of the foregoing, the Seller agrees to hold any Indemnified Party harmless from and indemnify such Indemnified Party against all Costs with respect to (x) any action taken in connection with this Repurchase Agreement, including, but not limited to, the payment of principal, interest and fees, and (y) all Purchased Loans relating to or arising out of any violation or alleged violation of any environmental law, rule or regulation or any consumer credit laws, including without limitation laws with respect to unfair or deceptive lending practices and Predatory Lending Practices, the Truth in Lending Act and/or the Real Estate Settlement Procedures Act, that, in each case, results from anything other than such Indemnified Party’s gross negligence or willful misconduct.
(iv)In any suit, proceeding or action brought by an Indemnified Party in connection with any Mortgage Loan for any sum owing thereunder, or to enforce any provisions of any Mortgage Loan, the Seller will save, indemnify and hold such Indemnified Party harmless from and against all expense, loss or damage suffered by reason of any defense, set-off, counterclaim, recoupment or reduction of liability whatsoever of the account debtor or obligor thereunder, arising out of a breach by the 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 obligor or its successors from the Seller. The Seller also agrees to reimburse an Indemnified Party for all such Indemnified Party’s costs and expenses incurred in connection with the enforcement or the preservation of such Indemnified Party’s rights under this Repurchase Agreement, any other Repurchase Document or any transaction contemplated hereby or thereby, including without limitation the fees and disbursements of its counsel as and when billed by such Indemnified Party.
(v)The Seller agrees to pay within [***]following receipt of an invoice therefor from the Buyer and the Agent (or the Buyer or the Agent, as the case may be) all of the out-of-pocket costs and expenses incurred by the Buyer and the Agent (or the Buyer or the Agent, as the case may be) in connection with the development, preparation, negotiation and execution of, and any amendment, supplement or modification to, this Repurchase Agreement, any other Repurchase Document or any other documents prepared in connection herewith or therewith. The Seller agrees to pay within [***] following receipt of an invoice therefor from the Buyer and the Agent (or the Buyer or the Agent, as the case may be) all of the out-of-pocket costs and expenses incurred in connection with the consummation and administration of the transactions contemplated hereby and thereby including without limitation (i) all the reasonable fees, disbursements and expenses of counsel to the Buyer and (ii) all the due diligence, inspection, testing and review costs and expenses incurred by the Buyer and the Agent (or the Buyer or the Agent, as the case may be) with respect to Purchased Items under this Repurchase Agreement, including, but not limited to, those costs and expenses incurred by the Buyer pursuant to Sections 14.04(a), 14.06 and 14.23 hereof. The Seller also agrees not to assert any claim against the Buyer and the Agent (or the Buyer or the Agent, as the case may be) or any of its Affiliates, or any of their respective officers, directors, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Repurchase Documents, the actual or proposed use of the proceeds of the Transactions, this Repurchase Agreement or any of the transactions contemplated hereby or thereby. THE FOREGOING INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY APPLIES, WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF THE INDEMNIFIED PARTIES.
(vi)If the Seller fails to pay when due any costs, expenses or other amounts payable by it under this Repurchase Agreement, including, without limitation, reasonable fees and expenses of counsel and indemnities, such amount may be paid on behalf of the Seller by the Buyer and the Agent (or the Buyer or the Agent, as the case may be) (including without
limitation by the Buyer netting such amount from the proceeds of any Purchase Price paid by the Buyer to the Seller hereunder), in its sole discretion and the Seller shall remain liable for any such payments by the Buyer. No such payment by the Buyer shall be deemed a waiver of any of the Buyer’s rights under the Repurchase Documents.
(vii)Without prejudice to the survival of any other agreement of the Seller hereunder, the covenants and obligations of the Seller contained in this Section 14.04 shall survive the termination of this Repurchase Agreement, the payment in full of the Repurchase Price and all other amounts payable hereunder and delivery of the Purchased Loans by the Buyer against full payment therefor.
(viii)This Section 14.04 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
1.0eWaiver of Redemption and Deficiency Rights. The Seller hereby expressly waives, to the fullest extent permitted by law, every statute of limitation on a deficiency judgment, any reduction in the proceeds of any Purchased Items as a result of restrictions upon the Buyer, the Agent or Custodian contained in the Repurchase Documents or any other instrument delivered in connection therewith, and any right that it may have to direct the order in which any of the Purchased Items shall be disposed of in the event of any disposition pursuant hereto.
1.0fReimbursement. All sums reasonably expended by the Buyer and the Agent (or the Buyer or the Agent, as the case may be) in connection with the exercise of any right or remedy provided for herein shall be and remain the Seller’s obligation (unless and to the extent that the Seller is the prevailing party in any dispute, claim or action relating thereto). The Seller agrees to pay, with interest at the Post-Default Rate to the extent that an Event of Default has occurred, the reasonable out-of-pocket expenses and reasonable attorneys’ fees incurred by the Buyer and/or Custodian in connection with the preparation, negotiation, enforcement (including any waivers), administration and amendment of the Repurchase Documents (regardless of whether a Transaction is entered into hereunder), the taking of any action, including legal action, required or permitted to be taken by the Buyer and/or Custodian pursuant thereto, any “due diligence” or loan agent reviews conducted by the Buyer or on its behalf or by refinancing or restructuring in the nature of a “workout”; provided, that notwithstanding the foregoing, due diligence costs and expenses of the Buyer and fees and expenses of the Buyer’s outside counsel, in each case, incurred but not paid prior the occurrence of an Event of Default shall not accrue interest at the Post-Default Rate.
1.0gTermination and Survival. This Repurchase Agreement shall remain in effect until the Termination Date. However, no such termination shall affect the Seller’s outstanding obligations to the Buyer at the time of such termination. The Seller’s obligations under Section 3.03, Section 4.12, Section 6, Section 7, Section 14.04 and Section 14.06 and any other reimbursement or indemnity obligation of the Seller to the Buyer pursuant to this Repurchase Agreement or any other Repurchase Documents shall survive the payment of the Repurchase Obligations relating to all Transactions and the termination of this Repurchase Agreement. In addition, each representation and warranty made or deemed to be made by a request for a Transaction, herein or pursuant hereto shall survive the making of such representation and warranty, and the Buyer shall not be deemed to have waived, by reason of making any Transaction, any Default that may arise because any such representation or warranty shall have proved to be false or misleading, notwithstanding that the Buyer may have had notice or knowledge or reason to believe that such representation or warranty was false or misleading at the time such Transaction was made.
1.0hSeverability. If any provision of any Repurchase Document is declared invalid by any court of competent jurisdiction, such invalidity shall not affect any other provision of the Repurchase Documents, and each Repurchase Document shall be enforced to the fullest extent permitted by law.
1.0iAmendments and Waivers.
Except as otherwise expressly provided in this Repurchase Agreement, any provision of this Repurchase Agreement may be modified or supplemented only by an instrument in writing signed by the Seller, the Buyer and the Agent. A waiver of any provision of this Repurchase Agreement may be made only in writing and approved by the Buyer, in its sole discretion, and if approved.
Neither this Repurchase Agreement nor any other Repurchase Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 14.09. The Buyer and the Agent (or the Buyer or the Agent, as the case may be) may, from time to time, (a) enter into with the Seller written amendments, supplements or modifications hereto and to the other Repurchase Documents for the purpose of adding any provisions to this Repurchase Agreement or the other Repurchase Documents or changing in any manner the rights of the Buyer or of the Seller hereunder or thereunder or (b) waive, on such terms and conditions as the Buyer and the Agent (or the Buyer or the Agent, as the case may be) may specify in such instrument, any of the requirements of this Repurchase Agreement or the other Repurchase Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall:
(1)reduce the amount or extend the scheduled date of maturity of any Transaction or of any payment made in respect thereof, or reduce the stated rate of any interest or fee payable hereunder or extend the scheduled date of any payment thereof or increase the amount or extend the expiration date of this Repurchase Agreement or any Transaction, in each case without the consent of the Buyer and the Agent (or the Buyer or the Agent, as the case may be), or
(2)amend, modify or waive any provision of this Section 14.09 or consent to the assignment or transfer by the Seller of any of its rights and obligations under this Repurchase Agreement and the other Repurchase Documents or release all or substantially all of the Purchased Items (except in accordance with this Repurchase Agreement upon repayment of all amounts owing under the Repurchase Documents in respect thereof), in each case without the written consent of the Buyer and the Agent (or the Buyer or the Agent, as the case may be);
provided, that any waiver, amendment, supplement or modification shall apply to the Buyer and shall be binding upon the Seller, the Buyer, the Agent and their respective permitted successors and assigns and, in the case of any waiver, the Seller, the Buyer and the Agent shall be restored to their former positions and rights hereunder and under the other Repurchase Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.
j.Assignments and Participations.
(i)With the prior written consent of the Seller, the Buyer may assign to one or more Persons all or a portion of its rights and obligations under this Repurchase Agreement; provided, however, that in the case of any such assignment to an Affiliate of the Buyer or upon the occurrence of any Event of Default (that has not been waived), the Seller’s written consent shall
not be required, but the Buyer shall provide the Seller prompt written notice of any such assignment; provided, further, that the parties to each such assignment shall execute and deliver an Assignment and Acceptance substantially in the form of Exhibit E, with appropriate completions (an “Assignment and Acceptance”).
(ii)Upon such execution and delivery, from and after the effective date specified in such Assignment and Acceptance, (i) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of the Buyer hereunder, (ii) the Buyer assignor thereunder shall, to the extent that any rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Repurchase Agreement, and (iii) the Seller shall bear no additional costs or expenses solely resulting from such assignment.
(iii)With the prior written consent of the Seller, the Buyer may sell participations to one or more Persons in or to all or a portion of its rights and obligations under this Repurchase Agreement; provided, however, that in the case of any such sale of a participation to an Affiliate of the Buyer or upon the occurrence of any Event of Default (that has not been waived), the Seller’s written consent shall not be required, but the Buyer shall provide the Seller prompt written notice of any such participation sale; provided, further, that (i) the Buyer’s obligations under this Repurchase Agreement shall remain unchanged, (ii) the Buyer shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) the Seller shall continue to deal solely and directly with the Buyer in connection with the Buyer’s rights and obligations under and in respect of this Repurchase Agreement and the other Repurchase Documents, and (iv) the Seller shall bear no additional costs or expenses solely resulting from such sale of a participation. Notwithstanding the terms of Section 3.03 (without duplication of such amounts paid to the Buyer), each participant of the Buyer shall be entitled to the additional compensation and other rights and protections afforded the Buyer under Section 3.03 to the same extent as the Buyer would have been entitled to receive them with respect to the participation sold to such participant. No participant shall not be entitled to receive any greater payment under Section 3.01 or Section 4.12, with respect to any participation, that the Buyer would have been entitled to receive under the terms of this Agreement.
(iv)The Buyer may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 14.10, disclose to the assignee or participant or proposed assignee or participant, as the case may be, any information relating to the Seller or any of its Subsidiaries or to any aspect of the Transactions that has been furnished to the Buyer by or on behalf of the Seller or any of its Subsidiaries. The Buyer (or the Agent, acting solely for this purpose as an agent of the Seller), shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Buyer(s), and the commitments of, and principal amounts (and stated interest) of the obligations owing to, each Buyer pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Buyer, the Agent and the Seller shall treat each person whose name is recorded in the Register pursuant to the terms hereof as a Buyer hereunder for all purposes of this Repurchase Agreement. The Register shall be available for inspection by the Buyer and Seller, at any reasonable time and from time to time upon reasonable prior notice. Each Buyer that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Seller, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Purchased Loans or other obligations under the Repurchase Documents (the “Participant Register”); provided that no Buyer shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant's interest in any commitments, loans, letters of credit or its other obligations under any Repurchase Agreement) to any person except to the extent that
such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Buyer shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Repurchase Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.
(v)The Buyer may at any time create a security interest in all or any portion of its rights under this Repurchase Agreement (including, without limitation, the Repurchase Obligations owing to it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank. No such assignment shall release the assigning the Buyer from its obligations hereunder.
(vi)Notwithstanding the foregoing, upon the occurrence and during the continuance of an Event of Default, the Buyer may assign all or any portion of its rights and obligations hereunder to any Person, provided that upon the effective date of such assignment such Person shall become a party hereto and the Buyer hereunder and shall be (A) entitled to all the rights, benefits and privileges accorded the Buyer under the Repurchase Documents, and (B) subject to all the duties and obligations of the Buyer under the Repurchase Documents.
1.afSuccessors and Assigns. This Repurchase Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. The Seller may not assign any of its rights or obligations hereunder without the prior written consent of the Buyer.
1.agReserved.
1.ahCaptions. The table of contents and captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Repurchase Agreement.
1.aiCounterparts. This Repurchase Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Repurchase Agreement by signing any such counterpart.
1.ajGoverning Law; Repurchase Agreement Constitutes Security Agreement. This Repurchase Agreement and any claim, controversy or dispute arising under or related to or in connection with this Repurchase Agreement, the relationship of the parties, and/or the interpretation and enforcement of the rights and duties of the parties shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York and shall constitute a security agreement within the meaning of the Uniform Commercial Code.
1.akReserved.
1.alElectronic Signatures. The parties agree that this Repurchase Agreement, any documents to be delivered pursuant to this Repurchase Agreement and any notices hereunder may be transmitted between them by e-mail or via other electronic format acceptable to Buyer, including through Buyer’s FTP site. The parties intend that electronically imaged signatures such as .pdf files shall constitute original signatures and are binding on all parties. Each party shall send to the other original signatures for any document that is transmitted by e-mail.
1.amSubmission To Jurisdiction; Waivers. Each of the Seller, the Agent and the Buyer hereby irrevocably and unconditionally:
(a)SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS REPURCHASE AGREEMENT AND THE OTHER REPURCHASE DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(b)CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(c)AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH THE OTHER PARTIES HERETO SHALL HAVE BEEN NOTIFIED; AND
(d)AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.
k.WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY LAW, EACH OF THE SELLER, THE AGENT AND THE BUYER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS REPURCHASE AGREEMENT, ANY OTHER REPURCHASE DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
l.Acknowledgments. Each of the Seller, the Buyer and the Agent hereby acknowledges that:
(vii)it has been advised by counsel in the negotiation, execution and delivery of this Repurchase Agreement and the other Repurchase Documents;
(viii)the Buyer and the Agent have no fiduciary relationship to the Seller, and the relationship between the Seller, on the one hand, and the Buyer (and the Agent of the Buyer, as applicable), on the other hand, is solely that of the Seller and the Buyer (and the Agent of the Buyer, as applicable); and
(ix)no joint venture exists between the Buyer (including the Agent) and the Seller.
1.kHypothecation or Pledge of Purchased Items. Subject to the Buyer’s obligation to reconvey the related Purchased Loans on the applicable Repurchase Date, the Buyer, in its sole election and without the Seller’s consent, shall have free and unrestricted use of all of the Purchased Items and nothing in this Repurchase Agreement shall preclude the Buyer from engaging in repurchase transactions with the Purchased Items or otherwise selling, pledging, repledging, transferring, assigning, hypothecating, rehypothecating or otherwise conveying the Purchased Items. Nothing contained in this Repurchase Agreement shall obligate the Buyer to segregate any Purchased Items delivered to the Buyer by the Seller. Notwithstanding anything to the contrary in this Repurchase Agreement, nothing in this Repurchase Agreement shall prevent or prohibit the Buyer from pledging its interest in the Purchased Items hereunder to a Federal Reserve Bank in support of borrowings made by the Buyer from such Federal Reserve Bank.
1.lServicing.
(x)With respect to the Servicing Rights appurtenant to each Purchased Loan, the Buyer shall own, and the Seller shall deliver, such Servicing Rights to the Buyer on the related Purchase Date. The Seller covenants to maintain or cause the servicing of the Purchased Loans to be maintained in conformity with Accepted Servicing Practices. The Seller and the Buyer hereby agree and confirm that from and after the date hereof, only such Servicing Agreements that have been approved by Buyer shall govern the servicing of the Purchased Items and any prior agreement between the Seller and any other Person or otherwise with respect to such servicing is hereby superseded in all respects. Provided that the Buyer shall have received a duly executed Servicer Notice, prior to an Event of Default that has not been waived, the Seller may retain a Servicer, on behalf of the Buyer, to service the Purchased Items for the benefit of or on behalf of the Buyer; provided, however, that the obligation of such Servicer to service any Purchased Items for the benefit of or on behalf of Buyer as aforesaid shall cease upon the repurchase of such Purchased Items Loan by Seller in accordance with the provisions of this Repurchase Agreement or as otherwise provided in the Servicer Notice In the event that the preceding language is interpreted as constituting one or more servicing contracts, each such servicing contract and the related Servicing Rights shall terminate automatically upon the earliest of (i) an Event of Default, (ii) [***] after the Effective Date, and every [***] thereafter, in each case, unless the Seller receives written notice of non-termination from the Buyer prior to the end of such [***] period, (iii) the date on which all the Repurchase Obligations have been paid in full or (iv) the transfer of servicing approved by the Seller. Upon any such termination, Seller shall comply with the requirements set forth in Section 7.31 as to the delivery of the Servicing Records and the physical servicing of each Purchased Loan.
(xi)Upon any termination of the Seller, or Servicer as the servicer, the Seller shall deliver (or cause the related Servicer to deliver) the Servicing Records (as defined below) and, to the extent applicable, the physical and contractual servicing of each Purchased Item to the Buyer or its designee within thirty (30) days of such termination of the Seller, or Servicer as the servicer. The Seller’s, or Servicer’s transfer of the Servicing Rights, Servicing Records and the physical and contractual servicing shall be in accordance with customary standards in the industry 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”).
(xii)During the period the Seller or Servicer is servicing the Purchased Loans, (i) the Seller agrees that the Buyer is the owner of the Servicing Rights and all servicing records, including but not limited to any and all servicing agreements, files, documents, records, data bases, computer tapes, copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records, and any other records relating to or evidencing the servicing of such Purchased Loans (the “Servicing Records”), and (ii) the Seller grants the Buyer a security interest in all servicing fees and rights relating to the Purchased
Loans and all Servicing Records to secure the obligation of the Seller or its designee to service in conformity with this Section 14.22 and any other obligation of the Seller to the Buyer. At all times during the term of this Repurchase Agreement, the Seller covenants to hold such Servicing Records in trust for the Buyer and to safeguard, or cause each Servicer to safeguard, such Servicing Records and to deliver them, or cause any such Servicer to deliver them to the extent permitted under the related Servicing Agreement promptly to the Buyer or its designee (including Custodian) at the Buyer’s request or otherwise as required by operation of Section 7.31 hereof. It is understood and agreed by the parties that prior to an Event of Default, the Seller, as servicer shall retain the servicing fees with respect to the Purchased Loans.
(xiii)If the Purchased Loans are, at any time during the term of this Repurchase Agreement, serviced by a third party servicer (such third party servicer, the “Servicer”), such Servicer must be acceptable to RHS, Fannie Mae, Freddie Mac, FHA or VA, as applicable, and each Seller (i) shall provide a copy of the servicing agreement to the Buyer, which shall be in form and substance acceptable to the Buyer (the “Servicing Agreement”), and (ii) shall provide a Servicer Notice and Agreement to the Servicer substantially in the form of Exhibit C hereto (a “Servicer Notice and Agreement”) and shall cause the Servicer to acknowledge and agree to the same. Any successor or assignee of a Servicer shall be approved in writing by the Buyer and shall acknowledge and agree to a Servicer Notice and Agreement prior to such successor’s assumption of servicing obligations with respect to the Mortgage Loans. Any transfer of servicing of Mortgage Loans to any Servicer in accordance with this Section 14.22(d), shall be subject to the Buyer’s ownership and security interest in the Servicing Rights, (including, without limitation, the security interest created under Section 4.01(b)), the Buyer’s security interest in any payments received or to be received by the Seller in connection with such transfer or to any payments of any kind with respect to the Mortgage Loans being serviced by the Servicer and such transfer shall be subject to the Buyer’s right to terminate the Servicing Agreement with such transferee and to cause such transferee to transfer the servicing rights to the Buyer’s designee, in each case as more particularly set forth in this Section 14.22(d).
(xiv)If the servicer of the Purchased Loans is the Seller or the Servicer is an Affiliate of the Seller, the Seller shall provide to the Buyer a letter from the Seller or the Servicer, as the case may be, to the effect that upon the occurrence of an Event of Default that has not been waived, the Buyer may terminate any Servicing Agreement and in any event transfer servicing to the Buyer’s designee, at no cost or expense to the Buyer, it being agreed that the Seller will pay any and all fees required to terminate the Servicing Agreement and to effectuate the transfer of servicing to the designee of the Buyer.
(xv)In addition to the rights provided in Section 14.22(a), the Buyer shall have the right, exercisable at any time in its sole discretion, upon sixty (60) days prior written notice, to the Seller or the Servicer, as applicable, to terminate the Seller or any Servicers as servicer, respectively, of any Purchased Loans and any related Servicing Agreement. Upon any such termination, the Seller shall transfer or shall cause Servicer to transfer such servicing with respect to such Purchased Loans to the Buyer or its designee, at no cost or expense to the Buyer. The Seller agrees to cooperate with the Buyer in connection with the transfer of servicing.
(xvi)After the Purchase Date for any Purchased Loan, until such Purchased Loan is repurchased by the Seller and possession thereof is relinquished by the Custodian, the Seller will have no right to modify or alter the terms of such Purchased Loan and the Seller will have no obligation or right to repossess such Purchased Loan or substitute another Purchased Loan, except as provided in the Custodial and Disbursement Agreement.
(xvii)In the event the Seller or its Affiliate is servicing the Purchased Loans, the Seller shall permit the Buyer from time to time to inspect the Seller’s or its Affiliate’s servicing facilities, as the case may be, for the purpose of satisfying the Buyer that the Seller or its
Affiliate, as the case may be, has the ability to service the Purchased Loans as provided in this Repurchase Agreement.
(xviii)The Buyer shall have the right in its sole discretion to appoint a third party to perform due diligence with respect to the Seller’s servicing facilities at any time. The Seller shall cooperate with the Buyer and/or its designees to provide access to the Seller’s servicing facilities including without limitation its books and records with respect to the Seller’s servicing portfolio and the Purchased Loans. In addition to the foregoing, the Seller shall permit the Buyer to inspect upon reasonable prior written notice at a mutually convenient time, the Seller’s or its Affiliate’s servicing facilities, as the case may be, for the purpose of satisfying the Buyer that the Seller or its Affiliate, as the case may be, has the ability to service the Mortgage Loans as provided in this Repurchase Agreement. In addition, with respect to any Servicer which is not an Affiliate of the Seller, the Seller shall use its best efforts to enable the Buyer to inspect the servicing facilities of such Servicer and to cause such Servicer to cooperate with the Buyer and/or its designees in connection with any due diligence performed by the Buyer and/or such designees in accordance with this Section 14.22(i). The Seller and the Buyer further agree that all reasonable out-of-pocket costs and expenses incurred by the Buyer in connection with any due diligence or inspection performed pursuant to this Section 14.22(i) shall be paid by the Buyer.
m.Periodic Due Diligence Review.
(xix)Purchased Loans. The Seller acknowledges that the Buyer has the right to perform continuing due diligence reviews with respect to the Purchased Loans and the manner in which they were originated, for purposes of verifying compliance with the representations, warranties and specifications made hereunder, or otherwise, and the Seller agrees that, unless an Event of Default has occurred and has not been waived (in which case no notice is required), upon reasonable (but no less than [***]) prior notice to the Seller, the Buyer or its authorized representatives will be permitted during normal business hours to examine, inspect, and make copies and extracts of, the Mortgage Files and any and all documents, records, agreements, instruments or information relating to such Mortgage Files in the possession or under the control of the Seller and/or the Custodian; provided, that prior to the occurrence of an Event of Default hereunder, Buyer shall be entitled to conduct an on-site due diligence review no more than one (1) time per calendar year, or such additional times with the consent of Seller, in each case, at the expense of the Seller. The Seller also shall make available to the Buyer a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Mortgage Files and the Mortgage Loans. Without limiting the generality of the foregoing, the Seller acknowledges that the Buyer may make Transactions to the Seller based solely upon the information provided by the Seller to the Buyer in the Mortgage Loan Data File and the representations, warranties and covenants contained herein, and that the Buyer, at its option, has the right at any time to conduct a partial or complete due diligence review on some or all of the Purchased Loans relating to such Transaction, including without limitation ordering new credit reports and new appraisals on the related Mortgaged Properties and otherwise re-generating the information used to originate such Mortgage Loan. The Buyer may underwrite such Purchased Loans itself or engage a mutually agreed upon third party underwriter to perform such underwriting. The Seller agrees to cooperate with the Buyer and any third party underwriter in connection with such underwriting, including, but not limited to, providing the Buyer and any third party underwriter with access to any and all documents, records, agreements, instruments or information relating to such Purchased Loans in the possession, or under the control, of the Seller.
(xx)The Seller. The Seller acknowledges that the Buyer has the right to perform due diligence reviews of the Seller’s operations, including, but not limited to, a review of (1) the financial condition of the Seller, (2) loan origination and servicing guidelines, and (3) other
corporate due diligence matters at the discretion of the Buyer. In connection therewith, the Seller agrees that upon reasonable (but no less than three (3) Business Day’s) prior written notice to the Seller (provided, that if an Event of Default has occurred and is continuing, no such notice shall be required), the Buyer or its authorized representatives will be permitted during normal business hours to examine, inspect, and make copies and extracts of all documents, records, agreements, instruments or information relating to the Seller which are in possession or under the control of the Seller, as the Buyer may reasonably request; provided, that prior to the occurrence of an Event of Default has occurred and has not been waived, Buyer shall be entitled to conduct an on-site due diligence review no more than one (1) time per calendar year, or such additional times with the consent of seller, in each case, at the expense of the Seller. The Seller shall also make available to the Buyer a knowledgeable financial or accounting officer for the purpose of answering questions respecting the financial condition of the Seller and make available to the Buyer an officer of the Seller for the purpose of answering questions respecting other corporate due diligence matters.
(xxi)Fees and Expenses. The Seller further agrees that the Seller shall reimburse the Buyer for any and all out-of-pocket costs and expenses in an amount not to exceed [***], in the aggregate, in any calendar year, incurred by the Buyer in connection with their activities pursuant to this Section 14.23 within thirty (30) days following receipt of an invoice therefor from the Buyer; provided that upon the occurrence of an Event of Default that has not been waived, the foregoing [***] limitation shall not apply.
1.an[Reserved].
1.aoSet-Off. The Seller hereby acknowledges, admits and agrees that the Seller’s obligations under this Repurchase Agreement are recourse obligations of the Seller to which the Seller pledges its full faith and credit. In addition to any rights and remedies of the Buyer, the Agent and any of their Affiliates (or the Buyer or the Agent or any of their Affiliates, as the case may be) provided by this Repurchase Agreement and by law, the Buyer, the Agent and any of their Affiliates (or the Buyer or the Agent or any of their Affiliates, as the case may be) shall have the right, solely after an Event of Default that has not been waived, and without prior notice to the Seller, any such notice being expressly waived by the Seller to the extent permitted by applicable law, upon any amount becoming due and payable by the Seller hereunder (without giving effect to any grace period, and whether at the stated maturity, by acceleration or otherwise), to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness, amounts or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Buyer, the Agent or any of their Affiliates (or the Buyer or the Agent or any of their Affiliates, as the case may be) to or for the credit or the account of the Seller under the Repurchase Agreement or any other agreement between the Seller or its Affiliates on the one hand and the Buyer, the Agent or any of their Affiliates on the other, whether or not such obligations are then due, without prejudice to the Agent’s or the Buyer’s or any of their Affiliate’s right to recover any deficiency. For the avoidance of doubt, and without limitation, the Seller acknowledges and agrees that any proceeds or amounts under any agreement between Seller on the one hand, and the Buyer, the Agent or any of their Affiliates on the other, which exceed the amount due under such agreement, shall be available to satisfy any obligations of the Seller which are owed to the Buyer or the Agent or their Affiliate under this Agreement or any other agreement between Seller on the one hand, and the Buyer, the Agent or any of their Affiliates on the other. The Buyer, the Agent and any of their Affiliates (or the Buyer or the Agent or any of their Affiliates, as the case may be) agree promptly to notify the Seller after any such set-off and application made by the Buyer, the Agent and any of their Affiliates (or the Buyer or the Agent or any of their Affiliates, as the case may be); provided that the failure to give such notice shall not affect the validity of such set-off and application
1.apSingle Agreement. The Seller, the Agent and the Buyer acknowledge that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual relationship and have been made in consideration of each other. Accordingly, the Seller, the Agent and the Buyer each agree (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, and (ii) that payments, deliveries and other transfers made by any of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other Transaction hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted.
1.aqIntent.
(xxii)Seller, Buyer and Agent intend and acknowledge that (i) this Agreement and each Transaction hereunder is a “repurchase agreement” as that term is defined in Section 101 of the Bankruptcy Code (except insofar as the type of assets subject to such Transaction or the term of such Transaction would render such definition inapplicable), a “securities contract” as that term is defined in Section 741 of the Bankruptcy Code (except insofar as the type of assets subject to such Transaction or the term of such Transaction would render such definition inapplicable), a “master netting agreement” as that term is defined in Section 101(38A)(A) of the Bankruptcy Code and a “qualified financial contract” as that term is defined in the Federal Deposit Insurance Act, as applicable (except insofar as the type of assets subject to such Transaction or the term of such Transaction would render such definition inapplicable); (ii) any payments or transfers of property made with respect to this Agreement or any Transaction shall be considered a “margin payment” or “settlement payment” as such terms are defined in Bankruptcy Code Sections 741(5) and 741(8); (iii) each Purchased Loan constitutes either a “mortgage loan” or “an interest in a mortgage” as such terms are used in the Bankruptcy Code; and (iv) the pledge of the Related Credit Enhancement in Section 4.01(c) constitutes “a security agreement or other arrangement or other credit enhancement” that is “related to” this Agreement and Transactions hereunder within the meaning of Sections 101(38A)(A), 101(47)(A)(v) and 741(7)(A)(xi) of the Bankruptcy Code. Without limiting the generality of the foregoing, the parties recognize and intend that each Transaction is a “repurchase transaction” or “reverse repurchase transaction” of “mortgage loans” or “interests” in “mortgage loans” (as such terms are used in section 741(7) of the Bankruptcy Code). Each party hereto further agrees that it shall not challenge, and hereby waives to the fullest extent available under applicable law its right to challenge, the characterization of this Agreement or any Transaction hereunder as a “master netting agreement,” “repurchase agreement” and/or “securities contract” within the meaning of the Bankruptcy Code.
(xxiii)Seller, Buyer and Agent further intend and acknowledge that (i)(1) for so long as Buyer is a “financial institution,” “financial participant” or another entity listed in Sections 555, 559, 561, 362(b)(6), 362(b)(7) or 362(b)(27) of the Bankruptcy Code, Buyer shall be entitled to, without limitation, the liquidation, termination, acceleration, netting, set-off, and non-avoidability rights afforded to parties such as Buyer to “repurchase agreements” pursuant to Sections 559, 362(b)(7) and 546(f) of the Bankruptcy Code, “securities contracts” pursuant to Sections 555, 362(b)(6) and 546(e) of the Bankruptcy Code, “master netting agreements” pursuant to Sections 561, 362(b)(27) and 546(j) of the Bankruptcy Code and “qualified financial contracts” pursuant to Section 1821(e)(8)(A)(i) of the Federal Deposit Insurance Act, as applicable, and (2) Buyer’s right to liquidate the Purchased Loans delivered to it in connection with the Transactions hereunder or to accelerate or terminate this Agreement or otherwise exercise any other remedies pursuant to Section 9 hereof is a contractual right to liquidate, accelerate or terminate such Transaction as described in Bankruptcy Code Sections 555, 559 and 561 and Section 1821(e)(8)(A)(i) of the Federal Deposit Insurance Act, as applicable, and (ii)
Buyer’s right to set-off claims and appropriate and apply any and all deposits of money or property or any other indebtedness at any time held or owing by Buyer to or for the credit of the account of any Affiliate against and on account of the obligations and liabilities of Seller pursuant to Section 14.25 hereof is a contractual right as described in Bankruptcy Code Sections 553 and 561. The parties hereby intend that any provisions hereof or in any other document, agreement or instrument that is related in any way to the servicing of the individual Mortgage Loans shall be deemed “related to” this Agreement within the meaning of Sections 101(38A)(A) and 101(47)(A)(v) of the Bankruptcy Code and part of the “contract” as such term is used in Section 741 of the Bankruptcy Code.
(xxiv)The parties further agree 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 the FDIA, and any rules, orders or policy statement thereunder.
(xxv)It is understood and agreed Seller, Buyer and Agent by 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).
(xxvi)Seller, Buyer and Agent agree that this Agreement is intended to create mutuality of obligations among the parties, and as such, the Agreement constitutes a contract that (i) is between all of the parties and (ii) places each party in the same right and capacity.
n.Confidentiality.
(xxvii)The Repurchase Documents and their respective terms, provisions, supplements and amendments, and transactions and notices thereunder, are proprietary to the Seller, the Buyer and the Agent and shall be held by each such party in strict confidence and shall not be disclosed to any third party without the consent of the other parties except for (i) disclosure to such party’s Affiliates, directors, attorneys, agents or accountants (the “Representatives”), provided that such party shall (A) inform each of its Representatives receiving any Repurchase Documents of the confidential nature of the Repurchase Documents, (B) direct its Representatives to treat the Repurchase Documents confidentially, and (C) be responsible for any improper use of the Repurchase Documents by such party or its Representatives or (ii) upon prior written notice to the other parties, if permitted by law, disclosure required by law, rule, regulation or order of a court or other regulatory body or (iii) upon prior written notice to the other parties, disclosure to any approved hedge counterparty to the extent necessary to obtain any Interest Rate Protection Agreement hereunder or (iv) any disclosures or filing required under Securities and Exchange Commission (“SEC”) or state securities’ laws; provided that in the case of disclosure by any party pursuant to the foregoing clauses (ii), (iii) or (iv), such party shall provide the other parties with prior written notice to permit such parties to seek a protective order to take other appropriate action; provided further that in the case of clause (iv), such party shall not file any of the Repurchase Documents other than the Repurchase Agreement with the SEC or state securities office unless such party shall have provided at least thirty (30) days (or such lesser time as may be demanded by the SEC or state securities office) prior written notice of such filing to the other parties, and provided further that the notice in clause (ii) above shall not be required in the case of disclosures required by a Governmental Authority (including, for the avoidance of doubt, bank and securities examiners). Such party shall use its commercially reasonable efforts to cooperate in the other parties’ efforts to obtain a protective order or other reasonable assurance that confidential treatment will be accorded the Repurchase Documents. If, in the absence of a
protective order, such party or any of its Representatives is compelled as a matter of law to disclose any such information, such party may disclose to the party compelling disclosure only the part of the Repurchase Documents as is required by law to be disclosed (in which case, prior to such disclosure, such party shall use its commercially reasonable efforts to advise and consult with the other parties and its counsel as to such disclosure and the nature and wording of such disclosure) and such party shall use its commercially reasonable best efforts to obtain confidential treatment therefor. The parties hereto acknowledge that this Repurchase Agreement may be filed with the SEC; provided that, the disclosing party shall redact any pricing and other confidential provisions, including, without limitation, the amount of any fees, Commitment Fee, Non-Utilization Fee, Applicable Pricing Spread and Applicable Purchase Rate from such filed Agreement.
(xxviii)Notwithstanding anything in this Repurchase Agreement to the contrary, each party shall, with respect to the Mortgage Loans and/or any applicable terms of this Agreement (the “Confidential Information”) comply with all privacy and data protection law, rules and regulations that are applicable to the Confidential Information comprised of “nonpublic personal information”, as that term is defined in Section 509(4) of the Gramm-Leach-Bliley Act (the “GLB Act”), and each such party agrees to maintain such nonpublic personal information that it receives hereunder in accordance with the GLB Act and other applicable federal and state privacy laws.
(xxix)Notwithstanding anything else herein, nothing in this Repurchase Agreement shall require any party to provide any notice, information, investigation, audit, correspondence, or any other communication (collectively, “Information”) to any other party if providing such Information is prohibited by applicable Laws, or if such party is required not to disclose such Information by any Governmental Authority or any Agency.
1.aEntire Agreement. This Repurchase Agreement and the other Repurchase Documents embody the entire agreement and understanding of the parties hereto and thereto and supersede any and all prior agreements, arrangements and understandings relating to the matters provided for herein and therein. No alteration, waiver, amendments, or change or supplement hereto shall be binding or effective unless the same is set forth in writing by a duly authorized representative of each party hereto. This Repurchase Agreement and the other Repurchase Documents represent the agreement of the Buyer, the Agent and the Seller with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Buyer or the Agent relative to the subject matter hereof or thereof not expressly set forth or referred to herein or in the other Repurchase Documents.
IN WITNESS WHEREOF, the parties hereto have caused this Repurchase Agreement to be duly executed and delivered as of the day and year first above written.
SELLER
HOME POINT FINANCIAL CORPORATION
By:
Title:
Address for Notices:
2211 Old Earhart Road, Suite 250
Ann Arbor, MI 48105
Attention: [***]
Telephone: [***]
E-mail: [***]
With a copy to:
Legal
E-mail: [***]
BUYER
MORGAN STANLEY BANK, N.A.
By:
Title:
Address for Notices:
Morgan Stanley Bank, N.A.
1585 Broadway, 24th Floor
New York, New York 10036
Attention: [***]
Telephone No.: [***]
Email: [***]
With a copy to:
One Utah Center
201 South Main Street
Salt Lake City, Utah 84111
With a copy to:
Morgan Stanley, N.A.
1 New York Plaza, 41st Floor
New York, NY 10004
Attention: [***]
Telephone: [***]
Email: [***]
AGENT
MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC
By:
Title:
Address for Notices:
Morgan Stanley Mortgage Capital Holdings LLC
1585 Broadway, 24th Floor
New York, NY 10036
Attention: [***]
Telephone No.: [***]
Email: [***]
Schedule 1
REPRESENTATIONS AND WARRANTIES RE: ELIGIBLE MORTGAGE LOANS
As to each Mortgage Loan that is a Purchased Loan subject to any Transaction outstanding on a Purchase Date (and the related Mortgage, Mortgage Note, Assignment of Mortgage and Mortgaged Property), the Seller shall be deemed to make the following representations and warranties to the Buyer as of such date and at all times a Purchased Loan is subject to a Transaction. With respect to any representations and warranties made to the best of the Seller’s knowledge, in the event that it is discovered that the circumstances with respect to the related Mortgage Loan are not accurately reflected in such representation and warranty notwithstanding that such representation and warranty is made to the best of the Seller’s knowledge, such Mortgage Loan shall be assigned a Recognized Value of zero.
(a)Mortgage Loans as Described. The information set forth in the Mortgage Loan Schedule with respect to the Mortgage Loan is true and correct in all material respects.
(b)Payments Current. All payments required to be made up to the Purchase Date for the Mortgage Loan under the terms of the Mortgage Note have been made and credited. No payment required under the Mortgage Loan is delinquent nor has any payment under the Mortgage Loan been delinquent at any time since the origination of the Mortgage Loan. The first Monthly Payment shall be made, or shall have been made, with respect to the Mortgage Loan no later than the last day of the calendar month of the Due Date, all in accordance with the terms of the related Mortgage Note.
(c)No Outstanding Charges. There are no defaults in complying with the terms of the Mortgage securing the Mortgage Loan, and all Taxes, governmental assessments, insurance premiums, water, sewer and municipal charges, leasehold payments or ground rents which previously became due and owing have been paid, or an escrow of funds has been established 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. Neither the Seller nor the Qualified Originator from which the Seller acquired the Mortgage Loan has advanced funds, or induced, solicited or knowingly received any advance of funds by a party other than the Mortgagor, directly or indirectly, for the payment of any amount required under the Mortgage Loan, except for interest accruing from the date of the Mortgage Note or date of disbursement of the proceeds of the Mortgage Loan, whichever is earlier, to the day which precedes by one month the Due Date of the first installment of principal and interest thereunder.
(d)Original Terms Unmodified. 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 recorded, if necessary to protect the interests of the Buyer, and which has been delivered to the Custodian and the terms of which are reflected in the Mortgage Loan Schedule. The substance of any such waiver, alteration or modification has been approved by the insurer under the Primary Insurance Policy, if any, and the title insurer, to the extent required, and, with respect to the FHA, RHS and VA Loans, has been approved by the FHA, to the extent required by the FHA Insurance Contract, the RHS to the extent required of the Rural Housing Service Guaranty or the VA, to the extent of the VA Guaranty Agreement, and its terms are reflected on the Mortgage Loan Schedule. No Mortgagor in respect of the Mortgage Loan has been released, in whole or in part, except in connection with an assumption agreement approved by the insurer under the Primary Insurance Policy, if any, and the title insurer, to the extent required by such policy and with respect to any FHA Loan, the FHA to the extent required by the FHA Insurance Contract or FHA Regulations, or with respect to any VA Loan, the VA to the extent of the VA Guaranty Agreement, or with respect to any RHS Loan, the RHS to the extent of the Rural Housing Service Guaranty, and which assumption
agreement is part of the Mortgage File delivered to the Custodian and the terms of which are reflected in the Mortgage Loan Schedule.
(e)No Defenses. 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, and no Mortgagor in respect of the Mortgage Loan was a debtor in any state or Federal bankruptcy or insolvency proceeding at the time the Mortgage Loan was originated, or with respect to the Mortgagor of any Prime Jumbo Mortgage Loan or Non-QM Mortgage Loan at any time during the two-year period prior to the related Origination Date. The Seller has no knowledge nor has it received any notice that any Mortgagor in respect of the Mortgage Loan is a debtor in any state or federal bankruptcy or insolvency proceeding. With respect to any Prime Jumbo Mortgage Loan or Non-QM Mortgage Loan, the Mortgagor has not owned a property at any time during the two-year period prior to the related Origination Date that has been subject of a foreclosure, deed-in-lieu or other similar proceeding.
(f)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 the Seller as of the date of origination consistent with the Underwriting Guidelines, against earthquake and other risks insured against by Persons operating like properties in the locality of the Mortgaged Property, in an amount not less than 100% of the replacement cost of all improvements to the Mortgaged Property and consistent with the amount that would have been required as of the date of origination in accordance with the Underwriting Guidelines. 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 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. All such insurance policies (collectively, the “hazard insurance policy”) contain a standard mortgagee clause naming the Seller, its successors and assigns (including without limitation, subsequent owners of the Mortgage Loan), as mortgagee, and may not be reduced, terminated or canceled without 30 days’ prior written notice to the mortgagee. No such notice has been received by the Seller. All premiums on such insurance policy 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 therefor from such Mortgagor. Where required by state law or regulation, the Mortgagor has been given an opportunity to choose the carrier of the required hazard insurance, provided the policy is not a “master” or “blanket” hazard insurance policy covering a condominium, or any hazard insurance policy covering the common facilities of a planned unit development. The hazard insurance policy is the valid and binding obligation of the insurer and is in full force and effect. The Seller has not engaged in, and has no knowledge of the Mortgagor’s having engaged in, any act or omission which would impair the coverage of any such policy, the benefits of the endorsement provided for herein, or the validity and binding effect of either including, without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful items have been received, retained or realized by the Seller.
(g)Compliance with Applicable Laws. Any and all requirements of any federal, state or local law including, without limitation, usury, laws with respect to unfair and deceptive lending practices and Predatory Lending Practices 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, the consummation of the transactions contemplated hereby will not involve the violation of any such laws or regulations, and the Seller shall maintain or shall cause its agent to maintain in its possession, available for the inspection of the Buyer, and shall deliver to the Buyer, upon demand, evidence of compliance with all such requirements.
(h)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 effect any such release, cancellation, subordination or rescission. The Seller has not waived the performance by the Mortgagor of any action, if the Mortgagor’s failure to perform such action would cause the Mortgage Loan to be in default, nor has the Seller waived any default resulting from any action or inaction by the Mortgagor.
(i)Location and Type of Mortgaged Property. The Mortgaged Property is located in an Acceptable State as identified in the Mortgage Loan Schedule and consists of a single parcel of real property with a dwelling which is acceptable to the related Agency pursuant to the applicable Agency Guide. No residence or dwelling is a mobile home or a manufactured dwelling. No portion of the Mortgaged Property is used for commercial purposes; provided that Mortgaged Properties which contain a home office shall not be considered as being used for commercial purposes as long as the Mortgaged Property has not been altered for commercial purposes and is not storing any chemicals or raw materials other than those commonly used for homeowner repair, maintenance and/or household purposes. The Mortgage Loan is not secured by an industrial, agricultural, mixed use, undeveloped property, or by a condominium unit that was part of a condominium development that operated as, or held itself out to be, a condominium hotel, regardless of whether the unit itself was being used as a condotel unit.
(j)Valid First Lien. The Mortgage is a valid, subsisting, enforceable and perfected first lien 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:
(i)the lien of current real property Taxes and assessments not yet due and payable;
(ii)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 generally and to any applicable Agency, and specifically referred to in the lender’s title insurance policy delivered to the applicable Agency, and originator of the Mortgage Loan and (a) referred to or otherwise considered in the appraisal made for the originator of the Mortgage Loan or (b) which do not adversely affect the Appraised Value of the Mortgaged Property set forth in such appraisal; and
(iii)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, and which will not in any way prevent realization of the full benefits of
any FHA Insurance Contract, VA Guaranty Agreement or Rural Housing Service Guaranty.
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 the Seller has full right to pledge and assign the same to the Buyer. The Mortgaged Property was not, as of the date of origination of the Mortgage Loan, subject to a mortgage, deed of trust, deed to secure debt or other security instrument creating a lien subordinate to the lien of the Mortgage.
(k)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. All parties to the Mortgage Note, the Mortgage and any other such related agreement had legal capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage Note, the Mortgage and any such agreement, and the Mortgage Note, the Mortgage and any other such related agreement have been duly and properly executed by such related parties. 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. The Seller has reviewed all of the documents constituting the Mortgage File and has made such inquiries as it deems necessary to make and confirm the accuracy of the representations set forth herein. For each Mortgage Loan with respect to which the related Mortgagor electronically executed any Mortgage Loan Document, received related disclosure electronically or otherwise engaged in an electronic transaction in connection with the origination of the related Mortgage Loan, the Mortgagor consented, as required pursuant to the Electronic Signatures in Global and National Commerce Act (“E-Sign Act”), Title 15, United States Code, Sections 7001 et seq., the Uniform Electronic Transaction Act (“UETA”) and any applicable state law, to electronically execute any Mortgage Loan Document, receive related disclosure electronically and otherwise engage in an electronic transaction in connection with the origination of the related Mortgage Loan, as applicable. The Seller or any Qualified Originator, as applicable, complied in all material respects with the E-Sign Act, UETA and any applicable state law when collecting electronic signatures from, electronically distributing disclosure to and otherwise engaging in an electronic transaction with any Mortgagor, as applicable.
(l)Full Disbursement of Proceeds. The Mortgage Loan (unless it is an FHA §203(k) Loan) has been closed and the proceeds of the Mortgage Loan have been fully disbursed and there is no further requirement for future advances thereunder, and 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. 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.
(m)Ownership. The Seller is the sole owner and holder of the Mortgage Loan. The Mortgage Loan is not assigned or pledged, and the Seller has good, indefeasible and marketable title thereto, and has full right to transfer, pledge and assign the Mortgage Loan to the 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 assign, transfer and pledge each Mortgage Loan pursuant to this Repurchase Agreement and following the pledge of each Mortgage Loan, the Buyer will hold such Mortgage Loan free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest except any such security interest created pursuant to the terms of this Repurchase Agreement.
(n)Doing Business. All parties which have had any interest in the Mortgage Loan, whether as Mortgagee, assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of such interest, were) (i) in compliance with any and all applicable licensing requirements of the laws of the state wherein the Mortgaged Property is located and all applicable Agency Guides, and (ii) either (A) organized under the laws of such state, (B) qualified to do business in such state, (C) a federal savings and loan association, a savings bank or a national bank having a principal office in such state, or (D) not doing business in such state.
(o)LTV. No Agency Mortgage Loan has an LTV greater than the percentage permitted by Fannie Mae, Freddie Mac, Ginnie Mae, FHA or VA, as applicable. No Jumbo Mortgage Loan has an LTV greater than [***]. No Non-QM Mortgage Loan has an LTV greater than 90%. Each Mortgage Loan which is required to be subject to a Primary Insurance Policy pursuant to the Agency Guide of the applicable Agency is and will be subject to such a Primary Insurance Policy, issued by a Qualified Insurer, which insures that portion of the Mortgage Loan in excess of the portion of the Appraised Value of the Mortgaged Property as required by such Agency. All provisions of such Primary Insurance Policy have been and are being complied with, such policy is in full force and effect, and all premiums due thereunder have been paid. Any Mortgage subject to any such Primary Insurance Policy obligates the Mortgagor thereunder to maintain such insurance and to pay all premiums and charges in connection therewith. The Mortgage Interest Rate for the Mortgage Loan does not include any such insurance premium.
(p)Title Insurance. Other than each Cooperative Mortgage Loan, the Mortgage Loan is covered by either (i) an attorney’s opinion of title and abstract of title, the form and substance of which is acceptable to prudent mortgage lending institutions making mortgage loans in the area wherein the Mortgaged Property is located or (ii) an ALTA lender’s title insurance policy or other generally acceptable form of policy in accordance with the Underwriting Guidelines, with respect to each Agency Mortgage loan, acceptable to the applicable Agency, and with respect to FHA Loans, RHS Loans and VA Loans, the FHA, RHS or VA, as the case may be, and each such title insurance policy is issued by a title insurer acceptable to Fannie Mae or Freddie Mac, as applicable, and with respect to FHA Loans, RHS Loans and VA Loans, the FHA, RHS or the VA, as the case may be, and qualified to do business in the jurisdiction where the Mortgaged Property is located, insuring the Seller, its successors and assigns, as to the first priority lien of the Mortgage in the original principal amount of the Mortgage Loan, subject only to the exceptions contained in clauses (1), (2) and (3) of paragraph (j) of this Schedule 1, and in the case of adjustable rate Mortgage Loans, against any loss by reason of the invalidity or unenforceability of the lien resulting from the provisions of the Mortgage providing for adjustment to the Mortgage Interest Rate and Monthly Payment. Where required by state law or regulation, the Mortgagor has been given the opportunity to choose the carrier of the required mortgage title insurance. Additionally, such lender’s title insurance policy affirmatively insures ingress and egress and against encroachments by or upon the Mortgaged Property or any interest therein. The title policy does not contain any special exceptions (other than the standard exclusions) for zoning and uses and has been marked to delete the standard survey exception or to replace the standard survey exception with a specific survey reading. The Seller, its successors and assigns, are the sole insureds of such lender’s title insurance policy, and such lender’s title insurance policy is valid and remains in full force and effect and will be in force and effect upon the consummation of the transactions contemplated by this Repurchase Agreement. No claims have been made under such lender’s title insurance policy, and no prior holder or servicer of the related Mortgage, including the Seller, has done, by act or omission, anything which would impair the coverage of such lender’s title insurance policy, including, without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful items have been received, retained or realized by the Seller.
(q)No Defaults. Other than Mortgage Loans which are no more than thirty (30) days past due, there is no default, breach, violation or event of acceleration existing under the Mortgage or the Mortgage Note and no event has occurred 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, and neither the Seller nor its predecessors have waived any default, breach, violation or event of acceleration.
(r)Environmental Matters. There is no pending action or proceeding directly involving the Mortgaged Property in which compliance with any environmental law, rule, or regulation is an issue.
(s)No Mechanics’ Liens. There are no 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.
(t)Location of Improvements; No Encroachments. All improvements which were considered in determining the Appraised Value of the Mortgaged Property lie wholly within the boundaries and building restriction lines of the Mortgaged Property, and no improvements on adjoining properties encroach upon the Mortgaged Property. No improvement located on or being part of the Mortgaged Property is in violation of any applicable zoning and building law, ordinance or regulation.
(u)Origination; Payment Terms. The Mortgage Loan was originated by or in conjunction with a Mortgagee approved by the Secretary of Housing and Urban Development pursuant to Sections 203 and 211 of the National Housing Act, a savings and loan association, a savings bank, a commercial bank, credit union, insurance company or similar banking institution which is supervised and examined by a federal or state authority. Monthly Payments on the Mortgage Loan commenced no more than sixty (60) days after funds were disbursed in connection with the Mortgage Loan. The Mortgage Note Interest Rate is adjusted, with respect to adjustable rate Mortgage Loans, on each Interest Rate Adjustment Date to equal the Mortgage Note Index plus the Gross Margin (rounded up or down to the nearest .125%), subject to the Mortgage Note Interest Rate Cap. The Mortgage Note is payable on the first day of each month. Other than with respect to a Mortgage Loan identified on the related Mortgage Loan Schedule as an interest-only Mortgage Loan, the Mortgage Loan is payable in equal monthly installments of principal and interest, which installments of interest, with respect to adjustable rate Mortgage Loans, are subject to change due to the adjustments to the Mortgage Note Interest Rate on each Interest Rate Adjustment Date, with interest calculated and payable in arrears, sufficient to amortize the Mortgage Loan fully by the stated maturity date, over an original term of not more than thirty (30) years from commencement of amortization. With respect to each Mortgage Loan identified on the Mortgage Loan Schedule as an interest-only Mortgage Loan, the interest-only period shall not exceed ten (10) years (or such other period specified on the Mortgage Loan Schedule) and following the expiration of such interest-only period, the remaining Monthly Payments shall be sufficient to fully amortize the original principal balance over the remaining term of the Mortgage Loan and to pay interest at the related Mortgage Interest Rate. The term of any Mortgage Loan shall not exceed thirty (30) years.
(v)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. There is no homestead or other exemption available to a Mortgagor which would interfere with the right to sell the Mortgaged Property at a trustee’s sale or the right to foreclose the Mortgage.
(w)Conformance with Underwriting Guidelines and Agency Standards. The Mortgage Loan was underwritten in accordance with the Underwriting Guidelines. The Mortgage Note and Mortgage are on forms acceptable to Freddie Mac, Fannie Mae or Ginnie Mae, as applicable, and the Seller has not made any representations to a Mortgagor that are inconsistent with the mortgage instruments used.
(x)Occupancy of the Mortgaged Property or Cooperative Unit. As of the Purchase Date the Mortgaged Property or Cooperative Unit is lawfully occupied under applicable law. All inspections, licenses and certificates required to be made or issued with respect to all occupied portions of the Mortgaged Property and, with respect to the use and occupancy of the same, including but not limited to certificates of occupancy and fire underwriting certificates, have been made or obtained from the appropriate authorities. The Seller has not received notification from any Governmental Authority that the Mortgaged Property or Cooperative Unit is in material non-compliance with such laws or regulations, is being used, operated or occupied unlawfully or has failed to have or obtain such inspection, licenses or certificates, as the case may be. The Seller has not received notice of any violation or failure to conform with any such law, ordinance, regulation, standard, license or certificate. The Mortgagor represented at the time of origination of the Mortgage Loan that the Mortgagor would occupy the Mortgage Property as the Mortgagor’s primary residence.
(y)No Additional Collateral. The Mortgage Note is not and has not been 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 (j) above.
(z)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 the Custodian or the Buyer to the trustee under the deed of trust, except in connection with a trustee’s sale after default by the Mortgagor.
(aa)Delivery of Mortgage Documents. The Mortgage Note, the Mortgage, the Assignment of Mortgage and any other documents required to be delivered under the Custodial and Disbursement Agreement for each Mortgage Loan (other than Wet-Ink Mortgage Loans) have been delivered to the Custodian. The Seller or its agent is in possession of a complete, true and accurate Mortgage File in compliance with the Custodial and Disbursement Agreement, except for such documents the originals of which have been delivered to the Custodian.
(ab)Transfer of Mortgage Loans. With respect to each Mortgage Loan other than a Cooperative Mortgage Loan, The Assignment of Mortgage is in recordable form and is acceptable for recording under the laws of the jurisdiction in which the Mortgaged Property is located with respect to each Cooperative Mortgage Loan, the UCC-3 assignment is in a form suitable for filing in the jurisdiction in which the Mortgaged Property is located.
(ac)Due-On-Sale. 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 or Cooperative Unit, as applicable, is sold or transferred without the prior written consent of the Mortgagee thereunder.
(ad)No Buydown Provisions; No Graduated Payments or Contingent Interests. The Mortgage Loan does not contain provisions pursuant to which Monthly Payments are paid or
partially paid with funds deposited in any separate account established by the Seller, the Mortgagor, or anyone on behalf of the Mortgagor, or paid by any source other than the Mortgagor nor does it contain any other similar provisions which may constitute a “buydown” provision. The Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan does not have a shared appreciation or other contingent interest feature.
(ae)Consolidation of Future Advances. Any future advances made to the Mortgagor prior to the Purchase Date have been consolidated with the outstanding principal amount secured by the Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and single repayment term. With respect to each Mortgage Loan other than a Cooperative Mortgage Loan, the lien of the Mortgage securing the consolidated principal amount is expressly insured as having first lien priority by a title insurance policy, an endorsement to the policy insuring the Mortgagee’s consolidated interest or by other title evidence in accordance with the Underwriting Guidelines and, with respect to each Agency Mortgage Loan, acceptable to the related Agency. The consolidated principal amount does not exceed the original principal amount of the Mortgage Loan.
(af)Mortgaged Property Undamaged. The Mortgaged Property is undamaged by waste, fire, earthquake or earth movement, windstorm, flood, tornado or other casualty so as to affect adversely the value of the Mortgaged Property or Cooperative Unit as security for the Mortgage Loan or the use for which the premises were intended and each Mortgaged Property is in good repair. There have not been any condemnation proceedings with respect to the Mortgaged Property and the Seller has no knowledge of any such proceedings.
(ag)Collection Practices; Escrow Deposits; Interest Rate Adjustments. The origination and collection practices used by the originator, each servicer of the Mortgage Loan and the Seller with respect to the Mortgage Loan have been in all respects in compliance with Accepted Servicing Practices, applicable laws and regulations, and have been in all respects legal and proper and each FHA Loan, RHS Loan and VA Loan has been serviced in accordance with all FHA, RHS and VA policies and regulations, as applicable. With respect to escrow deposits and Escrow Payments, all such payments are in the possession of, or under the control of, the Seller and there exist no deficiencies in connection therewith for which customary arrangements for repayment thereof have not been made. All Escrow Payments have been collected in full compliance with state and federal law. An escrow of funds is not prohibited by applicable law and, where required under the applicable Underwriting Guidelines or requested by the related Mortgagor, (for Mortgage Loans other than Cooperative Mortgage Loans) has been established in an amount sufficient to pay for every item that remains unpaid and has been assessed but is not yet due and payable. No escrow deposits or Escrow Payments or other charges or payments due the Seller have been capitalized under the Mortgage or the Mortgage Note. All Mortgage Note Interest Rate adjustments have been made in strict compliance with state and federal law and the terms of the related Mortgage Note. Any interest required to be paid pursuant to state, federal and local law has been properly paid and credited. The Mortgage Loan was originated and has been serviced in a manner such that the Mortgage Loan will be eligible for the maximum amount of insurance made available by the FHA, RHS or VA, as the case may be, without any right of offset, counterclaim or defense by the FHA, the RHS or VA, as the case may be.
(ah)Conversion to Fixed Interest Rate. With respect to adjustable rate Mortgage Loans, the Mortgage Loan is not convertible to a fixed interest rate Mortgage Loan.
(ai)Other Insurance Policies. No action, inaction or event has occurred and no state of facts exists or has existed that has resulted or will result in the exclusion from, denial of, or defense to coverage under any applicable special hazard insurance policy, PMI Policy or bankruptcy bond, irrespective of the cause of such failure of coverage. In connection with the placement of any such insurance, no commission, fee, or other compensation has been or will be
received by the Seller or by any officer, director, or employee of the Seller or any designee of the Seller or any corporation in which the Seller or any officer, director, or employee had a financial interest at the time of placement of such insurance.
(aj)Servicemembers Civil Relief Act. The Mortgagor has not notified the Seller, and the Seller has no knowledge, of any relief requested or allowed to the Mortgagor under the Servicemembers Civil Relief Act of 2003 (formerly known as the Soldiers’ and Sailors’ Civil Relief Act of 1940).
(ak)Appraisal. With respect to each Mortgage Loan for which the related Agency has not granted a property inspection waiver, the Mortgage File contains an appraisal of the related Mortgaged Property or Cooperative Unit signed prior to the approval of the Mortgage Loan application by a qualified appraiser, duly appointed by the Seller, who had no interest, direct or indirect in the Mortgaged Property or Cooperative Unit or in any loan made on the security thereof, and whose compensation is not affected by the approval or disapproval of the Mortgage Loan, and the appraisal and appraiser both satisfy (i) with respect to each Agency Mortgage Loan, the requirements of Fannie Mae, Freddie Mac, Ginnie Mae, FHA, RHS or VA, as applicable, and (ii) Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 as amended and the regulations promulgated thereunder, all as in effect on the date the Mortgage Loan was originated.
(al)Disclosure Materials. The Mortgagor has executed a statement to the effect that the Mortgagor has received all disclosure materials required by applicable law with respect to the making of adjustable rate mortgage loans, and the Seller maintains such statement in the Mortgage File.
(am)Construction or Rehabilitation of Mortgaged Property. No Mortgage Loan (other than an FHA §203(k) Loan) was made in connection with the construction or rehabilitation of a Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged Property.
(an)No Defense to Insurance Coverage. No action has been taken or failed to be taken, no event has occurred and no state of facts exists or has existed on or prior to the Purchase Date (whether or not known to the Seller on or prior to such date) which has resulted or will result in an exclusion from, denial of, or defense to coverage under any PMI Policy (including, without limitation, any exclusions, denials or defenses which would limit or reduce the availability of the timely payment of the full amount of the loss otherwise due thereunder to the insured) whether arising out of actions, representations, errors, omissions, negligence, or fraud of the Seller, the related Mortgagor or any party involved in the application for such coverage, including the appraisal, plans and specifications and other exhibits or documents submitted therewith to the insurer under such insurance policy, or for any other reason under such coverage, but not including the failure of such insurer to pay by reason of such insurer’s breach of such insurance policy or such insurer’s financial inability to pay.
(ao)Capitalization of Interest. The Mortgage Note does not by its terms provide for the capitalization or forbearance of interest.
(ap)No Equity Participation. No document relating to the Mortgage Loan provides for any contingent or additional interest in the form of participation in the cash flow of the Mortgaged Property or a sharing in the appreciation of the value of the Mortgaged Property. The indebtedness evidenced by the Mortgage Note is not convertible to an ownership interest in the Mortgaged Property or the Mortgagor and the Seller has not financed nor does it own directly or indirectly, any equity of any form in the Mortgaged Property or the Mortgagor.
(aq)Proceeds of Mortgage Loan. The proceeds of the Mortgage Loan have not been and shall not be used to satisfy, in whole or in part, any debt owed or owing by the Mortgagor to the Seller or any Affiliate or correspondent of the Seller except in connection with a refinanced Mortgage Loan where the original Mortgage Loan was held by the Seller.
(ar)Withdrawn Mortgage Loans. If the Mortgage Loan has been released to the Seller pursuant to a Request for Release as permitted under the Custodial and Disbursement Agreement, then the promissory note relating to the Mortgage Loan has been or will be returned to the Custodian within the time period required under the Custodial and Disbursement Agreement.
(as)Origination Date. With respect to any Mortgage Loan originated by the Seller, the Origination Date is no earlier than 30 days prior to the date the Mortgage Loan is first included as a Purchased Loan under the Repurchase Agreement. With respect to any Mortgage Loan originated by a Qualified Originator other than the Seller, the Origination Date is no earlier than [***] prior to the date the Mortgage Loan is first included as a Purchased Loan under the Repurchase Agreement.
(at)No Exception. The Custodian has not noted any material exceptions on an Exception Report (as defined in the Custodial and Disbursement Agreement) with respect to the Mortgage Loan which would materially adversely affect the Mortgage Loan or the security interest granted by the Seller in the Mortgage Loan to the Buyer under the Repurchase Agreement.
(au)Qualified Originator. The Mortgage Loan has been originated by a Qualified Originator.
(av)Mortgage Submitted for Recordation. The Mortgage either has been or will promptly be submitted for recordation in the appropriate governmental recording office of the jurisdiction where the Mortgaged Property is located.
(aw)Value of Mortgaged Property. Seller has no knowledge of any circumstances existing that should reasonably be expected to materially and adversely affect the value or the marketability of the Mortgaged Property or the Mortgage Loan or to cause the Mortgage Loan to prepay during any period materially faster or slower than the mortgage loans originated by Seller generally.
(ax)HOEPA. 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).
(ay)[Reserved].
(az)[Reserved].
(ba)Compliance with Subprime Statement. No Purchased Loan that is an adjustable rate Mortgage Loan and that has a residential loan application date on or after September 13, 2007, is subject to the Interagency Statement on Subprime Mortgage Lending, 72 FR 37569 (July 10, 2007) as defined by Fannie Mae in the Lender Letter 03-07 (August 15,
2007) or by Freddie Mac in Freddie Mac Single Family Advisory (September 7, 2007) and Freddie Mac Bulletin 2007-4);
(bb)MERS Loans. With respect to each MERS Designated Mortgage Loan, a Mortgage Identification Number has been assigned by MERS and such Mortgage Identification Number is accurately provided on the Mortgage Loan Schedule. The related Assignment of Mortgage to MERS has been duly and properly recorded. With respect to each MERS Designated Mortgage Loan, the Seller has not received any notice of liens or legal actions with respect to such Mortgage Loan and no such notices have been electronically posted by MERS;
(bc)No Prohibited Persons. To the best of the Seller’s knowledge, no Mortgagor is a Prohibited Person that is currently the subject of any OFAC-Administered Sanctions, nor is located, organized or resident in a country or territory that is the subject of OFAC-Administered Sanctions; and, to the best of the Seller’s knowledge, no Mortgagor will directly or indirectly lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Prohibited Person, to fund activities of or business with any Prohibited Person, or in any country or territory, that at the time of such funding or facilitation, is the subject of OFAC-Administered Sanctions, or in a manner that would otherwise cause any Prohibited Person (including any Prohibited Person involved in the Transactions under the Agreement) to violate any OFAC-Administered Sanctions;
(bd)Cooperative Mortgage Loans. With respect to each Cooperative Mortgage Loan, the Seller represents and warrants:
(iv)the Cooperative Mortgage Loan is secured by a valid, subsisting, enforceable and perfected first lien on the Cooperative Shares issued to the related Mortgagor with respect to such Cooperative Mortgage Loan. The lien of the Security Agreement is subject only to the Cooperative Corporation’s lien against such corporation stock, shares or membership certificate for unpaid assessments of the Cooperative Corporation to the extent required by applicable law. Any Security Agreement, chattel mortgage or equivalent document related to and delivered in connection with the Cooperative Mortgage Loan establishes and creates a valid, subsisting and enforceable first lien and first priority security interest on the property described therein and the Seller has full right to sell and assign the same to the Buyer. The Cooperative Unit was not, as of the date of origination of the Cooperative Mortgage Loan, subject to a mortgage, deed of trust, deed to secure debt or other security instrument creating a lien subordinate to the lien of the Security Agreement.
(v)(i) the term of the related Proprietary Lease is longer than the term of the Cooperative Mortgage Loan, (ii) there is no provision in any Proprietary Lease which requires the Mortgagor to offer for sale the Cooperative Shares owned by such Mortgagor first to the Cooperative, (iii) there is no prohibition in any Proprietary Lease against pledging the Cooperative Shares or assigning the Proprietary Lease and (iv) the Recognition Agreement is on a form of agreement published by the Aztech Document Systems, Inc. or includes provisions which are no less favorable to the lender than those contained in such agreement.
(vi)There is no proceeding pending or threatened for the total or partial condemnation of the building owned by the applicable Cooperative Corporation (the “Underlying Mortgaged Property”). The Underlying Mortgaged Property is undamaged by waste, fire, earthquake or earth movement, windstorm, flood, tornado or other casualty so as to affect adversely the value of the Underlying Mortgaged Property as security for the mortgage loan on such Underlying
Mortgaged Property (the “Cooperative Mortgage”) or the use for which the premises were intended.
(vii)There is no default, breach, violation or event of acceleration existing under the Cooperative Mortgage or the mortgage note related thereto and no 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.
(viii)The Cooperative Corporation has been duly organized and is validly existing and in good standing under the laws of the jurisdiction of its formation. The Cooperative Corporation has requisite power and authority to (i) own its properties, and (ii) transact the business in which it is now engaged. The Cooperative Corporation possesses all rights, licenses, permits and authorizations, governmental or otherwise, necessary to entitle it to own its properties and to transact the businesses in which is now engaged.
(ix)The Cooperative Corporation complies in all material respects with all applicable legal requirements. The Cooperative Corporation is not in default or violation of any order, writ, injunction, decree or demand of any governmental authority, the violation of which might materially adversely affect the condition (financial or otherwise) or business of the Cooperative Corporation.
(x)The Seller has delivered to the Buyer or its designee each of the following documents (collectively, the “Cooperative Loan Documents”): (i) the Cooperative Mortgage Note, duly endorsed in accordance with the endorsement requirements for Mortgage Notes set forth in this Repurchase Agreement, (ii) the Security Agreement, (iii) the Cooperative Shares accompanied by a stock power which authorizes the Buyer to transfer the Cooperative Shares in the event of a default under the Cooperative Loan Documents, (iv) the Proprietary Lease or occupancy agreement, accompanied by an assignment in blank of such Proprietary Lease, (v) a recognition agreement executed by the Cooperative Corporation, which requires the Cooperative Corporation to recognize the rights of the lender and its successors in interest and assigns, under the Cooperative Mortgage Loan, accompanied by an assignment of such recognition agreement in blank, (vi) UCC-1 financing statements with recording information thereon from the appropriate state and county recording offices if necessary to perfect the security interest of the Cooperative Mortgage Loan under the Uniform Commercial Code in the state in which the Cooperative Project is located, accompanied by UCC-3 financing statements executed in blank for recordation of the change in the secured party thereunder, and (vii) any guarantees, if applicable. The Cooperative Loan Documents are assignable to the Buyer and its successors and assigns and have been duly assigned to the Buyer in accordance with this sub-section (7).
(xi)The Security Agreement contains customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the realization against the Cooperative Shares of the benefits of the security provided thereby.
(xii)As of the date of origination the related Cooperative Project is insured by a generally acceptable insurer against loss by fire, hazards of extended coverage and such other hazards as are customary in the area where the Cooperative Project is located.
(a)FHA/VA/ RHS Loans. With respect to each FHA Loan and VA Loan, the Seller represents and warrants:
(xiii)All parties which have had any interest in an FHA Loan, RHS Loan or a VA Loan, whether as mortgagee or assignee, are (or, during the period in which they held and disposed of such interest, were) an FHA Approved Mortgagee, Rural Housing Service Approved Lender or VA Approved Lender;
(xiv)The Mortgage is either guaranteed by the VA or the RHS to the maximum extent permitted by law or is fully insured by the FHA and all necessary steps have been taken to make and keep such guaranty or insurance valid, binding and enforceable and the applicable insurance or guaranty agreement is the binding, valid and enforceable obligation of the FHA, RHS or VA, as the case may be, to the full extent thereof, without surcharge, set-off or defense;
(xv)In the case of an FHA Loan, no claim for insurance benefits, full or partial, has been filed with respect to such Mortgage Loan and, in the case of a VA Loan or RHS Loan, no claim for guarantee has been filed;
(xvi)No Mortgage Loan is (a) an active subsidy loan originated under the 203K program (24 C.F.R. 203.50), a Section 235 subsidy loan (24 C.F.R. 235), or a graduated loan under Section 245 (24 C.F.R. 203.45 and 24 C.F.R. 203.436), (b) an advance claim loan, or (c) a VA Vendee loan;
(xvii)Neither the Seller, its servicer, nor any prior holder or servicer of the Mortgage Loan has engaged in any action or inaction which would result in the curtailment of a payment (or nonpayment thereof) by the FHA, RHS or the VA; and
(xviii)All actions required to be taken by the Seller or the related Qualified Originator (if different from the Seller) to cause the Buyer, as owner of the FHA Loan, VA Loan or RHS Loan, to be eligible for the full benefits available under the applicable insurance or guaranty agreement have been taken by such entity.
(be)Qualified Mortgage. Each Mortgage Loan that is an Agency Mortgage Loan is a Qualified Mortgage.
(bf)Closing Protection Letter. With respect to each Mortgage Loan that is a Wet-Ink Mortgage Loan (other than any such Mortgage Loan originated in the State of New York), Seller has obtained an ALTA closing protection letter which provides indemnification for the Buyer for losses arising from the related Closing Agent’s fraud, theft, dishonesty, negligence or failure to follow written closing instructions, in form and substance acceptable to the Buyer. If such closing protection letter is not addressed to Buyer, such closing protection letter shall provide that the Buyer and any assignee of Buyer are protected by such letter as if it were addressed directly to them.
Schedule 2
FILING JURISDICTIONS AND OFFICES
New Jersey
Schedule 3
PREVIOUS NAMES, ASSUMED NAMES OR
TRADE NAMES USED BY THE SELLER
NONE
Schedule 4
COOPERATIVE MORTGAGE LOAN DOCUMENTS
(1)Cooperative Mortgage Note;
(2)Security Agreement and the original Assignment of the Security Agreement;
(3)Cooperative Shares and related Stock Power, in blank, executed by the Mortgagor with such signature guaranteed and original Stock Power, in blank executed by the Seller;
(4)Proprietary Lease or occupancy agreement and the Assignment of the Proprietary Lease executed by the Mortgagor in blank or if the Proprietary Lease has been assigned by the Mortgagor to the Seller, then the Seller must execute an assignment of the Assignment of the Proprietary Lease in blank;
(5)Recognition Agreement and the original Assignment of the Recognition Agreement;
(6)UCC-1 financing statements with recording information thereon from the appropriate state and county recording offices if necessary to perfect the security interest of the Cooperative Mortgage Loan under the Uniform Commercial Code in the state in which the Cooperative Project is located (or a copy thereof, together with an officer’s certificate of the Seller certifying that such represents a true and correct copy of the original and that such original has been submitted for filing in the appropriate UCC filing office of the jurisdiction where the Cooperative Project is located), accompanied by UCC-3 financing statements executed in blank for recordation of the change in the secured party thereunder;
(7)an Estoppel Letter and/or Consent;
(8)the Cooperative Lien Search; and
(9)any guarantees, if applicable.
Schedule 5
INFORMATION FOR SERVICER REPORTS
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Schedule 6
EXCLUDED STATES
NONE
Exhibit 1
TAKEOUT INVESTORS
1.[***]
2.[***]
3.[***]
4.[***]
5.[***]
6.[***]
7.[***]
8.[***]
Exhibit 2
UNDERWRITING GUIDELINES
[TO BE PROVIDED BY THE SELLER]
Exhibit 3
FORM OF SERVICER NOTICE
__________ __, 20__
[SERVICER], as Servicer
[ADDRESS]
Attention: ___________
Re: Master Repurchase Agreement and Securities Contract, dated as of June 3, 2020 (the “Repurchase Agreement”), by and among Home Point Financial Corporation (the “Seller”), Morgan Stanley Mortgage Capital Holdings LLC (the “Agent”) and Morgan Stanley Bank, N.A. (the “Buyer”)
Ladies and Gentlemen:
[SERVICER] (the “Servicer”) is servicing certain mortgage loans for the Seller pursuant to certain Servicing Agreements between the Servicer and the Seller. Pursuant to the Repurchase Agreement among the Buyer, the Agent and the Seller, the Servicer is hereby notified that the Seller has granted a security interest to the Buyer in certain mortgage loans which are serviced by Servicer.
Upon receipt of a Notice of Event of Default from the Buyer in which the Buyer shall identify the mortgage loans which are then sold to the Buyer under the Repurchase Agreement (the “Purchased Loans”), the Servicer shall segregate all amounts collected on account of such Purchased Loans, hold them in trust for the sole and exclusive benefit of the Buyer, and remit such collections in accordance with the Buyer’s written instructions. Following such Notice of Event of Default, the Servicer shall follow the instructions of the Buyer with respect to the Purchased Loans, and shall deliver to the Buyer any information with respect to the Pledged Mortgage Loans reasonably requested by the Buyer.
[If the Servicer is an Affiliate of the Seller, this letter shall include: Upon the occurrence of an Event of Default that has not been waived, the Buyer (or the Agent, on behalf of the Buyer), may terminate any Servicing Agreement and in any event transfer servicing to the Buyer’s designee, at no cost or expense to the Buyer, it being agreed that the Seller will pay any and all fees required to terminate the Servicing Agreement and to effectuate the transfer of servicing to the designee of the Buyer.]
Notwithstanding any contrary information or direction which may be delivered to the Servicer by the Seller, the Servicer may conclusively rely on any information, direction or notice of an Event of Default delivered by the Buyer (or the Agent, on behalf of the Buyer), and the Seller shall indemnify and hold the Servicer harmless for any and all claims asserted against the Servicer for any actions taken in good faith by the Servicer in connection with the delivery of such information or Notice of Event of Default.
No provision of this letter may be amended, countermanded or otherwise modified without the prior written consent of the Buyer. The Buyer is an intended third party beneficiary of this letter.
Please acknowledge receipt and your agreement to the terms of this instruction letter by signing in the signature block below and forwarding an executed copy to the Buyer promptly upon receipt. Any notices to the Buyer should be delivered to the following address: 1585 Broadway, New York, New York 10036; Attention: ________________; Telephone:
___________; Facsimile: ____________]; with a copy to: Morgan Stanley Bank, N.A., One Utah Center, 201 South Main Street, Salt Lake City, Utah 84111.
Very truly yours,
[ ]
By:
Name:
Title:
ACKNOWLEDGED AND AGREED TO:
as Servicer
By:
Title:
Telephone:
Facsimile:
Exhibit 4
(FORM OF BLANKET TAKEOUT ASSIGNMENT (THE SELLER’S LETTERHEAD)
(Date)
[TAKE-OUT THE BUYER]
[ADDRESS]
Attention
Dear :
With respect to each whole loan trade made by us with your firm from time to time, the undersigned hereby assigns each such trade to Morgan Stanley Bank, N.A. (the “Buyer”) unless and until such time as such assignment is revoked by a written notice from us and the Buyer to you. For each transaction, you hereby agree to accept delivery from, and pay the purchase price directly to the Buyer, whose acceptance of each trade assignment is indicated below. Accordingly, the Buyer is obligated to make delivery of such mortgage loans to you, and you will establish each trade as a buy transaction from the Buyer or its designee.
All confirmations pertaining to each trade should be sent to the Buyer, at 1585 Broadway, New York, New York 10036, Attention: ________________.
Please execute this letter in the space provided below and send it by facsimile to the Buyer.
Very truly yours,
[____________]
By:
Date:
Agreed:
[TAKE-OUT THE BUYER]
By:
Date:
Acceptance of Takeout Assignment:
MORGAN STANLEY BANK, N.A.
By:
Date:
Exhibit 5
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Master Repurchase Agreement and Securities Contract dated as of June 3, 2020 (as amended, supplemented or otherwise modified from time to time, the “Repurchase Agreement”) by and between Home Point Financial Corporation, a New Jersey corporation (the “Seller”), Morgan Stanley Mortgage Capital Holdings LLC (the “Agent”) and Morgan Stanley Bank, N.A. (the “Buyer”). Capitalized terms not otherwise defined herein shall have the same meanings as specified therefor in the Repurchase Agreement.
Each “Assignor” referred to on Schedule I hereto (each, an “Assignor”) and each “Assignee” referred to on Schedule I hereto (each an “Assignee”) hereby agrees severally with respect to all information relating to it and its assignment hereunder and on Schedule I hereto as follows:
Subject to the provisions of Section 14.11 of the Repurchase Agreement, such Assignor hereby sells and assigns, without recourse except as to the representations and warranties made by it herein, to such Assignee, and such Assignee hereby purchases and assumes from such Assignor, an interest in and to such Assignor’s rights and obligations under the Repurchase Agreement as of the Effective Date (as hereinafter defined) equal to the percentage interest specified on Schedule I hereto of all outstanding rights and obligations under the Repurchase Agreement (collectively, the “Assigned Interests”).
Such Assignor:
(a)hereby represents and warrants that its name set forth on Schedule I hereto is its legal name, that it is the legal and beneficial owner of the Assigned Interest and that such Assigned Interest is free and clear of any adverse claim;
(b)other than as provided herein, makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Repurchase Agreement or any of the other Repurchase Documents, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, the Repurchase Agreement or any of the other Repurchase Documents, or any other instrument or document furnished pursuant thereto; and
(c)makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Seller or any of the other parties or the performance or observance by the Seller or any of the other parties of any of its Obligations under or in respect of any of the Repurchase Documents, or any other instrument or document furnished pursuant thereto.
Such Assignee:
(a)confirms that it has received a copy of the Repurchase Agreement, together with copies of the financial statements referred to in Section 9.01 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance;
(d)agrees that it will, independently and without reliance upon the Buyer and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Repurchase Agreement;
(e)represents and warrants that its name set forth on Schedule I hereto is its legal name;
(f)agrees that, from and after the Effective Date, it will be bound by the provisions of the Repurchase Agreement and the other Repurchase Documents and, to the extent of the Assigned Interest, it will perform in accordance with their terms all of the obligations that by the terms of the Repurchase Agreement are required to be performed by it as a Buyer; and
(g)The effective date for this Assignment and Acceptance (the “Effective Date”) shall be the date specified on Schedule I hereto.
As of the Effective Date, (a) such Assignee shall be a party to the Repurchase Agreement and, to the extent that rights and obligations under the Repurchase Agreement have been assigned to it pursuant to this Assignment and Acceptance, have the rights and obligations of a Buyer thereunder and (b) such Assignor shall, to the extent that any rights and obligations under the Repurchase Agreement have been assigned by it pursuant to this Assignment and Acceptance, relinquish its rights (other than provisions of the Repurchase Documents that are specified under the terms of such Repurchase Documents to survive the payment in full of the Obligations of the Seller under or in respect of the Repurchase Documents) and be released from its obligations under the Repurchase Agreement (and, if this Assignment and Acceptance covers all or the remaining rights and obligations of such Assignor under the Repurchase Agreement, such Assignor shall cease to be a party thereto).
From and after the Effective Date, the Seller shall make all payments under the Repurchase Agreement in respect of the Assigned Interest to such Assignee. Such Assignor and such Assignee shall make all appropriate adjustments in payments under the Repurchase Agreement for periods prior to the Effective Date directly between themselves.
This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York.
This Assignment and Acceptance shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Acceptance may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of Schedule I hereto by facsimile shall be effective as delivery of an originally executed counterpart of this Assignment and Acceptance.
IN WITNESS WHEREOF, each Assignor and each Assignee have caused Schedule I hereto to be executed by their respective officers thereunto duly authorized, as of the date specified thereon.
Schedule 1
to
ASSIGNMENT AND ACCEPTANCE
| | | | | | | | | | | | | | | | | |
| Percentage interest assigned | % | % | % | % | % |
| Amount of Maximum Amount assigned | $ | $ | $ | $ | $ |
| Aggregate outstanding principal amount of Purchased Loans assigned | $ | $ | $ | $ | $ |
Effective Date: ________ __, ____
Assignor
_______________________________, as Assignor
[Type or print legal name of Assignor]
By
Name:
Title:
Dated: ________ __, ____
Assignee
_______________________________, as Assignee
[Type or print legal name of Assignee]
By
Name:
Title:
Dated: ________ __, ____
Domestic Lending Office:
Exhibit 6
TAKEOUT PROCEEDS IDENTIFICATION LETTER
[Date]
Morgan Stanley Bank, N.A.
1585 Broadway
New York, New York 10036
Attention: ____________
Facsimile: (___) ___-____
Ladies and Gentlemen:
Reference is made to that certain Master Repurchase Agreement and Securities Contract, dated as of June 3, 2020 (the “Repurchase Agreement”), by and between Home Point Financial Corporation (the “Seller”), Morgan Stanley Mortgage Capital Holdings LLC (the “Agent”) and Morgan Stanley Bank, N.A. (the “Buyer”). Capitalized terms used but not otherwise defined in this letter agreement (“Letter Agreement”) shall have the meanings given to them in the Repurchase Agreement.
On [date] the Takeout Investor previously identified to you with respect to the Mortgage Loan(s) referenced on Exhibit A attached hereto wired to your account at ________________, [total amount of wire]. Contained within the total amount of the wire was a disbursement amount of _________. This amount represents proceeds for one or more mortgage loans which were not financed under the Repurchase Agreement, the details of which are:
Mortgage loan #: _____________________________
Obligor’s name: _____________________________
Mortgage loan #: _____________________________
Obligor’s name: _____________________________
[list additional mortgage loans, if necessary]
Please wire these funds to:
[insert wire instructions here]
All costs and expenses incurred in carrying out, or as a consequence of having carried out, these instructions shall be borne by the undersigned, including, without limitation, all wire transfer fees and any related Costs.
Very truly yours,
By:
Name:
Title:
Exhibit 7
RESERVED
Exhibit 8
FORM OF COMPLIANCE CERTIFICATE
[_______]
Reference is made to the Master Repurchase Agreement and Securities Contract, dated as of June 3, 2020 (the “Repurchase Agreement”), by and among Home Point Financial Corporation (the “Seller”), Morgan Stanley Mortgage Capital Holdings LLC (the “Agent”) and Morgan Stanley Bank, N.A. (the “Buyer”),
The undersigned hereby certifies to the Buyer on behalf of the Seller, as of [_____], 20[__], that:
(a)both immediately prior to the entering into of each Transaction that has been entered into during the period since the delivery to Buyer of the immediately preceding Compliance Certificate (or, with respect to the first such certificate, since the Effective Date) and also after giving effect to each such Transaction and to the intended use of the Purchase Price paid to the Seller in respect thereof, the representations and warranties made by the Seller in Section 6 and Schedule 1 of the Repurchase Agreement, and elsewhere in each of the Repurchase Documents, were true and correct in all material respects on and as of the date of the making of each such Transaction (in the case of the representations and warranties in Section 6.11, Section 6.25 and Schedule 1 of the Repurchase Agreement, solely with respect to Purchased Loans subject to such outstanding Transactions) with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date);
(b)Seller is, and as of the date of each Transaction that was entered into during the period since the delivery to Buyer of the immediately preceding Compliance Certificate (or, with respect to the first such certificate, since the Effective Date) was in compliance with all governmental licenses and authorizations, statutory and regulatory requirements, and qualified to do business and in good standing in all required jurisdictions;
(c)Seller has observed or performed all of its covenants and other agreements, and satisfied every condition, contained in the Repurchase Agreement and the other Repurchase Documents to be observed, performed or satisfied by it, and that such Responsible Officer has obtained no knowledge of any Default or Event of Default [except as specified below:][ if any Default or Event of Default has occurred and is continuing, Seller shall describe the same in reasonable detail and describing the action the Seller has taken or proposes to take with respect thereto];
(d)the below calculations support the undersigned’s certification of the Seller’s compliance with the requirements of Sections 7.14, 7.15, 7.16 and 7.18 of the Repurchase Agreement; and
(e)[Seller has not entered into a new, or amended any existing, repurchase agreement or other credit facility with any Person that is a More Favorable Agreement, as defined in Section 7.35 of the Repurchase Agreement][Seller has entered into a new, or amended an existing, repurchase agreement or other credit facility with any Person that is a More Favorable Agreement, as defined in Section 7.35 of the Repurchase Agreement, and the new terms are set forth on a schedule attached hereto].
(f)[As of the date hereof, Seller has not formed any new Subsidiaries since the date of delivery of the immediately preceding Compliance Certificate.][Seller has formed the
following new Subsidiaries since the date of delivery of the immediately preceding Compliance Certificate: [___]].
Responsible Officer Certification:
By:
Name:
Title:
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED. [***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
CHANGE IN TERMS AGREEMENT
(Standard Seller Warehouse Document Modifications)
THIS CHANGE IN TERMS AGREEMENT (this "Agreement") is made and entered into by the undersigned executing this Agreement as "Seller" and TEXAS CAPITAL BANK ("Bank") and is effective as of the date set forth below Bank's signature block hereto (the "Effective Date").
RECITALS
A. Seller and Bank have entered into, or are otherwise bound under, that certain Mortgage Warehouse Agreement (as modified or amended from time to time, including pursuant to this Agreement, and including all addenda and exhibits to each of the foregoing, the "Warehouse Agreement") as of SEPTEMBER 1, 2021. Capitalized terms used and not otherwise defined herein shall have the respective meanings assigned to such terms in the Warehouse Agreement.
B. Seller and Bank now desire to modify and amend certain terms and provisions of the Warehouse Agreement and/or the other Warehouse Documents as more particularly described herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, the covenants, representations, warranties and/or agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby covenant and agree as follows:
1. Financial Covenants. Seller covenants and agrees that, until the Agreement Termination Date, Seller will, at all times, observe, perform and comply with each of the following covenant(s) (in addition to those other covenants set forth in the Warehouse Agreement which are not specifically amended, modified or superseded hereby):
(a) Minimum Tangible Net Worth. Seller shall maintain Tangible Net Worth of not less than [***]. "Tangible Net Worth" means, at any particular time, all amounts which, in conformity with GAAP, would be properly included as owner's equity on Seller's balance sheet, but excluding (i) all assets which are properly classified as intangible assets, and (ii) loans or advances to, or receivables from, any owner, officer or employee of Seller.
(b) Minimum Liquid Assets. Seller shall maintain Total Eligible Liquidity of not less than [***]. "Total Eligible Liquidity" means, at any particular time, the sum of Seller's cash, cash equivalents (certificates of deposit and other depository accounts established at FDIC-insured banks), United States government-issued securities and other registered, unrestricted equity or debt securities which are publicly traded on a recognized United States exchange and have been approved by Bank, in its sole and absolute discretion and which, in all events, are held in Seller's name and are free and clear of all Liens (except Liens in favor of Bank), as calculated and determined as set forth in Exhibit A attached hereto.
(c) Minimum Pre-Tax Net Income. [***].
If Seller is required or permitted under the Warehouse Agreement to deliver to Bank quarterly consolidated financial statements, then the above-described financial covenants will be tested and calculated by Bank based on the consolidated financial information of Seller and each other entity whose
financial information is required or permitted by Bank to be set forth on such consolidated financial statements.
After the Effective Date, Seller and Bank may, in their sole discretion, enter into certain written agreements executed by Seller and Bank evidencing or otherwise governing one or more credit facilities extended by Bank to Seller in addition to the financial accommodations evidenced and governed by the Warehouse Agreement (collectively, "Credit Agreements"), which Credit Agreements may include (a) certain financial covenants pertaining to Seller in addition to those contained in this Agreement (each a "New Financial Covenant") and (b) one or more of the same financial covenants contained in this Agreement, but with certain modified terms pertaining to Seller with respect to each such financial covenant (each a "Modified Financial Covenant"). In such event, unless otherwise agreed to by Bank, the financial covenants contained in this Agreement shall automatically be modified and amended from time to time (a) to include each New Financial Covenant and (b) to include the most recent terms of each Modified Financial Covenant to the extent inconsistent with those contained in this Agreement. Except as modified and amended in accordance with the terms of the previous sentence, this Agreement shall continue in full force and effect as originally executed and delivered. The modifications and amendments contemplated hereby shall not be affected by the termination of any Credit Agreement, and shall survive the termination of each Credit Agreement.
Seller acknowledges Bank has requested, and Seller shall timely prepare and furnish to Bank, the financial statements and reports required under the Warehouse Agreement, plus such additional financial reports and information as Bank may from time to time request. In addition, Seller shall prepare and submit to Bank, on a quarterly basis and no later than forty-five (45) days after the close of each fiscal quarter, a compliance certificate executed by Seller, demonstrating Seller's compliance with the covenants of this Agreement and the provisions of the Warehouse Agreement, and such substantiation thereof as may be required by Bank, all in such form and content required by Bank from time to time. A copy of Bank's current required form of compliance certificate is attached hereto as Exhibit A. Although compliance certificates are to be delivered to Bank on a quarterly basis, Seller shall at all times comply with all covenants of this Agreement and the provisions of the Warehouse Agreement, and Bank may test Seller's compliance with such covenants at any time.
2. Representations and Warranties.
(a) Seller represents and warrants to Bank that all representations and warranties made by Seller to Bank in the Warehouse Documents as of the date thereof are true and correct as of the Effective Date, as if such representations and warranties were recited herein in their entirety. Any other representations and warranties made in this Agreement shall not limit the generality of the preceding sentence.
(b) As of the Effective Date, Seller hereby represents to Bank that: (i) no Event of Default exists; and (ii) no event or condition exists which, with the giving of notice or the passage of time or both, would constitute an Event of Default.
(c) As of the Effective Date, Seller represents and warrants to Bank that there is no fact that Seller is aware of and has not disclosed to Bank in writing that could have a material adverse effect on the Participation Interests or the ability of Seller to perform its obligations under the Warehouse Documents.
(d) As of the Execution Date, Seller represents and warrants to Bank that Seller has the power and authority required to enter into and perform its obligations under this Agreement and to make the agreements set forth herein. Without limiting the generality of the foregoing, as of the Effective Date: (i) the resolutions of Seller and each other entity (if any) which were most recently executed and delivered to Bank in connection with the Warehouse Agreement (collectively, the "Resolutions") are presently in full force and effect, and have not been rescinded, amended or otherwise modified; (ii) the formation and governance documents attached to the Resolutions (collectively, the "Organizational Documents"), are presently in full force and effect, and have not been rescinded, amended or otherwise modified; (iii) the execution and delivery of this Agreement and the other documents to be executed by or on behalf of Seller
and delivered to Bank in connection with this Agreement (collectively, the "Change in Terms Documents"), and the consummation by Seller of the transactions contemplated hereby and thereby, and the performance by Seller of its obligations hereunder and thereunder, are duly and validly authorized by the Resolutions and the Organizational Documents; (iv) each person executing the Change in Terms Documents on behalf of Seller has the requisite power and authority to do so pursuant to the Resolutions and the Organizational Documents; (v) no consent or approval is required from any person or entity (other than consents or approvals previously obtained) for the execution, delivery and performance of the Change in Terms Documents by Seller; and (vi) upon execution, each Change in Terms Document constitutes the legal, valid and binding obligations of Seller, enforceable in accordance with the terms thereof.
3. Miscellaneous Provisions.
(a) AS A MATERIAL INDUCEMENT TO BANK TO ENTER INTO THIS AGREEMENT, SELLER HEREBY DECLARES THAT, AS OF THE EFFECTIVE DATE, IT HAS NO CLAIMS, SET-OFFS, COUNTERCLAIMS, DEFENSES OR OTHER CAUSES OF ACTION AGAINST BANK ARISING OUT OF ANY OF THE WAREHOUSE DOCUMENTS OR ANY OTHER DOCUMENT MENTIONED HEREIN OR OTHERWISE; AND, TO THE EXTENT ANY SUCH CLAIMS, SETOFFS, COUNTERCLAIMS, DEFENSES OR OTHER CAUSES OF ACTION MAY EXIST, WHETHER KNOWN OR UNKNOWN, SUCH ITEMS ARE HEREBY WAIVED BY SELLER.
(b) Effective as of the Effective Date, the Warehouse Agreement and the other Warehouse Documents are hereby supplemented, modified and amended as provided herein. The provisions of this Agreement supersede, modify and amend any and all inconsistent or conflicting provisions in the Warehouse Agreement and the other Warehouse Documents (including any and all written change in terms agreements executed by Seller and Bank prior to the Effective Date). Except as hereby supplemented, modified or amended, the Warehouse Agreement and the other Warehouse Documents are in full force and effect as of the Effective Date. The Warehouse Agreement and the other Warehouse Documents, as hereby supplemented, modified or amended, are ratified and confirmed by Seller as of the Effective Date.
(c) Except as may be expressly set forth in this Agreement, nothing contained herein shall affect, impair or release the liability of any Person who may now or hereafter be liable to Bank under the Warehouse Documents.
(d) This Agreement shall be governed by and construed in accordance with Texas law and applicable federal law.
(e) Seller represents and warrants that it has the power and authority required to enter into and perform its obligations under this Agreement and to make the agreements set forth herein. This Agreement may not be modified, amended or discharged except by written amendment executed by Seller and Bank. The terms and provisions of this Agreement shall be binding upon any successors and assigns of Seller permitted pursuant to the terms of the Warehouse Agreement and shall benefit the successors and assigns of Bank.
(f) This Agreement may be executed in multiple counterparts, each to constitute a separate agreement, but all, taken together, to constitute one and the same agreement.
(g) The liability of all Persons obligated to Bank in any manner under this Agreement shall be joint and several. If more than one Person shall execute this Agreement as "Seller", then the term "Seller" as used herein shall refer both to each such Person individually and to all such Persons collectively.
(h) This Agreement may be signed electronically or digitally in the manner specified by Bank. Each of the undersigned consents to the use of electronic and/or digital signatures by any or all of the undersigned in such manner specified by Bank. The undersigned agree not to deny the legal effect or enforceability of this Agreement solely because this Agreement was
signed using electronic or digital signatures. Further, the undersigned agree not to object to the admissibility of this Agreement if it bears an electronic or digital signature on the grounds that any signature is not in its original form or on the grounds that this Agreement does not comply with Chapter 26 of the Texas Business and Commerce Code or any similar law.
(i) THIS WRITTEN AGREEMENT AND THE OTHER WAREHOUSE DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Signature Pages Follow]
EXECUTED to be effective as of the Effective Date.
| | | | | |
| SELLER:
HOME POINT FINANCIAL CORPORATION, A NEW JERSEY CORPORATION By:/s/ Joseph Ruhlin
Name: JOSEPH RUHLIN
Title: TREASURER
Seller’s Execution Date: June 27, 2022 |
[Bank's Signature Page Follows]
ACCEPTED AND AGREED to by Bank at Richardson, Collin County, Texas, and executed to be effective as of the Effective Date.
| | | | | |
| BANK:
TEXAS CAPITAL BANK By:/s/ Heather Crawford
Name: Heather Crawford
Title: Vice President
Effective Date: June 28, 2022 |
EXHIBIT A
(TO CHANGE IN TERMS AGREEMENT)
COMPLIANCE CERTIFICATE
[***]
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, William A. Newman, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Home Point Capital Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and 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.
| | | | | | | | | | | |
| Dated: August 11, 2022 | | | /s/ William A. Newman |
| | | William A. Newman |
| | | Director, President and Chief Executive Officer
(Principal Executive Officer) |
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Mark E. Elbaum, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Home Point Capital Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and 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.
| | | | | | | | | | | |
| Dated: August 11, 2022 | | | /s/ Mark E. Elbaum |
| | | Mark E. Elbaum |
| | | Chief Financial Officer
(Principal Financial Officer) |
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Home Point Capital Inc. (the “Company”) for the quarter ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
| | | | | | | | | | | |
| August 11, 2022 | | | |
| | | /s/ William A. Newman |
| | | William A. Newman |
| | | Director, President and Chief Executive Officer
(Principal Executive Officer) |
| | | |
| | | /s/ Mark E. Elbaum |
| | | Mark E. Elbaum |
| | | Chief Financial Officer
(Principal Financial Officer) |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.