Exhibit 10.1

 

MASTER REPURCHASE AGREEMENT

 

Dated as of December 14, 2011

 

Between:

 

RYLAND MORTGAGE COMPANY, as Seller jointly and severally with the other Sellers

 

and

 

RMC MORTGAGE CORPORATION, as Seller jointly and severally with the other Sellers

 

and

 

JPMORGAN CHASE BANK, N.A., as Buyer

 

 

1.         Applicability

 

From time to time prior to the Termination Date, the parties hereto may enter
into transactions in which RYLAND MORTGAGE COMPANY (“RMC”) and/or RMC MORTGAGE
CORPORATION (“RMCMC”) (RMC and RMCMC, together with their respective successors
and assigns, are each individually referred to herein as “Seller” and
collectively “Sellers”) agree to transfer to JPMorgan Chase Bank, N.A. (together
with its successors and assigns, “Buyer”) Mortgage Loans (including the
Servicing Rights thereto and all Accounts created thereunder) on a servicing
released basis against the transfer of funds by Buyer, with a simultaneous
agreement by Buyer to transfer to Sellers those Mortgage Loans (including the
Servicing Rights thereto and all Accounts created thereunder) on a servicing
released basis at a date certain or on demand, against the transfer of funds by
Sellers.  Each such transaction shall be referred to in this Agreement as a
“Transaction” and shall be governed by this Agreement.  Buyer shall have no
obligation to enter into any Transaction on or after the Termination Date.

 

2.         Definitions; Interpretation

 

(a)        Definitions.  As used in this Agreement and (unless otherwise defined
differently therein) in each other Transaction Document, the following terms
have these respective meanings.

 

“Accounts” means, collectively, the Cash Pledge Account, the Collection Account,
the Funding Account and the Operating Account, any interest, additions and
proceeds due or to become due on such accounts, which accounts are held at
Financial Institution and include all of the above described deposits, deposit
accounts, payment intangibles, financial assets and other obligations of
Financial Institution, whether they are deposit accounts, negotiable or
non-negotiable or book entry certificates of deposit, book entry investment time
deposits, savings accounts, money market accounts, transaction accounts, time
deposits, negotiable order of withdrawal accounts, share draft accounts, demand
deposit accounts, instruments, general intangibles, chattel paper or otherwise,
and all funds held in or represented by any of the

 

--------------------------------------------------------------------------------

 

foregoing, and any successor accounts howsoever numbered and all accounts issued
in renewal, extension or increase or decrease of or replacement or substitution
for any of the foregoing; and all promissory notes, checks, cash, certificates
of deposit, passbooks, deposit receipts, instruments, certificates and other
records from time to time representing or evidencing the accounts described
above and any supporting obligations relating to any of the foregoing property.

 

“Act of Insolvency” means with respect to any Person (a) the commencement by
that Person as debtor of any case or proceeding under any bankruptcy,
insolvency, reorganization, liquidation, dissolution or similar law, or a
request by that Person for the appointment of a receiver, trustee, custodian or
similar official for that Person or any substantial part of its property;
(b) the commencement of any such case or proceeding against that Person, or
another’s seeking such appointment, or the filing against that Person of an
application for a protective decree that (i) is consented to or not timely
contested by that Person, or (ii) results in the entry of an order for relief,
such an appointment, the issuance of such a protective decree or the entry of an
order having similar effect, or (iii) is not dismissed within fifteen (15) days;
(c) the making by that Person of a general assignment for the benefit of
creditors; (d) the admission in writing by that Person that it is unable to pay
its debts as they become due, or the nonpayment of its debts generally as they
become due; or (e) the board of directors, managers, members or partners, as the
case may be, of that Person taking any action in furtherance of any of the
foregoing.

 

“Additional Purchased Mortgage Loans” means Mortgage Loans provided by Sellers
to Buyer pursuant to Paragraph 4(a).

 

“Adjusted LIBOR Rate” has the meaning set forth in the Side Letter.

 

“Adjusted Tangible Net Worth” means, with respect to any Person and its
Subsidiaries on a consolidated basis on any day, an amount equal to:

 

 

(i)         the Tangible Net Worth of such Person and its Subsidiaries on a
consolidated basis on that day;

 

 

 

plus

(ii)        the lesser of (x) one percent (1%) of the Outstanding Principal
Balances of all Mortgage Loans for which such Person and its Subsidiaries own
the Servicing Rights and (y) the capitalized value of such Person’s and its
Subsidiaries’ Servicing Rights on that day;

 

 

 

plus

(iii)       the then unpaid principal amount of all Qualified Subordinated Debt
of such Person and its Subsidiaries;

 

 

 

minus

(iv)       the book value of Mortgage Loans held by such Person and its
Subsidiaries for investment purposes net of their reserves against Mortgage Loan
investment losses on that day;

 

 

 

plus

(v)        the lesser of (x) the amount subtracted pursuant to clause (iv)
immediately above and (y) fifty percent (50%) of the sum of the Outstanding
Principal Balances of Mortgage Loans then held by such Person and its
Subsidiaries for investment purposes;

 

2

--------------------------------------------------------------------------------

 

minus

(vi)       the book value of REO Property held by such Person and its
Subsidiaries net of their reserves against REO Property losses on that day;

 

 

plus

(v)        the lesser of (x) the amount subtracted pursuant to clause
(vi) immediately above and (y) fifty percent (50%) of the book value of REO
Property held by such Person and its Subsidiaries net of their reserves against
REO Property losses on that day;

 

 

minus

(vii)      fifty percent (50%) of the book value of other illiquid investments
held by such Person and its Subsidiaries net of their reserves against other
illiquid investments on that day.

 

“Affiliate” means, as to a specified Person, any other Person (a) that directly
or indirectly through one or more intermediaries controls, is controlled by or
is under common control with the specified Person; (b) that is a director,
manager, trustee, general partner or executive officer of the specified Person
or serves in a similar capacity in respect of the specified Person; (c) that,
directly or indirectly through one or more intermediaries, is the beneficial
owner of ten percent (10%) or more of any class of equity securities of the
specified Person; or (d) of which the specified Person is directly or indirectly
the owner of ten percent (10%) or more of any class of equity securities (or
equivalent equity interests).

 

“Aged Loan” means, on any day, a Purchased Mortgage Loan that is not a Jumbo
Loan whose Purchase Date was more than forty-five (45) days but not more than
sixty (60) days before that day.

 

“Agency” (and, with respect to two or more of the following, “Agencies”) means
FHA, Fannie Mae, Ginnie Mae, Freddie Mac, RHS or VA.

 

“Agency Guidelines” means those requirements, standards and procedures which may
be adopted by the Agencies from time to time with respect to their purchase or
guaranty of residential mortgage loans, which requirements govern the Agencies’
willingness to purchase or guaranty such loans.

 

“Aggregate Purchase Price” means, at any time, the sum of the Purchase Prices
paid by Buyer for all Purchased Mortgage Loans that are subject to Transactions
outstanding at that time.

 

“Agreement” means this Master Repurchase Agreement between Sellers and Buyer
(including any supplemental terms or conditions contained in the Exhibits hereto
and the Side Letter), as amended, restated, supplemented or otherwise modified
from time to time.

 

“Approved Takeout Investor” means any of (i) Fannie Mae, Freddie Mac and any of
the other entities listed on Schedule I, as such schedule is updated from time
to time by Buyer, in its sole discretion, with written notice to any Seller;
(ii) CL or (iii) an entity that is acceptable to Buyer, as indicated by Buyer to
any Seller in writing; provided, however, that, notwithstanding the foregoing,
any entity described in the foregoing clauses (i) through (iii) that fails to
perform any of its obligations under its Takeout Agreement shall cease to be an
Approved Takeout Investor upon such failure.

 

3

--------------------------------------------------------------------------------

 

“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 effect the
transfer of the Mortgage to the party indicated therein.

 

“Authorized Officer” means, with respect to a Seller, any officer or employee of
such Seller who prepares for sale or delivers Mortgage Loans for sale to Buyer.

 

“Authorized Signers” means, with respect to a Seller, each of the officers of
such Seller listed on Schedule II hereto or otherwise designated by the officer
of such Seller who is such Seller’s administrator with respect to the MWF Web,
as such schedule may be updated by such Seller from time to time with prior
written notice to Buyer.

 

“Available Facilities” means, at any time, the aggregate amount of used and
unused available warehouse lines of credit, purchase facilities, repurchase
facilities and off-balance sheet funding facilities (whether committed or
uncommitted) available to Sellers in the aggregate at such time.

 

“Bailee Letter” means a bailee letter in the form attached hereto as Exhibit J
or such other form as is satisfactory to Buyer in its sole discretion.

 

“Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C.
Paragraph 101 et seq.), as amended by the Bankruptcy Reform Act and as further
amended from time to time, or any successor statute.

 

“Bankruptcy Reform Act” means the Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005, effective as of October 17, 2005.

 

“Blanket Bond Required Endorsement” means, as to any Seller, endorsement of
Seller’s mortgage banker’s blanket bond insurance policy to (i) provide that for
any loss affecting Buyer’s interest, Buyer will be named on the loss payable
draft as its interest may appear and (ii) provide Buyer access to coverage under
the theft of secondary market institution’s money or collateral clause of
policy.

 

“Business Day” means a day other than a Saturday or Sunday when (i) banks in
Dallas, Texas, Houston, Texas and New York, New York are generally open for
commercial banking business and (ii) federal funds wire transfers can be made.

 

“Cash Equivalents” means any of the following: (a) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within three (3) months or less after the
date of the applicable financial statement reporting such amounts; and
(b) certificates of deposit, time deposits or Eurodollar time deposits having
maturities of three (3) months or less after the date of the applicable
financial statement reporting such amounts, or overnight bank deposits, issued
by any commercial bank organized under the laws of the United States or any
state thereof having combined capital and surplus of not less than $500,000,000
and rated at least A- by S&P or A3 by Moody’s.

 

4

--------------------------------------------------------------------------------

 

“Cash Pledge Account” means, with respect to Sellers jointly and severally, the
blocked Seller’s account (under the sole dominion and control of Buyer) with JPM
Chase styled as follows:

 

JPMorgan Chase Bank, N.A. Secured Party

Cash Pledge Account for Ryland Mortgage Company

 

“Change in Control” means the acquisition by any Person, or two or more Persons
acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended) of outstanding shares of voting stock (or equivalent equity
interests) of any Seller at any time if after giving effect to such acquisition
such Person or Persons owns fifty percent (50%) or more of the outstanding
voting stock (or equivalent equity interests) of such Seller.

 

“Change in Requirement of Law” means (a) the adoption of a Requirement of Law
after the date of this Agreement, (b) any change in a Requirement of Law or
(c) compliance by Buyer (or by any applicable lending office of Buyer) with any
Requirement of Law made or issued after the date of this Agreement; provided
that, notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall
Street Reform and Consumer Protection Act and all rules, regulations, guidelines
and directives thereunder, issued in connection therewith or in implementation
thereof, and (ii) all requests, rules, guidelines or directives promulgated by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States or
foreign regulatory authorities, shall in each case be deemed to be a Change in
Requirement of Law regardless of the date enacted, adopted, issued or
implemented.

 

“CL” means JPM Chase, operating through either its unincorporated division
commonly known as its Correspondent Lending group or its unincorporated division
commonly known as Chase Rural Housing.

 

“CL Ineligible Loan” means either (i) a Conventional Conforming Loan or (ii) a
Government Loan that is not an RHS Loan, that is not eligible for purchase by
CL.  Item (hhh) on Exhibit B is not applicable to CL Ineligible Loans.

 

“CL Jumbo Loan” means a Jumbo Loan that is covered by a best efforts Takeout
Commitment issued by CL.

 

“CL Loan” means an Eligible Mortgage Loan for which CL is the Approved Takeout
Investor.

 

“Collection Account” means, with respect to Sellers jointly and severally, the
blocked Seller’s account (under the sole dominion and control of Buyer) with JPM
Chase styled as follows:

 

5

--------------------------------------------------------------------------------

 

JPMorgan Chase Bank, N.A. Secured Party

Collection Account for Ryland Mortgage Company

 

“Completed Repurchase Advice” means with respect to any Purchased Mortgage Loan,
receipt by Buyer of:

 

(i)         funds into the Funding Account in an amount equal to or greater than
(x) the Repurchase Price of such Purchased Mortgage Loan minus (y) any unpaid
Price Differential to be paid by Sellers on the next Remittance Date;

 

(ii)        in the event that the funds described in clause (i) above are less
than an amount equal to (x) the Repurchase Price of such Purchased Mortgage Loan
minus (y) any unpaid Price Differential to be paid by Sellers on the next
Remittance Date, confirmation that funds in an amount equal to such deficiency
are on deposit in the Operating Account and available for payment to Buyer after
taking into account all other payments required to be made by Sellers out of
funds on deposit in the Operating Account;

 

(iii)       confirmation, in a form acceptable to Buyer in its sole discretion,
from the related Approved Takeout Investor, if applicable, that the funds
received in the Funding Account are for the purchase of that Purchased Mortgage
Loan; and

 

(iv)       an updated Loan Purchase Detail from a Seller showing the removal of
that Purchased Mortgage Loan from the list of Purchased Mortgage Loans subject
to the outstanding Transactions under this Agreement.

 

“Compliance Certificate” means a compliance certificate substantially in the
form of Exhibit C, completed, executed and submitted by the vice president
controller or treasurer of a Seller.

 

“Confirmation” means a confirmation substantially in the form attached hereto as
Exhibit A and delivered pursuant to Paragraph 3.

 

“Conventional Conforming Loan” means a Mortgage Loan that conforms to Agency
Guidelines.  The term Conventional Conforming Loan shall not include a Mortgage
Loan that is a Government Loan.

 

“Cooperative Corporation” means with respect to any Cooperative Loan, the
cooperative apartment corporation that holds legal title to the related
Cooperative Project and grants occupancy rights to units therein to stockholders
through Proprietary Leases or similar arrangements.

 

“Cooperative Loan” means a mortgage loan that is secured by a Lien on and
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.

 

6

--------------------------------------------------------------------------------

 

“Cooperative Project” means, with respect to any Cooperative Loan, all real
property and improvements thereto and rights therein and thereto owned by a
Cooperative Corporation including the land, separate dwelling units and all
common elements, all of which shall be located in any state of the United States
or the District of Columbia.

 

“Cooperative Shares” means, with respect to any Cooperative Loan, the shares of
stock issued by a Cooperative Corporation and allocated to a Cooperative Unit
and represented by a stock certificate.

 

“Cooperative Unit” means, with respect to a Cooperative Loan, a specific unit in
a Cooperative Project.

 

“Credit File” means, with respect to a Mortgage Loan, all of the paper and
documents required to be maintained pursuant to the related Takeout Commitment
or the related Hedging Arrangement, as applicable, and all other papers and
records of whatever kind or description, whether developed or created by a
Seller or others, required to Originate, document or service the Mortgage Loan.

 

“Current Assets” means, with respect to any Person at any date, those assets set
forth in the consolidated balance sheet of the Person, prepared in accordance
with GAAP, as current assets, defined as those assets that are now cash or that
by their terms or disposition will be converted to cash within one year from the
date of calculation.

 

“Current Liabilities” means, with respect to any Person at any date, those
liabilities set forth in the consolidated balance sheet of the Person, prepared
in accordance with GAAP, as current liabilities, defined as those liabilities
due upon demand or within one year from the date of calculation.

 

“Current Ratio” means, with respect to any Person at any date, the sum of the
amounts set forth in the consolidated balance sheet of the Person, prepared in
accordance with GAAP, as Current Assets divided by the sum of the amounts set
forth in such consolidated balance sheet as Current Liabilities.

 

“Debt” means, with respect to any Person, at any date (a) all indebtedness or
other obligations of such Person (and, if applicable, that Person’s
Subsidiaries, on a consolidated basis) which, in accordance with GAAP, would be
included in determining total liabilities as shown on the liabilities side of a
balance sheet of such Person at such date; and (b) all indebtedness or other
obligations of such Person (and, if applicable, that Person’s Subsidiaries, on a
consolidated basis) for borrowed money or for the deferred purchase price of
property or services; provided, however, that, for purposes of this Agreement,
there shall be excluded from Debt at any date loan loss reserves, deferred taxes
arising from capitalized excess service fees, operating leases and Qualified
Subordinated Debt.

 

“Default” means any condition or event that, with the giving of notice or lapse
of time or both, would constitute an Event of Default.

 

“Defaulted Loan” means a Mortgage Loan (i) as to which any payment, escrow
payment, or part thereof, remains unpaid for thirty (30) days or more from the
original due date

 

7

--------------------------------------------------------------------------------

 

for such payment (whether or not the applicable Seller has allowed any grace
period or extended the due date thereof by any means), (ii) as to which another
material default has occurred and is continuing, including the commencement of
foreclosure proceedings; (iii) as to which an Act of Insolvency has occurred
with respect to the Mortgagor thereof or any cosigner, guarantor, endorser,
surety, assumptor or grantor with respect thereto, or (iv) which, consistent
with the applicable Seller’s collection policies, has been or should be written
off as uncollectible in whole or in part.

 

“Defective Mortgage Loan” means a Mortgage Loan that is not an Eligible Mortgage
Loan.

 

“Early Repurchase Date” has the meaning set forth in Paragraph 3(i)(ii).

 

“Electronic Tracking Agreement” means the Electronic Tracking Agreement
substantially dated the date hereof, by and among, Buyer, Sellers, MERS and
MERSCORP, Inc. (the “Electronic Agent”), as amended, supplemented or otherwise
modified from time to time.

 

“Eligible Mortgage Loan” means, on any date of determination, a Mortgage Loan:

 

(i)         for which each of the representations and warranties set forth on
Exhibit B are true and correct as of such date of determination;

 

(ii)        which is either a Conventional Conforming Loan, a Government Loan or
a Jumbo Loan;

 

(iii)       which was Originated within thirty (30) days prior to the Purchase
Date for the initial Transaction to which that Mortgage Loan was subject;

 

(iv)       which is eligible for sale to an Approved Takeout Investor under its
Takeout Guidelines;

 

(v)        which has a scheduled Repurchase Date not later than the following
number of days after the Purchase Date for the initial Transaction to which that
Mortgage Loan was subject:

 

Type of Mortgage Loan

Number of days

Aged Loan

60

Conventional Conforming Loan that is not an Aged Loan

45

Government Loan that is not an Aged Loan

45

Jumbo Loan

30

 

(vi)       which does not have a Loan-to-Value Ratio in excess of (i) 105% in
the case of a Government Loan other than an RHS Loan, (ii) 103.627% in the case
of an RHS Loan or (iii) 95% in the case of a Conventional Conforming Loan (or,
in each case, such other percentage determined by Buyer in its sole discretion
and specified in a written notice from Buyer to any Seller from time to time)
and, if its Loan-to-Value Ratio

 

8

--------------------------------------------------------------------------------

 

is in excess of 80% (or such other percentage as may be determined by Buyer in
its sole discretion and specified in a written notice from Buyer to any Seller
from time to time), it has private mortgage insurance in an amount required by
the applicable Agency Guidelines, unless pursuant to Agency Guidelines in
existence at the time such Mortgage Loan was originated, private mortgage
insurance is not required for such Mortgage Loan;

 

(vii)      which, if a Government Loan, the related Mortgagor has a FICO Score
of at least 620 (or such other minimum FICO Score as may be determined by Buyer
in its sole discretion and specified in a written notice from Buyer to any
Seller from time to time);

 

(viii)      which, if a Conventional Conforming Loan, the related Mortgagor has
a FICO Score of at least 620 (or such other minimum FICO Score as may be
determined by Buyer in its sole discretion and specified in a written notice
from Buyer to any Seller from time to time);

 

(ix)       for which a complete Loan File has been delivered to Buyer, or, in
the case of a Wet Loan, for which the items listed in items (i) through (iv) of
the definition of Loan File have been delivered to Buyer;

 

(x)        for which, if a Wet Loan on the applicable Purchase Date, all
applicable items listed in items (v) through (xii) of the definition of Loan
File have been delivered to Buyer at or prior to its Wet Funding Deadline;

 

(xi)       which, if a Wet Loan, its Purchase Price, when added to the sum of
the Purchase Prices of all other Wet Loans that are then subject to Transactions
is less than or equal to (i) 60% of the Facility Amount on any day that is one
of the first five (5) or the last five (5) Business Days of any calendar month
and (ii) 40% of the Facility Amount on any day other than a day contemplated by
clause (i) above;

 

(xii)      for which, if not a CL Loan, Buyer has approved the underwriting, the
Takeout Commitment or Hedging Arrangement, as applicable, the appraisal and
other related information;

 

(xiii)      which, unless subject to a Hedging Arrangement, is not (a) subject
to a Takeout Agreement with respect to which the applicable Seller is in
default, or (b) rejected or excluded for any reason (other than default by
Buyer) from the related Takeout Commitment by the Approved Takeout Investor;

 

(xiv)     which, unless subject to a Takeout Commitment, is not (a) subject to a
Hedging Arrangement with respect to which the Seller is in default, or
(b) rejected or excluded for any reason (other than default by Buyer) from the
related Hedging Arrangement by the Person with whom such Hedging Arrangement is
maintained;

 

(xv)      which is not a Mortgage Loan that a Seller has failed to repurchase or
cause to be repurchased when required by the terms of this Agreement;

 

9

--------------------------------------------------------------------------------

 

(xvi)     for which, unless subject to a Hedging Arrangement, the Takeout
Commitment, if applicable, has not expired or been terminated or cancelled by
the Approved Takeout Investor;

 

(xvii)     for which, unless subject to a Takeout Commitment, the related
Hedging Arrangement has not expired or been terminated or cancelled by the
Person with whom such Hedging Arrangement is maintained;

 

(xviii)    for which the related Mortgage Note has not been out of the
possession of Buyer pursuant to a Trust Release Letter for more than five
(5) Business Days after the date of that Trust Release Letter;

 

(xix)     for which neither the related Mortgage Note nor the Mortgage has been
out of the possession of Buyer pursuant to a Bailee Letter for more than the
number of days specified in such Bailee Letter;

 

(xx)      which is not a Defaulted Loan;

 

(xxi)     which, if a Jumbo Loan, its Purchase Price, when added to the sum of
the Purchase Prices of all other Jumbo Loans that are then subject to
Transactions, is less than or equal to twenty percent (20%) (or such other
percentage as may be determined by Buyer in its sole discretion and specified in
a written notice from Buyer to any Seller from time to time) of the Facility
Amount, provided that the aggregate Purchase Price of OATI Jumbo Loans subject
to Transactions shall never exceed $7,500,000 at any one time;

 

(xxii)     which, if an RHS Loan, its Purchase Price, when added to the sum of
the Purchase Prices of all other RHS Loans that are then subject to
Transactions, is less than or equal to twenty percent (20%) (or such other
percentage as may be determined by Buyer in its sole discretion and specified in
a written notice from Buyer to any Seller from time to time) of the Facility
Amount;

 

(xxiii)    which, if a CL Ineligible Loan, its Purchase Price, when added to the
sum of the Purchase Prices of all other CL Ineligible Loans that are then
subject to Transactions, is less than or equal to five percent (5%) (or such
other percentage as may be determined by Buyer in its sole discretion and
specified in a written notice from Buyer to any Seller from time to time) of the
Facility Amount;

 

(xxiv)    which, if an Aged Loan, its Purchase Price, when added to the sum of
the Purchase Prices of all Aged Loans that are then subject to Transactions, is
less than or equal to five percent (5%) (or such other percentage as may be
determined by Buyer in its sole discretion and specified in a written notice
from Buyer to Seller from time to time) of the Facility Amount;

 

(xxv)    which, if an Investor Loan, its Purchase Price, when added to the sum
of the Purchase Prices of all Investor Loans and Second Home Loans that are then
subject to Transactions, is less than or equal to ten percent (10%) (or such
other percentage as may

 

10

--------------------------------------------------------------------------------

 

be determined by Buyer in its sole discretion and specified in a written notice
from Buyer to Seller from time to time) of the Facility Amount; and

 

(xxvi)    which, if a Second Home Loan, its Purchase Price, when added to the
sum of the Purchase Prices of all Second Home Loans and Investor Loans that are
then subject to Transactions, is less than or equal to ten percent (10%) (or
such other percentage as may be determined by Buyer in its sole discretion and
specified in a written notice from Buyer to Seller from time to time) of the
Facility Amount.

 

“Equivalent Mortgage Loan” means a Mortgage Loan for which all of the following
characteristics are substantially the same as those of the Purchased Mortgage
Loan for which such Mortgage Loan substitutes:  (i) its terms; (ii) its
acceptability for purchase by an Approved Takeout Investor by such Approved
Investor’s agreed purchase date for such Purchased Mortgage Loan and (iii) the
purchase price that such Approved Takeout Investor will pay Seller for such
Purchased Mortgage Loan.

 

“ERISA” means the Employee Retirement Income Security Act of 1974 and all
rules and regulations promulgated thereunder, as amended from time to time and
any successor statute, rules and regulations.

 

“Event of Default” has the meaning set forth in Paragraph 12.

 

“Facility Amount” has the meaning set forth in the Side Letter.

 

“Fannie Mae” means the Federal National Mortgage Association or any successor.

 

“FDIC” means the Federal Deposit Insurance Corporation or any successor.

 

“FHA” means the Federal Housing Administration, which is a sub-division of HUD,
or any successor.  The term “FHA” is used interchangeably in this Agreement with
the term “HUD”.

 

“FICO Score” means, with respect to any Mortgagor, the statistical credit score
prepared by Fair Isaac Corporation, Experian Information Solutions, Inc.,
TransUnion LLC or such other Person as may be approved in writing by Buyer in
its sole discretion.

 

“Financial Institution” means JPM Chase in its capacity of the bank at which the
Accounts are held.

 

“Freddie Mac” means the Federal Home Loan Mortgage Corporation or any successor.

 

“Funding Account” means, with respect to Sellers jointly and severally, the
blocked Seller’s account (under the sole dominion and control of Buyer) with JPM
Chase styled as follows:

 

JPMorgan Chase Bank, N.A. Secured Party

Funding Account for Ryland Mortgage Company

 

11

--------------------------------------------------------------------------------

 

“GAAP” means generally accepted accounting principles consistently applied in
the United States.

 

“Ginnie Mae” means the Government National Mortgage Association or any
successor.

 

“GLB Act” means the Gramm-Leach Bliley Act of 1999 (Public Law 106-102, 113 Stat
1338), as it may be amended from time to time.

 

“Government Loan” means a Mortgage Loan which is insured by the FHA or
guaranteed by the Department of Veterans Affairs or RHS.  The term Government
Loan shall not include any Mortgage Loan which is a Conventional Conforming
Loan.

 

“Governmental Authority” means and includes the government of the United States
of America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, central
bank or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government,
any governmental or quasi-governmental department, commission, board, bureau or
instrumentality, any court, tribunal or arbitration panel, and, with respect to
any Person, any private body having regulatory jurisdiction over any Person or
its business or assets (including any insurance company or underwriter through
whom that Person has obtained insurance coverage).

 

“Hedging Arrangement” means any forward sales contract, forward trade contract,
interest rate swap agreement, interest rate cap agreement, or other contract
pursuant to which a Seller has protected itself from the consequences of a loss
in the value of a Mortgage Loan or its portfolio of Mortgage Loans because of
changes in interest rates or in the market value of mortgage loan assets.

 

“HUD” means the U.S. Department of Housing and Urban Development or any
successor department or agency.

 

“Income” means, with respect to any Purchased Mortgage Loan, (i) all payments of
principal, payments of interest, proceeds of Takeout Commitments, proceeds of
Hedging Arrangements, cash collections, dividends, sale or insurance proceeds
and other cash proceeds received relating to the Purchased Mortgage Loan and
other Mortgage Assets, (ii) any other payments or proceeds received in relation
to the Purchased Mortgage Loan and other Mortgage Assets (including, without
limitation, any liquidation or foreclosure proceeds with respect to the
Purchased Mortgage Loan and payments under any guarantees relating to the
Purchased Mortgage Loan), (iii) all escrow withholds and escrow payments for
Property Charges and (iv) all other “proceeds” as defined in Section 9-102(64)
of the UCC.

 

“Indemnified Party” has the meaning set forth in Paragraph 16(b).

 

“Insured Closing Letter” means a letter of indemnification from a title insurer
addressed to a Seller and, for each Wet Loan, Buyer, with coverage that is
customarily acceptable to Persons engaged in the Origination of mortgage loans,
identifying the Settlement Agent covered thereby and indemnifying such Seller
and/or Buyer against losses incurred due to malfeasance or fraud by the
Settlement Agent or the failure of the Settlement Agent to follow the specific

 

12

--------------------------------------------------------------------------------

 

closing instructions specified by Buyer in the escrow letter with respect to the
closing of the Mortgage Loan.  The Insured Closing Letter shall be either with
respect to the individual Mortgage Loan being purchased pursuant hereto or a
blanket Insured Closing Letter which covers closings conducted by the Settlement
Agent in the jurisdiction in which the closing of such Mortgage Loan takes
place.

 

“Interim Servicing Term” has the meaning set forth in Paragraph 13(a).

 

“Investor Loan” means a Conventional Conforming Loan secured by a single family
residence that is not occupied by the Mortgagor that conforms to all CL mortgage
loan guidelines.

 

“IRC” means the Internal Revenue Code of 1986, as amended from time to time and
any successor statute.

 

“JPM Chase” means JPMorgan Chase Bank, N.A., a national banking association, in
its individual capacity, and its successors and assigns.

 

“Jumbo Loan” means an Eligible Mortgage Loan in an original principal amount not
exceeding $1,000,000 and which conforms to all CL jumbo mortgage loan
guidelines.

 

“Last Endorsee” means with respect to each Mortgage Loan, the last Person to
whom such Mortgage Loan was assigned or the related Mortgage Note was endorsed,
as applicable.

 

“Leverage Ratio” means that ratio of a Person’s Debt (including off balance
sheet financings) to its Adjusted Tangible Net Worth.

 

“Lien” means any security interest, mortgage, deed of trust, charge, pledge,
hypothecation, assignment, deposit arrangement, equity, encumbrance, lien
(statutory or other), preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing statement under the UCC (other than any such financing statement
filed for informational purposes only) or comparable law of any jurisdiction to
evidence any of the foregoing.

 

“Liquidity” means, at any time, with respect to Sellers in the aggregate,
Sellers’ unencumbered and unrestricted cash and Cash Equivalents (including the
balance on deposit in the Cash Pledge Account, but excluding any restricted cash
or cash pledged to third parties) at such time plus, with respect to any
Purchased Mortgage Loans then subject to outstanding Transactions, the excess,
if any, of (x) the aggregate maximum Purchase Price available to Sellers
pursuant to the terms hereof for such Purchased Mortgage Loans over (y) the
Aggregate Purchase Price at such time.

 

“Litigation” means, as to any Person, any action, lawsuit, investigation, claim,
proceeding, judgment, order, decree or resolution pending or, to such Person’s
knowledge, threatened against or affecting such Person or the business,
operations, properties or assets of such Person before, or by, any Governmental
Authority.

 

13

--------------------------------------------------------------------------------

 

“Loan File” means, with respect to each Mortgage Loan, the following documents:

 

(i)         if a Wet Loan, a fully executed Insured Closing Letter from the
related Settlement Agent involved in the Wet Funding of that Mortgage Loan;

 

(ii)        if a Government Loan, a valid eligibility certification from VA, FHA
or RHS, as applicable, or such other documentation as may be required by Buyer
in its sole discretion and specified in a written notice from Buyer to any
Seller from time to time, with respect to such Purchased Mortgage Loan;

 

(iii)       if a Conventional Conforming Loan, a valid eligibility certification
from Fannie Mae or Freddie Mac, as applicable, or such other documentation as
may be required by Buyer in its sole discretion and specified in a written
notice from Buyer to any Seller from time to time, with respect to such Mortgage
Loan;

 

(iv)       evidence satisfactory to Buyer, in its sole discretion, that such
Mortgage Loan is subject to a valid and binding Takeout Commitment or Hedging
Arrangement, which may include a copy of the related Takeout Agreement or
Hedging Arrangement and such other documents required by Buyer in its sole
discretion;

 

(v)        the original Mortgage Note, endorsed in blank without recourse by the
Last Endorsee thereof, together with all intervening endorsements showing an
unbroken chain of endorsement from the originator of such Mortgage Loan to the
Last Endorsee, or, if the original has been lost, a lost note affidavit in form
and substance acceptable to Buyer and executed by the Last Endorsee;

 

(vi)       the original recorded Mortgage, or, if the original has been lost or
if such Mortgage is in the process of being recorded, a copy of the original
Mortgage together with an Officer’s Certificate (which may be included on the
face of such copy) certifying (x) that such copy is a true, correct and complete
copy and (y) that such Mortgage has been transmitted to the appropriate
recording office for recordation;

 

(vii)      the originals of all assumption, modification, consolidation,
substitution and extension agreements, if any, with evidence of recordation
thereon, or copies of such original agreements together with an Officer’s
Certificate certifying (x) that such copy is a true, correct and complete copy
and (y) that such agreements have been transmitted to the appropriate recording
office for recordation;

 

(viii)      all guarantees, supporting obligations and collateral, if any,
received with respect to, or supporting repayment of, such Purchased Mortgage
Loan;

 

(ix)       a copy of (1) the DU/DO/LP approval cover page or, (2) for a CL Jumbo
Loan, a copy of the related CHL Correspondent Channel Approval Memorandum or,
(3) for an RHS Loan, a copy of the related Conditional Commitment for Single
Family Housing Loan Guarantee 1980-18 or, (4) for an OATI Jumbo Loan, evidence
of underwriting approval by the related Approved Takeout Investor or, (5) for a
Second Home Loan, a copy of the related valid eligibility certificate issued by
an Agency;

 

14

--------------------------------------------------------------------------------

 

(x)        the original, or a copy (together with an Officer’s Certificate,
which may be included on the face of such copy, certifying that such copy is a
true, correct and complete copy) of the policy of lender’s title insurance
described in item (q) of Exhibit B or of a commitment to issue such title
insurance;

 

(xi)       evidence satisfactory to Buyer (i) that such Mortgage Loan is a MERS
Designated Mortgage Loan (which, except for MOM Loans, shall be a copy of (an)
Assignment(s) of Mortgage assigning the Mortgage from the original named
mortgagee to MERS, either showing the relevant recording information or
accompanied by an Officer’s Certificate, which may be included on the face of
such copy, certifying that such copy is a true, correct and complete copy and
that such Assignment of Mortgage has been transmitted to the appropriate
recording office for recordation) and (ii) that Buyer is designated as “Interim
Funder” on the MERS System with respect to such Mortgage Loan;

 

(xii)      if, at any point in the future, Buyer so designates, by giving at
least ten (10) Business Days written notice to a Seller, that Sellers will, on a
going forward basis, be responsible for giving the same (it being understood and
agreed that unless and until Buyer gives such notice to a Seller, Buyer will be
responsible for giving such notices to Mortgagors and this item will not be
included in the Loan Files), a notice letter in form and substance acceptable to
Buyer in its sole discretion, delivered by a Seller on behalf of Buyer to
Mortgagor setting forth the information regarding Buyer as the “new creditor”
and such other information required by Section 404 of The Helping Families Save
Their Homes Act of 2009 (amending the Truth in Lending Act of 1968 (as
amended)), and acknowledged in writing by Mortgagor unless Buyer has notified
any Seller in writing that such notice is no longer required;

 

(xiii)      if a Cooperative Loan:

 

(A)       the original Cooperative Shares with original Stock Power with a
signature guarantee in form and substance satisfactory to Buyer;

 

(B)       the original Proprietary Lease;

 

(C)       the original Recognition Agreement; and

 

(D)       an acknowledgement copy of the UCC-1 financing statement filed in
connection with the Mortgage related thereto; and

 

(xiv)     such additional documents required by Buyer in its sole discretion
from time to time by written notice to any Seller.

 

“Loan Purchase Detail” means a data tape or schedule of information prepared and
transmitted electronically by a Seller to Buyer in the format and with such
fields of information set forth in Exhibit I regarding the Purchased Mortgage
Loans, as such required format or information fields may be changed from time to
time by Buyer with prior written notice to any Seller.

 

15

--------------------------------------------------------------------------------

 

“Loan-to-Value Ratio” or “LTV” means, for each Mortgage Loan as of the related
Purchase Date, a fraction (expressed as a percentage) having as its numerator
the original principal amount of the Mortgage Note and as its denominator the
lesser of (x) the sales price of the related Mortgaged Property and (y) the
appraised value of the related Mortgaged Property of such Mortgage Loan
indicated in the appraisal obtained in connection with the Origination of such
Mortgage Loan.

 

“Manufactured Home” means a single-family home constructed at a factory and
shipped in one or more sections to a housing site.

 

“Margin Amount” means at any time with respect to any Purchased Mortgage Loan,
the amount equal to (a) the applicable Margin Percentage for that Purchased
Mortgage Loan at that time multiplied by (b) the Market Value for that Purchased
Mortgage Loan at that time.

 

“Margin Deficit” has the meaning specified in Paragraph 4(a).

 

“Margin Percentage” has the meaning set forth in the Side Letter.

 

“Margin Stock” has the meaning assigned to that term in Regulation U of the
Board of Governors of the Federal Reserve System as in effect from time to time.

 

“Market Value” means, at any time with respect to any Purchased Mortgage Loan,
the fair market value of such Purchased Mortgage Loan at such time as determined
by Buyer in its sole discretion.

 

“Material Adverse Effect” means any (i) material adverse effect upon the
validity, performance or enforceability of any Transaction Document,
(ii) material adverse effect upon the properties, business or condition,
financial or otherwise, of any Seller (and their Subsidiaries, on a consolidated
basis), (iii) material adverse effect upon the ability of any Seller to fulfill
its obligations under this Agreement, or (iv) material adverse effect on the
value or salability of the Purchased Mortgage Loans subject to this Agreement,
taken as a whole.

 

“Maximum Facility Ratio” means, at any time with respect to any Person or to
Sellers in the aggregate, the ratio of (a) Available Facilities at such time, to
(b) that Person’s or Sellers’ Adjusted Tangible Net Worth at such time.

 

“MERS” means Mortgage Electronic Registration Systems, Inc. and its successors
and assigns.

 

“MERS Designated Mortgage Loan” means a Mortgage Loan that satisfies the
definition of the term “MERS Designated Mortgage Loan” contained in the
Electronic Tracking Agreement.

 

“MERS® System” has the meaning given that term in the Electronic Tracking
Agreement.

 

“MIN” means the eighteen digit MERS Identification Number permanently assigned
to each MERS Designated Mortgage Loan.

 

16

--------------------------------------------------------------------------------

 

“MOM Loan” means a MERS Designated Mortgage Loan that was registered on the
MERS® System at the time of its Origination and for which MERS appears as the
record mortgagee or beneficiary on the related Mortgage.

 

“Moody’s” means Moody’s Investors Service and any successor.

 

“Mortgage” means a mortgage, deed of trust or other security instrument creating
a Lien on the Mortgaged Property.

 

“Mortgage Assets” has the meaning specified in Paragraph 6.

 

“Mortgage Loan” means a whole mortgage loan or Cooperative Loan which is secured
by a Mortgage on residential real estate, and shall include all Servicing Rights
with respect thereto.

 

“Mortgage Loan Documents” means the Mortgage Note, the Mortgage and all other
documents evidencing, securing, guaranteeing or otherwise related to a Mortgage
Loan.

 

“Mortgage Note” means the original, executed promissory note or other primary
evidence of indebtedness of a Mortgagor on a Mortgage Loan.

 

“Mortgaged Property” means the residential real estate securing the Mortgage
Note, which shall be either (i) in the case of a Mortgage Loan that is not a
Cooperative Loan, a fee simple estate in the real property located in any state
of the United States (including all buildings, improvements and fixtures thereon
and all additions, alterations and replacements made at any time with respect to
the foregoing) purchased with the proceeds of the Mortgage Loan or (ii) in the
case of a Cooperative Loan, the Proprietary Lease and related Cooperative
Shares.

 

“Mortgagor” means the obligor on a Mortgage Note or the grantor or mortgagor on
a Mortgage, as the context requires.

 

“MWF Web” means the website maintained by Buyer and used by Sellers and Buyer to
administer the Transactions, the notices and reporting requirements contemplated
by the Transaction Documents and other related arrangements.

 

“OATI” is an adjective that, when used to modify a type of Mortgage Loan, means
that it both (i) satisfies CL’s underwriting guidelines and (ii) is committed to
be sold to an Approved Takeout Investor other than CL.

 

“Officer’s Certificate” means a certificate signed by a Responsible Officer of
the applicable Seller and delivered to Buyer.

 

“Operating Account” means, with respect to Sellers jointly and severally, the
blocked Seller’s account (under the sole dominion and control of Buyer) with JPM
Chase styled as follows:

 

JPMorgan Chase Bank, N.A. Secured Party

 

17

--------------------------------------------------------------------------------

 

Operating Account for Ryland Mortgage Company

 

“Originate” or “Origination” means a Person’s actions in taking applications
for, underwriting and closing Mortgage Loans.

 

“Origination Date” means the date of the Mortgage Note and the related Mortgage.

 

“Outstanding Principal Balance” of a Mortgage Loan means, at any time, the then
unpaid outstanding principal balance of such Mortgage Loan.

 

“Party” means, with respect to this Agreement and the other Transaction
Documents, any of Buyer and Sellers (collectively, the “Parties”).

 

“Person” means an individual, partnership, corporation (including a business
trust), joint-stock company, limited liability company, trust, unincorporated
association, joint venture, any Governmental Authority or other entity.

 

“Post-Origination Period” means the period of time between a Mortgage Loan’s
Origination Date and its subsequent sale to an Approved Takeout Investor.

 

“Price Differential” means with respect to any Transaction hereunder, for each
month (or portion thereof) during which that Transaction is outstanding, the sum
of the following amount for each day during that month (or portion thereof): the
weighted average of the applicable Pricing Rates for such day multiplied by the
Aggregate Purchase Price on such day divided by 360.  The Price Differential for
each Transaction shall accrue during the period commencing on (and including)
the day on which the Purchase Price is transferred into the Funding Account (or
otherwise paid to Seller) for such Transaction and ending on (but excluding) the
date on which the Repurchase Price is paid.

 

“Pricing Rate” means the per annum percentage rate (or rates) to be applied to
determine the Price Differential, which rate (or rates) shall be determined in
accordance with the Side Letter.

 

“Prime Rate” means the rate of interest per annum announced from time to time by
Buyer as its prime rate.  The Prime Rate is a variable rate and each change in
the Prime Rate is effective from and including the date the change is announced
as being effective.  THE PRIME RATE IS A REFERENCE RATE AND MAY NOT BE BUYER’S
LOWEST RATE.

 

“Privacy Requirements” means (a) Title V of the GLB Act, (b) federal regulations
implementing such act codified at 12 CFR Parts 40, 216, 332 and 573, (c) the
Interagency Guidelines Establishing Standards For Safeguarding Customer
Information and codified at 12 CFR Parts 30, 208, 211, 225, 263, 308, 364, 568
and 570 and (d) any other applicable federal, state and local laws, rules,
regulations and orders relating to the privacy and security of Sellers’ Customer
Information, as such statutes, regulations, guidelines, laws, rules and orders
may be amended from time to time.

 

“Property Charges” means all taxes, fees, assessments, water, sewer and
municipal charges (general or special) and all insurance premiums, leasehold
payments or ground rents.

 

18

--------------------------------------------------------------------------------

 

“Proprietary Lease” means the lease on a Cooperative Unit evidencing the
possessory interest of the owner of the Cooperative Shares in such Cooperative
Unit.

 

“Purchase Date” means the date with respect to each Transaction on which the
Mortgage Loans subject to such Transaction are transferred by a Seller to Buyer
hereunder; provided, however, that in any case, the Purchase Date shall occur no
later than thirty (30) days after the Origination Date of each related Mortgage
Loan;.

 

“Purchase Price” has the meaning set forth in the Side Letter.

 

“Purchased Mortgage Loans” means, with respect to any Transaction, the Mortgage
Loans sold by a Seller to Buyer in such Transaction hereunder (each of which
sales shall be on a servicing released basis), including any Additional
Purchased Mortgage Loans delivered pursuant to Paragraph 4(a) and excluding any
Purchased Mortgage Loans repurchased by a Seller or transferred to a Seller. 
Unless the context shall otherwise require, the term “Purchased Mortgage Loans”
shall refer to all Purchased Mortgage Loans under all Transactions.

 

“Qualified Subordinated Debt” means, with respect to any Person, all unsecured
Debt of such Person, for borrowed money, which is, by its terms or by the terms
of a subordination agreement (which terms shall have been approved by Buyer), in
form and substance satisfactory to Buyer, effectively subordinated in right of
payment to all other present and future obligations and all indebtedness of such
Person, of every kind and character, owed to Buyer and which terms or
subordination agreement, as applicable, include, among other things, standstill
and blockage provisions approved by Buyer, restrictions on amendments without
the consent of Buyer, non-petition provisions and maturity date or dates for any
principal thereof at least 395 days after the date hereof.

 

“Recognition Agreement” means, with respect to a Cooperative Loan, an agreement
among a Cooperative Corporation, a lender and a Mortgagor whereby such parties
(i) acknowledge that such lender may make, or intends to make, such Cooperative
Loan and (ii) make certain agreements with respect to such Cooperative Loan.

 

“Remittance Date” means the 15th day of each month, or if such day is not a
Business Day, the next succeeding Business Day.

 

“REO Property” means a Mortgaged Property acquired by a Seller through
foreclosure or deed in lieu of foreclosure.

 

“Repurchase Date” means, with respect to each Transaction, the date on which a
Seller is required to repurchase from Buyer the Purchased Mortgage Loans which
are subject to that Transaction.  The Repurchase Date shall occur (i) for
Transactions terminable on a date certain, on the date specified in the
Confirmation, (ii) for Transactions to be terminable on demand, the earlier to
occur of (a) the date specified in Buyer’s demand or (b) the date specified in
the Confirmation on which a Seller is required to repurchase the Purchased
Mortgage Loans if no demand is sooner made and (iii) for repurchases of
Defective Mortgage Loans under Paragraph 3(i), the Early Repurchase Date;
provided, however, that in any case, the Repurchase Date with respect to each
Transaction shall occur no later than the earlier of (1) the Termination Date
and (2) (i) for each Jumbo Loan purchase Transaction, the date that is thirty
(30) days after the

 

19

--------------------------------------------------------------------------------

 

Purchase Date of such Transaction, (ii) for each Aged Loan purchase Transaction,
the date that is sixty (60) days after the Purchase Date for such Transaction;
or (iii) for each Transaction of any other type of Purchased Mortgage Loan, the
date that is forty-five (45) days after the Purchase Date of such Transaction.

 

“Repurchase Price” means, for each Purchased Mortgage Loan on any day, the price
for which such Purchased Mortgage Loan is to be resold by Buyer to a Seller upon
termination of the Transaction in which Buyer purchased it (including a
Transaction terminable on demand), that is (x) its Purchase Price minus (y) the
sum of all cash, if any, theretofore paid by Seller into the Operating Account
to cure the portion of any Margin Deficit that Buyer, using any reasonable
method of allocation, attributes to such Purchased Mortgage Loan plus (z) its
accrued and unpaid Price Differential on that day; provided that such accrued
Price Differential may be paid on a day other than the Repurchase Date in
accordance with the terms of this Agreement.

 

“Required Amount” has the meaning set forth in Paragraph 5(b).

 

“Requirement(s) of Law” means any law, treaty, ordinance, decree, requirement,
order, judgment, rule, regulation (or interpretation of any of the foregoing) of
any Governmental Authority having jurisdiction over Buyer, any Seller or any
Approved Takeout Investor, any of their respective Subsidiaries or their
respective properties or any agreement by which any of them is bound.

 

“Rescission” means the Mortgagor’s exercise of any right to rescind the related
Mortgage Note and related documents pursuant to applicable law.

 

“Responsible Officer” means, as to any Person, the chief executive officer or
president or, with respect to financial matters, the vice president controller
or treasurer of such Person; provided, however, that in the event any such
officer is unavailable at any time he or she is required to take any action
hereunder, Responsible Officer means any officer authorized to act on such
officer’s behalf as demonstrated by a certificate of corporate resolution or
similar document and an incumbency certificate.

 

“RHS” means the Rural Housing Service of the Rural Development Agency of the
United States Department of Agriculture or any successor.

 

“RHS Loan” means an Eligible Mortgage Loan guaranteed by RHS that conforms to
all CL rural housing mortgage loan guidelines.

 

“S&P” means Standard and Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and any successor.

 

“Second Home Loan” means a Conventional Conforming Loan secured by a single
family residence that is occupied by the Mortgagor but is not the Mortgagor’s
principal residence and whose underwriting, Takeout Commitment, appraisal and
all related documentation that Buyer elects to review are approved by Buyer.

 

“Sellers’ Accounts” means each of the Funding Account and the Operating Account.

 

20

--------------------------------------------------------------------------------

 

“Seller’s Customer” means any natural person who has applied to a Seller for a
financial product or service, has obtained any financial product or service from
a Seller or has a Mortgage Loan that is serviced or subserviced by a Seller.

 

“Sellers’ Customer Information” means with respect to Sellers, any information
or records in any form (written, electronic or otherwise) containing a Seller’s
Customer’s personal information or identity, including such Seller’s Customer’s
name, address, telephone number, loan number, loan payment history, delinquency
status, insurance carrier or payment information, tax amount or payment
information and the fact that such Seller’s Customer has a relationship with a
Seller.

 

“Servicing File” means with respect to each Mortgage Loan, all documents
relating to the servicing thereof, which may consist of (i) copies of the
documents contained in the related Credit File and Loan File, as applicable,
(ii) the credit documentation relating to the underwriting and closing of such
Mortgage Loan(s), (iii) copies of all related documents, correspondence, notes
and all other materials of any kind, (iv) copies of computer tapes, proof of
insurance coverage, insurance policies, appraisals, other closing documentation,
payment history records, (v) all other information or materials necessary or
required to board such Mortgage Loan onto the applicable servicing system and
(vi) all other related documents required to be delivered pursuant to any of the
Transaction Documents.

 

“Servicing Records” means all servicing records created and/or maintained by a
Seller in its capacity as interim servicer for Buyer with respect to a Purchased
Mortgage Loan, including any and all servicing agreements, files, documents,
records, databases, 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
thereof.

 

“Servicing Rights” means all rights and interests of a Seller or any other
Person, whether contractual, possessory or otherwise to service, administer and
collect Income with respect to Mortgage Loans, and all rights incidental
thereto.

 

“Settlement Agent” means a title company, escrow company or attorney that is
acceptable to Buyer in its sole discretion and that is (i) a division,
subsidiary or licensed agent of a title insurance company reasonably acceptable
to Buyer and (ii) insured against errors and omissions in such amounts and
covering such risks as are at all times customary for its business and with
industry standards, to which the proceeds of any purchase of a Mortgage Loan are
to be wired in accordance with local law and practice in the jurisdiction where
such Mortgage Loan is being Originated.

 

“Shipping Instructions” means the advice in the form of Exhibit D, sent by a
Seller to Buyer electronically through the MWF Web, which instructs Buyer to
send one or more Mortgage Notes and the related Mortgages to an Approved Takeout
Investor.

 

“Side Letter” means the Side Letter dated as of the date hereof, among Buyer and
Sellers, as the same may be amended, restated, supplemented or otherwise
modified from time to time.

 

21

--------------------------------------------------------------------------------

 

“Stock Power” means, with respect to a Cooperative Loan, an assignment of the
stock certificate or an assignment of the Cooperative Shares issued by the
Cooperative Corporation.

 

“Subservicer” has the meaning set forth in Paragraph 13(a)(ii).

 

“Subservicer Instruction Letter” means a letter agreement between a Seller and
each Subservicer substantially in the form of Exhibit H.

 

“Subservicing Agreement” has the meaning set forth in Paragraph 13(a)(ii).

 

“Subsidiary” means any corporation, association or other business entity in
which more than fifty percent (50%) of the total voting power or shares of stock
(or equivalent equity interest) entitled to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more of the other Subsidiaries of that
Person or a combination thereof.

 

“Successor Servicer” has the meaning set forth in Paragraph 13(e).

 

“Takeout Agreement” means an agreement, in form and substance acceptable to
Buyer, between an Approved Takeout Investor and a Seller, pursuant to which such
Approved Takeout Investor has committed to purchase from a Seller certain of the
Purchased Mortgage Loans, as such agreement may be amended, restated,
supplemented or otherwise modified from time to time with the prior written
consent of Buyer.

 

“Takeout Commitment” means, with respect to each Approved Takeout Investor, the
commitment to purchase a Purchased Mortgage Loan from a Seller pursuant to a
Takeout Agreement, and that specifies (a) the type of Purchased Mortgage Loan to
be purchased, (b) a purchase date or purchase deadline date and (c) a purchase
price or the criteria by which the purchase price will be determined.

 

“Takeout Guidelines” means (i) the eligibility requirements established by the
Approved Takeout Investor that must be satisfied by a Mortgage Loan originator
to sell Mortgage Loans to the Approved Takeout Investor and (ii) the
specifications that a Mortgage Loan must meet, and the requirements that it must
satisfy, to qualify for the Approved Takeout Investor’s program of Mortgage Loan
purchases, as such requirements and specifications may be revised, supplemented
or replaced from time to time.

 

“Takeout Value” means, (i) with respect to any Purchased Mortgage Loan subject
to a Takeout Commitment, the price that an Approved Takeout Investor has agreed
to pay the applicable Seller for such Purchased Mortgage Loan, and (ii) with
respect to any Purchased Mortgage Loan subject to a Hedging Arrangement, the
weighted average price of portfolio hedges or forward trades for such Purchased
Mortgage Loans.

 

“Tangible Net Worth” means, with respect to any Person at any date, the sum of
total shareholders’ equity in such Person (including capital stock, additional
paid-in capital and retained earnings, but excluding treasury stock, if any),
each as determined in accordance with GAAP on a consolidated basis; provided
that, for purposes of this definition, there shall be excluded from assets the
following:  the aggregate book value of all intangible assets of such

 

22

--------------------------------------------------------------------------------

 

Person (as determined in accordance with GAAP), including goodwill, trademarks,
trade names, service marks, copyrights, patents, licenses, franchises,
capitalized servicing rights, excess capitalized servicing rights, each to be
determined in accordance with GAAP consistent with those applied in the
preparation of such Person’s financial statements; advances or loans to
shareholders or Affiliates, advances or loans to employees (unless such advances
are against future commissions), unconsolidated investments in Affiliates
(including any unconsolidated Subsidiary), deferred tax assets, assets pledged
to secure any liabilities not included in the Debt of such Person and any other
assets that would be deemed by the Agencies to be unacceptable in calculating
tangible net worth or which have been communicated by Buyer or CL in writing as
being unacceptable in calculating tangible net worth for any subsequent period.

 

“Tax and Insurance Amount” means, at any time, the amount determined by Buyer
from time to time in its sole discretion with written notice to any Seller, as
the amount approximately equal to the escrowed tax and insurance payments made
by the Mortgagors with respect to the Purchased Mortgage Loans, at that time.

 

“Termination Date” means the earliest of (i) that Business Day which any Seller
designates as the Termination Date by written notice to Buyer at least thirty
(30) days prior to such date, (ii) the date of declaration of the Termination
Date pursuant to Paragraph 12(c), and (iii) 364 days after the date hereof, as
such date may be extended by written agreement of Buyer and Sellers.

 

“Third Party Originator” means any Person, other than a permanent employee of a
Seller, who engages in the solicitation, procurement, packaging, processing or
performing of any other Origination function with regard to a Mortgage Loan.

 

“TPO Loan” means a Mortgage Loan which has been solicited, procured, packaged,
processed or otherwise Originated by a Third Party Originator.

 

“Transaction” has the meaning set forth in Paragraph 1 of this Agreement.

 

“Transaction Documents” means this Agreement (including all exhibits and
schedules attached hereto), each Confirmation, each Bailee Letter, each Trust
Release Letter, the Side Letter, the Electronic Tracking Agreement, each Takeout
Agreement, each Takeout Commitment, each Insured Closing Letter and each deposit
account agreement, other agreement, document or instrument executed or delivered
in connection therewith, in each case as amended, restated, supplemented or
otherwise modified from time to time.

 

“Trust Release Letter” means a letter in substantially the form of Exhibit L,
appropriately completed and authenticated by a Seller, or such other form as may
be approved by Buyer in writing in its sole discretion.

 

“UCC” means the Uniform Commercial Code, as amended from time to time, as in
effect in the relevant jurisdiction.

 

“VA” means the U.S. Department of Veterans Affairs or any successor department
or agency.

 

23

--------------------------------------------------------------------------------

 

“Wet Funding” means the purchase of a Mortgage Loan that is Originated by a
Seller on the Purchase Date under escrow arrangements satisfactory to Buyer
pursuant to which a Seller is permitted to use the Purchase Price proceeds to
close the Mortgage Loan prior to Buyer’s receipt of the complete Loan File.

 

“Wet Funding Deadline” means, with respect to any Wet Loan, the fifth (5th)
Business Day after the Origination Date for such Wet Loan, or such later
Business Day as Buyer, in its sole discretion, may specify from time to time.

 

“Wet Loan” means a Mortgage Loan for which the completed Loan File was not
delivered to Buyer prior to funding of the related Purchase Price.

 

(b)        Interpretation.  Headings are for convenience only and do not affect
interpretation.  The following rules of this Paragraph 2(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.  Any capitalized term used in
the Side Letter and used, but not defined differently, in this Agreement has the
same meaning here as there.  A reference in this Agreement to a Paragraph,
subparagraph, Exhibit or Schedule is, unless otherwise specified, a reference to
a Paragraph or subparagraph of, or an Exhibit or Schedule to, this Agreement. 
“Indorse” and correlative terms used in the Uniform Commercial Code may be
spelled with an initial “e” instead of “i”.  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 supplemented, amended, novated, restated or
replaced, except to the extent prohibited by any Transaction Document.  A
reference to legislation or to a provision of legislation includes a
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 or electronic transmission and any other means of
reproducing words in a tangible and permanently visible form.  A reference to
conduct includes an omission, statement or undertaking, whether or not in
writing.  An Event of Default exists until it has been waived in writing by the
appropriate Person or Persons 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” and
correlative terms are not limiting and mean “including without limitation”,
whether or not that phrase is stated.  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”.  If a day for payment or performance
specified by, or determined in accordance with, the provisions of this Agreement
is not a Business Day, then the payment or performance will instead be due on
the Business Day next following that day.  Unless otherwise specifically
provided, all determinations by Buyer shall be in its sole, absolute and
unfettered discretion.  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 each shall be performed
in accordance with its terms.  Except as otherwise expressly provided herein,
all terms of an accounting or financial nature shall be construed in accordance
with GAAP, as in effect from time to time; provided that, if Sellers or Buyer
gives notice to the other of them that it requests an amendment to any provision
hereof to eliminate the effect of any change occurring after the effective date
of this Agreement in GAAP

 

24

--------------------------------------------------------------------------------

 

or in its application on the operation of such provision, whether any such
notice is given before or after such change in GAAP or in its application, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith.  Unless otherwise specifically provided, all accounting calculations
shall be made on a consolidated basis.  Except where otherwise provided in this
Agreement, references herein to “fiscal year” and “fiscal quarter” refer to such
fiscal periods of the Sellers.  Except where otherwise provided in this
Agreement, any determination, statement or certificate by the Buyer or an
authorized officer of the Buyer or any of its Affiliates provided for in this
Agreement that is made in good faith and in the manner provided for in this
Agreement shall be conclusive and binding on 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.  A reference to a document includes an agreement (as so defined) in
writing or a certificate, notice, instrument or document or any information
recorded on a computer drive or other electronic media form.  Where a Seller is
required by this Agreement to provide any document to Buyer, it shall be
provided in writing or printed form unless Buyer requests otherwise, and at
Buyer’s request, the document shall be provided in electronic form or in both
printed and electronic form.  This Agreement and the other Transaction Documents
are the result of negotiations between Buyer and Sellers (and Sellers’ related
parties) and are the product of all parties.  In the interpretation of this
Agreement and the other Transaction Documents, no rule of construction shall
apply to disadvantage one party on the ground that such party originated,
proposed, presented or was involved in the preparation of any particular
provision of this Agreement or of any other Transaction, or of this Agreement or
such other Transaction Document itself.  Except where otherwise expressly
stated, the Buyer may (i) give or withhold, or give conditionally, approvals and
consents, (ii) be satisfied or unsatisfied, and (iii) form opinions and make
determinations, in each case in Buyer’s sole and absolute discretion.  Any
requirement of good faith, reasonableness, discretion or judgment by Buyer shall
not be construed to require Buyer to request or await receipt of information or
documentation not immediately available from or with respect to Seller or any
other Person or the Purchased Mortgage Loans themselves.  Buyer may waive, relax
or strictly enforce any applicable deadline at any time and to such extent as
Buyer shall elect, and no waiver or relaxation of any deadline shall be
applicable to any other instance or application of that deadline or any other
deadline, and no such waiver or relaxation, no matter how often made or given,
shall be evidence of or establish a custom or course of dealing different from
the express provisions and requirements of this Agreement.

 

3.                                    Initiation; Confirmations; Termination;
Sellers as Agents

 

(a)        Initiation.  Any agreement to enter into a Transaction shall be made
in writing at the initiation of a Seller through the MWF Web prior to the
Termination Date.  In the event that a Seller desires to enter into a
Transaction hereunder, a Seller shall deliver to Buyer no earlier than three (3)
Business Days prior to, and no later than 3:30 p.m., Houston, Texas time, on,
the date of the proposed Purchase Date, a request for Buyer to purchase an
amount of Eligible Mortgage Loans on such Purchase Date.  All such purchases
shall be on a servicing released basis and shall include the Servicing Rights
with respect to such Eligible Mortgage Loan.  Such request shall state the
Purchase Price and shall include the Confirmation in form and substance
acceptable to Buyer related to the proposed Transaction.

 

25

--------------------------------------------------------------------------------

 

(b)        Purchase by Buyer.  Subject to the terms of the Side Letter and
satisfaction of the conditions precedent set forth in this Paragraph 3 and in
Paragraph 7, on the requested Purchase Date for each Transaction, Buyer shall
transfer to a Seller — for a newly Originated Eligible Mortgage Loan, by
transferring funds to the designated Settlement Agent — an amount equal to the
Purchase Price for purchase of each Eligible Mortgage Loan that is the subject
of such Transaction on that Purchase Date, less any amounts to be netted against
such Purchase Price.  The transfer of funds to the Settlement Agent to be used
to fund the Mortgage Loan, and if applicable, the netting of amounts for value,
on the Purchase Date for any Transaction will constitute full payment by Buyer
of the Purchase Price for such Mortgage Loan.  Within five (5) days following
the Purchase Date, a Seller shall (i) take such steps as are necessary and
appropriate to effect the transfer to Buyer on the MERS® System of the Purchased
Mortgage Loans so purchased, and to cause Buyer to be designated as “Interim
Funder” on the MERS® System with respect to each such Purchased Mortgage Loan
and (ii) in the case of a Wet Funding, deliver all remaining items of the
related Loan File to Buyer.  Notwithstanding anything to the contrary in this
Agreement or any other Transaction Document, Buyer shall have no obligation to
enter into any Transaction on or after the Termination Date.  A Seller may (i)
initially request less than one hundred percent (100%) of the Purchase Price for
any one or more Purchased Mortgage Loans, (ii) repay part of the Purchase Price
therefor to Buyer or (iii) both, and may subsequently request that Buyer fund
(or re-fund) the balance of the Purchase Price to a Seller, and in either case
so long as no Default or Event of Default has occurred and is continuing, Buyer
may elect (but shall not be obligated) to fund (or re-fund) such balance to a
Seller.

 

(c)        Confirmations.  The Confirmation for each Transaction shall
(i) include the Loan Purchase Detail with respect to the Mortgage Loans subject
to such Transaction, (ii) identify Buyer and Seller and (iii) set forth (A) the
Purchase Date, (B) the Purchase Price, (C) the Repurchase Date, (D) the Pricing
Rate applicable to the Transaction and (E) any additional terms or conditions of
the Transaction mutually agreeable to Buyer and Seller.  In the event of any
conflict between the terms of a Confirmation that has been affirmatively
accepted by Buyer and this Agreement, such accepted Confirmation shall prevail.

 

(d)        Failed Fundings.  Sellers agree to report to Buyer by facsimile
transmission or electronic mail as soon as practicable, but in no event later
than one (1) Business Day after each Purchase Date any Mortgage Loans which
failed to be funded to the related Mortgagor, otherwise failed to close for any
reason or failed to be purchased hereunder.  Sellers further agree to
(i) return, or cause the Settlement Agent to return, to the Funding Account, for
refunding to Buyer the portion of the Purchase Price allocable to such Mortgage
Loans as soon as practicable, but in no event later than one (1) Business Day
after the related Purchase Date, and (ii) indemnify Buyer for any loss, cost or
expense incurred by Buyer as a result of the failure of such Mortgage Loans to
close or to be delivered to Buyer.

 

(e)        Accrual and Payment of Price Differential.  The Price Differential
for each Transaction shall accrue during the period commencing on (and
including) the day when the Purchase Price is transferred into the Funding
Account (or otherwise paid to any Seller) for such Transaction and ending on
(but excluding) the day when the Repurchase Price is paid to Buyer.  Accrued
Price Differential for each Purchased Mortgage Loan shall be due and payable (i)
on each Remittance Date, (ii) when any Event of Default occurs and (iii) on each
Business Day after

 

26

--------------------------------------------------------------------------------

 

any Event of Default occurs and so long as it is continuing, to and including
the day that the Repurchase Price therefor shall be paid to Buyer.

 

(f)         Repurchase Required.  A Seller shall repurchase Purchased Mortgage
Loans from Buyer on or prior to each related scheduled Repurchase Date.  Each
obligation to repurchase exists without regard to any prior or intervening
liquidation or foreclosure with respect to any Purchased Mortgage Loan.  A
Seller is obligated to obtain the Purchased Mortgage Loans from Buyer or its
designee at Sellers’ expense on the related Repurchase Date.  On the Repurchase
Date, termination of the Transaction will be effected by resale by Buyer to a
Seller or its designee of the Purchased Mortgage Loans (or, at Buyer’s election,
Equivalent Mortgage Loans) on a servicing released basis against a Seller’s
submission to Buyer of a Completed Repurchase Advice, all in form and substance
satisfactory to Buyer.  After receipt of the payment of the Repurchase Price
from a Seller, Buyer shall transfer such Purchased Mortgage Loans (or, at
Buyer’s option, Equivalent Mortgage Loans) to such Seller and deliver, or cause
to be delivered, to such Seller all Mortgage Loan Documents previously delivered
to Buyer (or the Mortgage Loan Documents related to such Equivalent Mortgage
Loans, as applicable) and take such steps as are necessary and appropriate to
effect the transfer of the Purchased Mortgage Loan (or such Equivalent Mortgage
Loans, as applicable) to such Seller on the MERS® System.  All such transfers
from Buyer to Seller are and shall be without recourse and without any of the
transfer warranties of UCC §3-417 or other warranty, express or implied. 
Notwithstanding the foregoing or any other provision to the contrary in this
Agreement or any other Transaction Document, Buyer shall not be obligated to
transfer any Purchased Mortgage Loans (or any Equivalent Mortgage Loans) to any
Seller after the termination of this Agreement or Buyer’s liquidation of the
Purchased Mortgage Loans pursuant to Paragraph 12.

 

(g)        Repurchase Advice.  If Buyer receives the Completed Repurchase Advice
with respect to a Purchased Mortgage Loan at or prior to 3:00 p.m. Houston,
Texas time, on any Business Day, then the Repurchase Date will occur with
respect to such Purchased Mortgage Loan on such day.  If Buyer receives the
Completed Repurchase Advice with respect to any Purchased Mortgage Loan after
3:00 p.m. Houston, Texas time, on any Business Day, then the Repurchase Date
will occur with respect to such Purchased Mortgage Loan on the next Business
Day.  In connection with any repurchase pursuant to a Completed Repurchase
Advice, Buyer will debit the Funding Account and the Operating Account, if
applicable, for the amount of the Repurchase Price (less any amount of Price
Differential to be paid on the next Remittance Date).  Without limiting Sellers’
obligations hereunder, at any time after the occurrence and during the
continuance of a Default or an Event of Default, Sellers shall not be permitted
to repurchase less than all of the Purchased Mortgage Loans relating to all
Sellers without the prior written consent of Buyer.

 

(h)        Reliance.  With respect to any Transaction, Buyer may conclusively
rely upon, and shall incur no liability to any Seller in acting upon, any
request or other communication that Buyer reasonably believes to have been given
or made by a Person authorized to enter into a Transaction on behalf of any
Seller.

 

(i)         Defective Mortgage Loans.

 

27

--------------------------------------------------------------------------------

 

(i)         If, after Buyer purchases a Mortgage Loan, Buyer determines or
receives notice (whether from a Seller or otherwise) that a Purchased Mortgage
Loan is (or has become) a Defective Mortgage Loan, Buyer shall promptly notify
any Seller, and a Seller shall repurchase such Purchased Mortgage Loan at the
Repurchase Price on the Early Repurchase Date (as such term is defined below).

 

(ii)        If Sellers become obligated to repurchase a Mortgage Loan pursuant
to subparagraph 3(i)(i) above, Buyer shall promptly give notice of such
repurchase obligation to any Seller and a calculation of the Repurchase Price
therefor.  On the same day a Seller receives such notice (the “Early Repurchase
Date”), Sellers shall repurchase the Defective Mortgage Loan by making a payment
to Buyer of an amount equal to the sum of the Repurchase Price, and shall submit
a Completed Repurchase Advice.  Buyer is authorized to charge any of Sellers’
Accounts for such amount unless the Parties have agreed in writing to a
different method of payment and Sellers have paid such amount by such agreed
method.  If Sellers’ Accounts do not contain sufficient funds to pay in full the
amount due Buyer under this subparagraph, or if the amount due is not paid by
any applicable alternative method of payment previously agreed to by the
Parties, Sellers shall promptly deposit funds in the Operating Account
sufficient to pay such amount due Buyer and notify Buyer of such deposit.  After
receipt of the payment of the Repurchase Price therefor from Sellers, Buyer
shall transfer such Purchased Mortgage Loans (or, at Buyer’s option, Equivalent
Mortgage Loans) to Seller and deliver, or cause to be delivered, to Seller all
documents for the Mortgage Loan previously delivered to Buyer (or the Mortgage
Loan Documents related to such Equivalent Mortgage Loans, as applicable) and
take such steps as are necessary and appropriate to effect the transfer of the
Purchased Mortgage Loan (or such Equivalent Mortgage Loans, as applicable) to
Sellers on the MERS® System.

 

(j)         Sellers as Agents.  Each Seller hereby appoints all other Sellers,
individually and collectively, as its agents for purposes of initiating
Transactions, confirming Transactions, communicating with or receiving
communications from Buyer, satisfying the margin maintenance provisions
hereunder and for all other purposes under this Agreement and the other
Transaction Documents.  Each Seller hereby accepts its appointment as agent for
the other Sellers.  Each Seller acknowledges and agrees that (i) the
appointments and acceptances contemplated hereby are made for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, (ii)
a Seller, acting as agent, can bind any and all Sellers, (iii) Buyers’ actions
with respect to any agent shall bind all Sellers, whether or not Buyer knows the
applicable Seller is acting in an agency capacity and (iv) the agency
appointments contemplated hereby shall not relieve any Seller of its obligations
hereunder and shall not diminish the joint and several liability of all Sellers
hereunder.  For the avoidance of doubt but not by way of limitation, the Parties
agree that a Transaction may be initiated by, and a Confirmation may be
addressed to, any Seller whether or not such Seller is the Party selling the
Purchased Mortgage Loans subject to such Transaction or Confirmation.

 

4.                                    Margin Maintenance

 

(a)        Margin Deficit.  If at any time the sum of the Margin Amounts of all
Purchased Mortgage Loans is less than the Aggregate Purchase Price (a “Margin
Deficit”), then Buyer, by

 

28

--------------------------------------------------------------------------------

 

notice to any Seller (a “Margin Call”), may require Sellers to transfer to Buyer
(x) cash to be applied by Buyer to reduce the Repurchase Prices of Purchased
Mortgage Loans that are then subject to outstanding Transactions or (y) if Buyer
is willing to accept them in lieu of cash, additional Eligible Mortgage Loans
reasonably acceptable to Buyer (“Additional Purchased Mortgage Loans”) or (z) a
combination, to the extent (if any) acceptable to Buyer, of cash and Additional
Purchased Mortgage Loans, so that immediately after such transfer(s) the sum of
(i) such cash, if any, so transferred to Buyer plus (ii) the aggregate of the
Margin Amounts of all Purchased Mortgage Loans for all Transactions outstanding
at that time, including any such Additional Purchased Mortgage Loans, will be at
least equal to the Aggregate Purchase Price at that time.

 

(b)        Margin Maintenance.  If the notice to be given by Buyer to any Seller
under Paragraph 4(a) above is given at or prior to 10:00 a.m. Houston, Texas
time on a Business Day, Sellers shall transfer cash or Additional Purchased
Mortgage Loans to Buyer prior to 5:00 p.m. Houston, Texas time on the date of
such notice, and if such notice is given after 10:00 a.m. Houston, Texas time,
Sellers shall transfer cash or Additional Purchased Mortgage Loans prior to
12:00 p.m. Houston, Texas time on the Business Day following the date of such
notice.  All cash required to be delivered to Buyer pursuant to this Paragraph
4(b) shall be deposited by Sellers into the Operating Account and applied by
Buyer to reduce the Repurchase Prices of such of the Purchased Mortgage Loans
that are then subject to outstanding Transactions as Buyer shall select, with
the amount to be applied to the Repurchase Price of any particular Purchased
Mortgage Loan to be determined by Buyer, using such reasonable method of
allocation as Buyer shall elect in its sole discretion at the time.  Buyer’s
election, in its sole and absolute discretion, not to make a Margin Call at any
time there is a Margin Deficit shall not in any way limit or impair its right to
make a Margin Call at any other time a Margin Deficit exists (or still exists).

 

(c)        Margin Excess.  If on any day after a Seller has transferred cash or
Additional Purchased Mortgage Loans to Buyer pursuant to Paragraph 4(b) above,
the sum of (i) the cash paid to Buyer and (ii) the aggregate of the Margin
Amounts of all Purchased Mortgage Loans for all Transactions at that time,
including any such Additional Purchased Mortgage Loans, exceeds the Aggregate
Purchase Price, then at the request of a Seller, Buyer shall return a portion of
the cash or Additional Purchased Mortgage Loans (or, at Buyer’s election,
Equivalent Mortgage Loans) to a Seller so that the remaining sum of (i) and (ii)
does not exceed the Aggregate Purchase Price; provided that the sum of the cash
plus the value of Additional Purchased Mortgage Loans returned shall be strictly
limited to an amount, after the return of which, no Margin Deficit will exist.

 

(d)        Market Value Determinations.  Buyer may determine the Market Value of
any Purchased Mortgage Loans from time to time and with such frequency and
taking into consideration such factors, as it may elect, in its sole discretion,
including, but not limited to, current market conditions and the fact that the
Purchased Mortgage Loans may be sold or otherwise disposed of under
circumstances where any Seller is in default under this Agreement; provided,
however, that a Market Value of zero shall be assigned to any Purchased Mortgage
Loan that, at the time of determination, is not an Eligible Mortgage Loan. 
Buyer’s determination of Market Value shall be conclusive upon the Parties.

 

29

--------------------------------------------------------------------------------

 

5.                                    Accounts; Income Payments

 

(a)        Accounts.  Prior to the date hereof, Sellers shall jointly and
severally establish or cause to be established each of the Accounts at Financial
Institution.  RMC’s taxpayer identification number will be designated as the
taxpayer identification number for each Account and Sellers shall be jointly and
severally responsible for reporting and paying taxes on any income earned with
respect to the Accounts.  Each Account shall be under the sole dominion and
control of Buyer, and each Seller agrees that (i) no Seller shall have any right
or authority to withdraw or otherwise give any directions with respect to the
Accounts or the disposition of any funds held in the Accounts; provided that any
Seller may cause amounts to be deposited into any Account at any time, and
(ii) Financial Institution may comply with instructions originated by Buyer
directing disposition of the funds in the Accounts without further consent of
any Seller.  Only employees of Buyer shall be signers with respect to the
Accounts.  Pursuant to Paragraph 6, Sellers have pledged, assigned, transferred
and granted a security interest to Buyer in all Accounts in which any Seller has
rights or power to transfer rights and all Accounts in which any Seller later
acquires ownership, other rights or the power to transfer rights.  Sellers and
Buyer hereby agree that Buyer has “control” of the Accounts within the meaning
of Section 9-104 of the UCC.  Any provision hereof to the contrary
notwithstanding and for the avoidance of doubt, Sellers agree and acknowledge
that Buyer is not required to return funds on deposit in an Account to any
Seller if any amounts are owed to Buyer hereunder by any Seller or Sellers in
the aggregate.

 

(b)        Cash Pledge Account.  On or prior to the date hereof, Sellers shall
jointly and severally deposit an amount equal to 1.50% of the Facility Amount
(the “Required Amount”) into the Cash Pledge Account.  Sellers shall cause an
amount not less than the Required Amount to be on deposit in the Cash Pledge
Account at all times.  If on any Remittance Date, the amount on deposit in the
Cash Pledge Account is greater than the Required Amount, provided that no
Default or Event of Default has occurred, upon a Seller’s request such excess
will be disbursed to a Seller on such Remittance Date after application by Buyer
to the payment of any amounts owing by any Seller or Sellers in the aggregate to
Buyer on such date.  At any time upon or after the occurrence of an Event of
Default, Buyer, in its sole discretion, may apply the amounts on deposit in any
Cash Pledge Accounts in accordance with the provisions of Paragraph 5(f).

 

(c)        Funding Account.  The Funding Account shall be used for fundings of
the Purchase Price and the Repurchase Price with respect to each Purchased
Mortgage Loan in accordance with Paragraph 3.  Sellers shall jointly and
severally cause all amounts to be paid in respect of the related Takeout
Commitments to be remitted by the Approved Takeout Investors directly to the
Funding Account without any notice to or consent of any Seller.  On each
Repurchase Date which occurs pursuant to Paragraph 3(f) with respect to any
Purchased Mortgage Loan, Buyer will apply the applicable amounts on deposit in
the related Funding Account to the unpaid Repurchase Price due to Buyer for such
Purchased Mortgage Loan and, unless an Event of Default has occurred, Buyer will
transfer the remaining balance, if any, in the Funding Account to the Operating
Account.  At any time upon or after the occurrence of an Event of Default,
Buyer, in its sole discretion, may apply the amounts on deposit in the Funding
Accounts in accordance with the provisions of Paragraph 5(f).

 

30

--------------------------------------------------------------------------------

 

(d)        Collection Account.  At any time after the occurrence of an Event of
Default, Buyer may require that Sellers establish the Collection Account and
then and thereafter jointly and severally maintain on deposit in the Collection
Account an amount at least equal to the Tax and Insurance Amount, as determined
by Buyer from time to time.  If then or at any time thereafter, Buyer gives
notice to Sellers that the amount on deposit in the Collection Account is less
than the Tax and Insurance Amount, Sellers shall promptly deposit additional
funds in the Collection Account sufficient to increase its balance to equal the
Tax and Insurance Amount.  At any time after the occurrence of an Event of
Default, Buyer, in its sole discretion, may apply the amounts on deposit in the
Collection Account in accordance with the provisions of Paragraph 5(f).

 

(e)        Operating Account.

 

(i)         The Operating Account shall be used for the purposes of (1) Sellers’
payment of Price Differential and any other amounts owing to Buyer under this
Agreement, the Side Letter or any other Transaction Document, (2) Sellers’
funding of any shortfall between (x) the proceeds of an Eligible Mortgage Loan
being purchased by Buyer that are to be disbursed at its Origination and (y) the
Purchase Price to be paid by Buyer for that Eligible Mortgage Loan, (3) Sellers’
payment of any difference between the Repurchase Price and the amount received
by Buyer from the applicable Approved Takeout Investor in connection with the
repurchase of a Purchased Mortgage Loan pursuant to Paragraph 3(g) and (4) for
any cash payments made by Seller to satisfy Margin Calls pursuant to Paragraph
4(b).

 

(ii)        On or before the fourth (4th) Business Day before each Remittance
Date, Buyer will notify any Seller in writing of the Price Differential and
other amounts due Buyer on that Remittance Date.  On or prior to the Business
Day preceding each Remittance Date, Sellers shall jointly and severally deposit
into the Operating Account an amount sufficient to pay all amounts due Buyer on
that Remittance Date.  On each Remittance Date, Buyer shall withdraw funds from
the Operating Account to effect such payment to the extent of funds then
available in the Operating Account.  If the funds on deposit in the Operating
Account are insufficient to pay the amounts then due Buyer in full, Sellers
shall jointly and severally pay the deficiency amount on the date such payment
is due by wire transfer of such amount to the Operating Account, and Buyer shall
withdraw the funds so deposited to pay such deficiency to the extent of the
funds deposited.

 

(iii)       Funds deposited by Sellers in the Operating Account to cover the
shortfall, if any, referred to in clause (2) of subparagraph 5(e)(i) will be
disbursed by Buyer to the Settlement Agent along with the Purchase Price of the
related Eligible Mortgage Loan being purchased by Buyer to fund the Origination
of such Mortgage Loan as provided in Paragraph 3(b).

 

(iv)       At any time after a Margin Call, Buyer may withdraw funds from the
Operating Account to pay such Margin Call and shall apply the funds so withdrawn
for that purpose to reduce the Repurchase Prices of Purchased Mortgage Loans
then subject to outstanding Transactions as provided in Paragraph 4(b).  At any
time after the

 

31

--------------------------------------------------------------------------------

 

occurrence of an Event of Default, Buyer, in its sole discretion, may apply the
amounts on deposit in the Operating Account in accordance with the provisions of
Paragraph 5(f).

 

(v)        Unless (1) a Default or an Event of Default has occurred or (2) any
amounts are then owing to Buyer or any Indemnified Party under this Agreement or
another Transaction Document, on any Seller’s request, Buyer will transfer the
Operating Account balance to an account designated by such Seller.

 

(f)         Application of Funds.  After the occurrence of an Event of Default,
at such times as Buyer may direct in its sole discretion, Buyer shall apply all
Income and such other amounts on deposit in all or any of the Accounts, other
than (i) mortgagor’s actual escrow payments held in any account and required to
be used for the payment of taxes and insurance on any Purchased Mortgage Loan
and (ii) funds on deposit in the Collection Account that Buyer elects to apply,
or to reserve for future application, to pay taxes and insurance in respect of
Purchased Mortgage Loans if Buyer determines that available tax and insurance
escrow deposits are insufficient (or is unable to confirm their sufficiency), in
the same order and manner as is provided in Paragraph 12(e) for proceeds of
dispositions of Purchased Mortgage Loans not repurchased by Seller.

 

(g)        Income.  Where a particular Transaction’s term extends over the date
on which Income is paid by the Mortgagor on any Purchased Mortgage Loan subject
to that Transaction, that Income will be the property of Buyer until Sellers,
acting pursuant to their joint and several obligations hereunder, have paid
Buyer the full Repurchase Price in respect of such Transaction.  Notwithstanding
the foregoing, and provided no Default or Event of Default has occurred and is
continuing and no Margin Deficit then exists, Buyer agrees that a Seller or its
designee shall be entitled to receive and retain that Income to the full extent
it would be so entitled if the Purchased Mortgage Loans had not been sold to
Buyer; provided that any Income received by a Seller while the related
Transaction is outstanding shall be deemed to be held by Sellers solely in trust
for Buyer pending the payment of the Repurchase Price in respect of such
Transaction and the repurchase of the related Purchased Mortgage Loans.  If a
Default or an Event of Default has occurred and is continuing, or a Margin
Deficit exists, as of the date Income is paid on a Purchased Mortgage Loan
subject to a Transaction hereunder, if directed by Buyer, Sellers, acting
pursuant to their joint and several obligations hereunder, shall cause such
Income to be deposited directly into the Collection Account or to such other
account as Buyer may direct.

 

(h)        Sellers’ Obligations.  The provisions of this Paragraph 5 shall not
relieve any Seller from its joint and several obligations to pay the Repurchase
Price on the applicable Repurchase Date and to satisfy any other payment
obligation of Sellers hereunder or under any other Transaction Document.

 

6.                                    Security Interest; Assignment of Takeout
Commitments

 

(a)        Security Interest.  Although the Parties intend that all Transactions
hereunder be absolute sales and purchases and not loans, to secure the payment
and performance by Sellers of their joint and several obligations, liabilities
and indebtedness under each such Transaction and Sellers’ joint and several
obligations, liabilities and indebtedness hereunder and under the other
Transaction Documents, each Seller hereby pledges, assigns, transfers and grants
to Buyer a security interest in the Mortgage Assets in which such Seller
(individually or collectively with

 

32

--------------------------------------------------------------------------------

 

the other Sellers) has rights or power to transfer rights and all of the
Mortgage Assets in which such Seller (individually or collectively with the
other Sellers) later acquires ownership, other rights or the power to transfer
rights.  “Mortgage Assets” means (i) the Purchased Mortgage Loans with respect
to all related Transactions hereunder (including, without limitation, all
Servicing Rights with respect thereto), (ii) all Servicing Records, Loan Files,
Mortgage Loan Documents, including, without limitation, the Mortgage Note and
Mortgage, and all of Seller’s claims, liens, rights, title and interests in and
to the Mortgaged Property related to such Purchased Mortgage Loans, (iii) all
Liens securing repayment of such Purchased Mortgage Loans, (iv) all Income with
respect to such Purchased Mortgage Loans, (v) the related Accounts, (vi) the
Takeout Commitments and Takeout Agreements to the extent such Seller’s rights
thereunder relate to the Purchased Mortgage Loans, (vii) all Hedging
Arrangements relating to the Purchased Mortgage Loans and (viii) all proceeds of
the foregoing, including, without limitation, to the extent constituting
proceeds of the foregoing, all mortgage backed securities, and the right to have
and receive such mortgage backed securities when issued, that are, in whole or
in part, based on, backed by or created from Purchased Mortgage Loans for which
the full Repurchase Price has not been received by Buyer, irrespective of
whether such Purchased Mortgage Loans have been released from this security
interest.  Each Seller hereby authorizes Buyer to file such financing statements
and amendments relating to the Mortgage Assets as Buyer may deem appropriate,
and irrevocably appoints Buyer as such Seller’s attorney-in-fact to take such
other actions as Buyer deems necessary or appropriate to perfect and continue
the Lien granted hereby and to protect, preserve and realize upon the Mortgage
Assets.  Sellers agree, jointly and severally, to pay all fees and expenses
associated with perfecting such Liens including, without limitation, the cost of
filing financing statements and amendments under the UCC, registering each
Purchased Mortgage Loan with MERS and recording assignments of the Mortgages as
and when required by Buyer in its sole discretion.

 

(b)        Assignment of Takeout Commitment.  The sale of each Mortgage Loan to
Buyer shall include the related Seller’s rights (but none of the obligations)
under the applicable Takeout Commitment and Takeout Agreement to deliver the
Mortgage Loan to the Approved Takeout Investor and to receive the net sum
therefor specified in the Takeout Commitment from the Approved Takeout
Investor.  Effective on and after the Purchase Date for each Mortgage Loan
purchased by Buyer hereunder, each Seller assigns to Buyer, free and clear of
any Lien, all of such Seller’s right, title and interest in any applicable
Takeout Commitment and Takeout Agreement for such Mortgage Loan; provided that
Buyer shall not assume or be deemed to have assumed any of the obligations of
any Seller under any Takeout Agreement or Takeout Commitment.

 

7.                                    Conditions Precedent

 

(a)        Conditions Precedent to the Effectiveness of this Agreement.  The
effectiveness of this Agreement shall be subject to the satisfaction of each of
the following conditions precedent (any of which Buyer may electively waive, in
Buyer’s sole discretion):

 

(i)         on or before the date hereof, Sellers shall deliver or cause to be
delivered each of the documents listed on Exhibit E signed by or on behalf of
each Seller and in form and substance satisfactory to Buyer and its counsel;

 

33

--------------------------------------------------------------------------------

 

(ii)        as of the date hereof, there has been no material adverse change in
the financial condition of any Seller since the most recent financial statements
of such Person delivered to Buyer;

 

(iii)       as of the date hereof, no material action, proceeding or
investigation shall have been instituted or threatened, nor shall any material
order, judgment or decree have been issued or proposed to be issued by any
Governmental Authority with respect to any Seller;

 

(iv)       Sellers shall have delivered to Buyer opinions of counsel
substantially in the form of Exhibit F and in form and substance satisfactory to
Buyer and its counsel;

 

(v)        Sellers shall have delivered to Buyer such other documents, opinions
of counsel and certificates as Buyer may reasonably request;

 

(vi)       Sellers shall have established, jointly and severally, the Accounts
at Financial Institution and shall have deposited the Required Amount to the
Cash Pledge Account;

 

(vii)      on or before the date hereof, Sellers, jointly and severally, shall
have paid to the extent due all fees and out-of-pocket costs and expenses
(including due diligence fees and expenses and reasonable legal fees and
expenses) required to be paid under this Agreement and under the other
Transaction Documents;

 

(viii)      a private investigative report with respect to each Seller, in form
and substance satisfactory to Buyer, shall have been submitted to and approved
by Buyer; and

 

(ix)       a third party audit of Sellers, in form and substance satisfactory to
Buyer, shall have been submitted to and approved by Buyer.

 

(b)        Conditions Precedent to Each Transaction.  Buyer’s obligation to pay
the Purchase Price for each Transaction shall be subject to the satisfaction of
each of the following conditions precedent:

 

(i)         with respect to each Purchase Date, Sellers shall have delivered to
Buyer a Confirmation and the Loan Purchase Detail with respect to the Purchased
Mortgage Loans subject to such Transaction;

 

(ii)        in the case of a Mortgage Loan subject to a Wet Funding, Buyer shall
have received the documents described in items (i) through (iv) of the
definition of Loan File, and, in the case of any other Mortgage Loan subject to
such Transaction, Buyer shall have received the complete Loan File for such
Mortgage Loan, in each case in form and substance satisfactory to Buyer;

 

(iii)       no Default or Event of Default shall have occurred and be
continuing;

 

(iv)       no Margin Deficit shall exist either before or after giving effect to
such Transaction;

 

34

--------------------------------------------------------------------------------

 

(v)        this Agreement and each of the other Transaction Documents shall
remain in full force and effect, and the Termination Date shall not have
occurred;

 

(vi)       the representations and warranties of each Seller in this Agreement
and each of the other Transaction Documents to which it is a party and in any
Officer’s Certificate delivered to Buyer in connection therewith shall be true
and correct on and as of the date hereof and such Purchase Date, with the same
effect as though such representations and warranties had been made on and as of
such date (except for those representations and warranties and Officer’s
Certificates which are specifically made only as of a different date, which
representations and warranties and Officer’s Certificates shall be correct on
and as of the date made), and each Seller shall have complied with all the
agreements and satisfied all the conditions under this Agreement, each of the
other Transaction Documents and the Mortgage Loan Documents to which it is a
party on its part to be performed or satisfied at or prior to the related
Purchase Date;

 

(vii)      no Requirement of Law would prohibit the consummation of any
transaction contemplated hereby, or would impose limits on the amounts that
Buyer may legally receive or would impose a material tax or levy on such
Transaction or the Purchase Price, Repurchase Price or any payments received in
respect thereof;

 

(viii)      no action, proceeding or investigation shall have been instituted or
threatened, nor shall any order, judgment or decree have been issued or proposed
to be issued by any Governmental Authority to set aside, restrain, enjoin or
prevent the consummation of any Transaction contemplated hereby or seeking
material damages against Buyer in connection with the transactions contemplated
by the Transaction Documents;

 

(ix)       after giving effect to such Transaction, as of the related Purchase
Date and as of the proposed Repurchase Date for such Transaction, no Purchased
Mortgage Loan subject to a Transaction was originated more than thirty (30) days
prior to such Purchase Date and such proposed Repurchase Date;

 

(x)        Buyer shall have determined that the amounts on deposit in the
Operating Account are sufficient to fund any shortfall between the proceeds of a
Purchased Mortgage Loan to be funded at its Origination and the Purchase Price
to be paid by Buyer for the related Mortgage Loan, after taking into account the
other obligations of all Sellers to be satisfied with the amounts on deposit in
the Operating Account on such Purchase Date;

 

(xi)       after giving effect to such Transaction, the aggregate Purchase Price
for all outstanding Transactions shall not exceed the Facility Amount;

 

(xii)      Buyer shall have received such other documents, information, reports
and certificates as it shall have reasonably requested; and

 

(xiii)      Sellers shall have jointly and severally deposited the amounts
required by Paragraph 5 into each of the Collection Account and the Cash Pledge
Account.

 

35

--------------------------------------------------------------------------------

 

The acceptance by a Seller, or by any Settlement Agent at the direction of a
Seller, of any Purchase Price proceeds shall be deemed to constitute a
representation and warranty by all Sellers that the foregoing conditions have
been satisfied.

 

8.                                    Change in Requirement of Law

 

(a)        If any Change in Requirement of Law shall:

 

(i)         impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, Buyer (except any such reserve requirement reflected in the
Adjusted LIBOR Rate); or

 

(ii)        impose on Buyer or the London interbank market any other condition
affecting this Agreement or Transactions entered into by Buyer;

 

and the result of any of the foregoing shall be to increase the cost to Buyer of
making or maintaining any purchase hereunder (or of maintaining its obligation
to enter into any Transaction) or to increase the cost or to reduce the amount
of any sum received or receivable by Buyer (whether of Repurchase Price, Price
Differential or otherwise), then Sellers, jointly and severally, will pay to
Buyer such additional amount or amounts as will compensate Buyer for such
additional costs incurred or reduction suffered.

 

(b)        If Buyer determines that any Change in Requirement of Law regarding
capital requirements has or would have the effect of reducing the rate of return
on Buyer’s capital or on the capital of Buyer’s holding company as a consequence
of this Agreement or the purchases made by Buyer to a level below that which
Buyer or Buyer’s holding company could have achieved but for such Change in
Requirement of Law (taking into consideration Buyer’s policies with respect to
capital adequacy), then from time to time Sellers, jointly and severally, will
pay to Buyer such additional amount or amounts as will compensate Buyer or
Buyer’s holding company for any such reduction suffered.

 

(c)        A certificate of Buyer setting forth the amount or amounts necessary
to compensate Buyer or its holding company, as the case may be, as specified in
subparagraph (a) or (b) of this Paragraph shall be delivered to a Seller and
shall be conclusive absent manifest error.  Sellers, jointly and severally,
shall pay Buyer, the amount shown as due on any such certificate within ten
(10) days after receipt thereof.

 

(d)        Failure or delay on the part of Buyer to demand compensation pursuant
to this Paragraph shall not constitute a waiver of Buyer’s right to demand such
compensation; provided that Sellers shall not be required to compensate Buyer
pursuant to this Paragraph for any increased costs or reductions incurred more
than 270 days prior to the date that Buyer notifies any Seller of the Change in
Requirement of Law giving rise to such increased costs or reductions and of
Buyer’s intention to claim compensation therefor; provided, further, that, if
the Change in Requirement of Law giving rise to such increased costs or
reductions is retroactive, then the 270-day period referred to above shall be
extended to include the period of retroactive effect thereof.

 

36

--------------------------------------------------------------------------------

 

9.                                    Segregation of Documents Relating to
Purchased Mortgage Loans

 

All documents relating to Purchased Mortgage Loans in the possession of a Seller
shall be segregated from other documents and securities in its possession and
shall be identified as being subject to this Agreement.  Segregation may be
accomplished by appropriate identification on the books and records of the
holder, including a financial or securities intermediary or a clearing
corporation.  All of Sellers’ interest in the Purchased Mortgage Loans
(including the Servicing Rights) shall pass to Buyer on the Purchase Date and
nothing in this Agreement shall preclude Buyer from engaging in repurchase
transactions with the Purchased Mortgage Loans or otherwise selling,
transferring, pledging or hypothecating the Purchased Mortgage Loans, but no
such transaction shall relieve Buyer of its obligations to transfer the
Purchased Mortgage Loans (or, at Buyer’s election, Equivalent Mortgage Loans) to
a Seller pursuant to Paragraph 3 or 4.

 

10.                            Representations and Warranties

 

(a)        To induce Buyer to enter into this Agreement and the Transactions
hereunder, Sellers represent and warrant as of the date of this Agreement and as
of each Purchase Date with respect to each Seller that each of the following
statements is and shall remain true and correct throughout the term of this
Agreement and until all obligations, liabilities and indebtedness of all Sellers
under this Agreement and the other Transaction Documents are paid in full.

 

(i)         Representations and Warranties Concerning Purchased Mortgage Loans. 
By each delivery of a Confirmation, Seller shall be deemed, as of the Purchase
Date of the described sale of each Purchased Mortgage Loan (or, if another date
is expressly provided in such representation or warranty, as of such other
date), and as of each date thereafter that such Purchased Mortgage Loan remains
subject to this Agreement, to represent and warrant that each Purchased Mortgage
Loan then sold to Buyer is an Eligible Mortgage Loan.

 

(ii)        Organization and Good Standing.  Seller and each of its Subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction under which it was organized, has full legal power and
authority to own its property and to carry on its business as currently
conducted, and is duly qualified as a foreign corporation or entity to do
business and is in good standing in each jurisdiction in which the transaction
of its business makes such qualification necessary, except in jurisdictions, if
any, where a failure to be in good standing has no material adverse effect on
the business, operations, assets or financial condition of Seller or any such
Subsidiary.  For the purposes hereof, good standing shall include qualification
for any and all licenses and payment of any and all taxes required in the
jurisdiction of its organization and in each jurisdiction in which Seller or a
Subsidiary transacts business.  Seller has no Subsidiaries except those
identified by Seller to Buyer in Exhibit G.  With respect to Seller and each
such Subsidiary, Exhibit G correctly states its name as it appears in its
articles of formation filed in the jurisdiction of its organization, address,
place of organization, each state in which it is qualified as a foreign
corporation or entity, and in the case of the Subsidiaries, the percentage
ownership (direct or indirect) of Seller in such Subsidiary.

 

37

--------------------------------------------------------------------------------

 

(iii)       Authority and Capacity.  Seller has all requisite power, authority
and capacity to enter into this Agreement and each other Transaction Document
and to perform the obligations required of it hereunder and thereunder.  This
Agreement constitutes a valid and legally binding agreement of Seller
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization, conservatorship
and similar laws, and by equitable principles.  No consent, approval,
authorization, license or order of or registration or filing with, or notice to,
any Governmental Authority is required under any Requirement of Law prior to the
execution, delivery and performance of or compliance by Seller with this
Agreement or any other Transaction Document or the consummation by Seller of any
transaction contemplated thereby, except for those which have already been
obtained by Seller, and the filings and recordings in respect of the Liens
created pursuant to this Agreement and the other Transaction Documents.  If
Seller is a depository institution, this Agreement shall be maintained in
Seller’s official records.

 

(iv)       No Conflict.  Neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated by this Agreement, nor
compliance with its terms and conditions, shall conflict with or result in the
breach of, or constitute a default under, or result in the creation or
imposition of any Lien of any nature upon the properties or assets of Seller,
any of the terms, conditions or provisions of Seller’s organizational documents,
or any mortgage, indenture, deed of trust, loan or credit agreement or other
agreement or instrument to which Seller is now a party or by which it is bound
(other than this Agreement).

 

(v)        Performance.  Seller does not believe, nor does it have any reason or
cause to believe, that it cannot perform, and Seller intends to perform, each
and every covenant which it is required to perform under this Agreement and the
other Transaction Documents.

 

(vi)       Ordinary Course Transaction.  The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of Seller,
and neither the sale, transfer, assignment and conveyance of Mortgage Loans to
Buyer nor the pledge, assignment, transfer and granting of a security interest
to Buyer in the Mortgage Assets, by Seller pursuant to this Agreement are
subject to the bulk transfer or any similar Requirement of Law in effect in any
applicable jurisdiction.

 

(vii)      Litigation; Compliance with Laws.  There is no Litigation pending or,
to Seller’s knowledge threatened, that could reasonably be expected to cause a
Material Adverse Effect or that might materially and adversely affect the
Mortgage Loans sold or to be sold pursuant to this Agreement.  Seller has not
violated any Requirement of Law applicable to Seller which, if violated, would
materially and adversely affect the Mortgage Loans to be sold pursuant to this
Agreement or could reasonably be expected to cause a Material Adverse Effect.

 

(viii)      Statements Made.  The information, reports, financial statements,
exhibits and schedules furnished in writing by or on behalf of Seller to Buyer
in connection with the negotiation, preparation or delivery of this Agreement
and the other Transaction

 

38

--------------------------------------------------------------------------------

 

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 Seller to Buyer in connection with this Agreement and the other
Transaction Documents and the transactions contemplated hereby and thereby will
be true, complete and accurate in every material respect on the date as of which
such information is stated or certified or (in the case of projections) based on
estimates that are believed to be reasonable as of the respective dates of such
estimates.  There is no fact known to a Responsible Officer that, after due
inquiry, could reasonably be expected to have a Material Adverse Effect that has
not been disclosed herein, in the other Transaction Documents or in a report,
financial statement, exhibit, schedule, disclosure letter or other writing
furnished to Buyer for use in connection with the transactions contemplated
hereby or thereby.

 

(ix)       Approved Company.  Seller currently holds all approvals,
authorizations and other licenses from the Approved Takeout Investors and the
Agencies required under the Takeout Guidelines (or otherwise) to Originate,
purchase, hold, service and sell Mortgage Loans of the types to be offered for
sale to Buyer hereunder.

 

(x)        Fidelity Bonds.  Seller has purchased fidelity bonds and policies of
insurance, all of which are in full force and effect, insuring Seller, Buyer and
the successors and assigns of Buyer in the greater of (a) $500,000, (b) the
amount required by the Approved Takeout Investor and (c) the amount required by
any other Takeout Guidelines, against loss or damage from any breach of fidelity
by Seller or any officer, director, employee or agent of Seller, and against any
loss or damage from loss or destruction of documents, fraud, theft,
misappropriation, or errors or omissions.

 

(xi)       Solvency.  As of the date hereof and immediately after giving effect
to each Transaction hereunder, the fair value of the assets of Seller is greater
than the fair value of the liabilities (including contingent liabilities if and
to the extent required to be recorded as a liability on the financial statements
of Seller in accordance with GAAP) of Seller, and Seller is and will be solvent,
is, will be able and intends, to pay its debts as they mature and does not and
will not have an unreasonably small capital to engage in the business in which
it is engaged and proposes to engage. Seller does not intend to incur, or
believe that it has incurred, debts beyond its ability to pay such debts as they
mature. Seller is not transferring any Loans with any intent to hinder, delay or
defraud any Person.

 

(xii)      Reporting.  In its financial statements, Seller intends to report
each sale of a Mortgage Loan hereunder as a financing in accordance with GAAP. 
Seller has been advised by or confirmed with its independent public accountants
that such sales can be so reported under GAAP on its financial statements.

 

(xiii)      Financial Condition.  The balance sheets of Seller provided to Buyer
pursuant to Paragraph 11(g) (and, if applicable, its Subsidiaries, on a
consolidated and consolidating basis) as at the dates of such balance sheets,
and the related statements of

 

39

--------------------------------------------------------------------------------

 

income, changes in stockholders’ equity and cash flows for the periods ended on
the dates of such balance sheets heretofore furnished to Buyer, fairly present
the financial condition of Seller and its Subsidiaries as of such dates and the
results of its and their operations for the periods ended on such dates.  On the
dates of such balance sheets, Seller had no known material liabilities, direct
or indirect, fixed or contingent, matured or unmatured, or liabilities for
taxes, long-term leases or unusual forward or long-term commitments not
disclosed by, or reserved against on, said balance sheets 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 Buyer in writing.  Said financial statements
were prepared in accordance with GAAP applied on a consistent basis throughout
the periods involved.  Since the date of such balance sheet, there has been no
Material Adverse Effect, nor is Seller aware of any state of facts particular to
Seller which (with or without notice or lapse of time or both) could reasonably
be expected to result in any such Material Adverse Effect.

 

(xiv)     Regulation U.  Seller is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock, and no part of the proceeds of any sales
made hereunder will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any margin stock.

 

(xv)      Investment Company Act.  Neither Seller nor any of its Subsidiaries is
an “investment company” or controlled by an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.

 

(xvi)     Agreements.  Neither Seller nor any of its Subsidiaries is a party to
any agreement, instrument or indenture, or subject to any restriction,
materially or adversely affecting its business, operations, assets or financial
condition, except as disclosed in the financial statements described in
Paragraph 11(g).  None of Seller’s Subsidiaries is subject to any dividend
restriction imposed by a Governmental Authority other than those under
applicable statutory law.  Neither Seller nor any of its Subsidiaries is in
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 reasonably be expected to result in a Material Adverse
Effect.  No holder of any Debt of Seller or of any of its Subsidiaries has given
notice of any alleged default thereunder, or, if given, the same has been cured
or will be cured by Seller or the relevant Subsidiary within the cure period
provided therein.  No Act of Insolvency with respect to Seller or any of its
Subsidiaries or any of their respective properties is pending, contemplated or,
to the knowledge of Seller, threatened.

 

(xvii)     Title to Properties.  Seller and each Subsidiary of Seller has good,
valid, insurable (in the case of real property) and marketable title to all of
its properties and assets (whether real or personal, tangible or intangible)
reflected on the financial statements described in Paragraph 11(g), and the
Mortgage Assets are free and clear of all Liens other than those created or
permitted hereunder.

 

40

--------------------------------------------------------------------------------

 

(xviii)    ERISA.  All plans (“Plans”) of a type described in Paragraph 3(3) of
ERISA in respect of which Seller or any Subsidiary of Seller is an “employer,”
as defined in Paragraph 3(5) of ERISA, are in substantial compliance with ERISA,
and none of such Plans is insolvent or in reorganization, has an accumulated or
waived funding deficiency within the meaning of Paragraph 412 of the IRC, and
neither Seller nor any Subsidiary of Seller has incurred any material liability
(including any material contingent liability) to or on account of any such Plan
pursuant to Paragraphs 4062, 4063, 4064, 4201 or 4204 of ERISA.  No proceedings
have been instituted to terminate any such Plan, and no condition exists which
presents a material risk to Seller or a Subsidiary of Seller of incurring a
liability to or on account of any such Plan pursuant to any of the foregoing
Paragraphs of ERISA.  No Plan or trust forming a part thereof has been
terminated since December 1, 1974.

 

(xix)     Proper Names.  Seller does not operate in any jurisdiction under a
trade name, division, division name or name other than those names previously
disclosed in writing by Seller to Buyer, and all such names are utilized by
Seller only in the jurisdiction(s) identified in such writing.  The only names
used by Seller in its tax returns for the last ten years are set forth in
Exhibit K.

 

(xx)      No Undisclosed Liabilities.  Other than as disclosed in the financial
statements delivered pursuant to Paragraph 11(g), Seller does not have any
liabilities or Debt, direct or contingent.

 

(xxi)     Tax Returns and Payments. (A) all federal, state and local income,
excise, property and other tax returns required to be filed with respect to
Seller’s operations and those of its Subsidiaries in any jurisdiction have been
filed on or before the due date thereof (plus any applicable extensions); and
(B) all such returns are true and correct; all taxes, assessments, fees and
other governmental charges upon Seller, and Seller’s Subsidiaries and upon their
respective properties, income or franchises, which are due and payable have been
paid, including all Federal Insurance Contributions Act (FICA) payments and
withholding taxes, if appropriate, other than those which are being contested in
good faith by appropriate proceedings, diligently pursued and as to which Seller
has established adequate reserves determined in accordance with GAAP,
consistently applied.  The amounts reserved, as a liability for income and other
taxes payable, in the financial statements described in Paragraph 11(g) are
sufficient for payment of all unpaid federal, state and local income, excise,
property and other taxes, whether or not disputed, of Seller and its
Subsidiaries, accrued for or applicable to the period and on the dates of such
financial statements and all years and periods prior thereto and for which
Seller and Seller’s Subsidiaries may be liable in their own right or as
transferee of the assets of, or as successor to, any other Person.

 

(xxii)     Subsidiaries.  Seller has not issued, and does not have outstanding,
any warrants, options, rights or other obligations to issue or purchase any
shares of its capital stock or other securities (or other equity equivalent). 
The outstanding shares of capital stock (or other equity equivalent) of Seller
have been duly authorized and validly issued and are fully paid and
non-assessable.

 

41

--------------------------------------------------------------------------------

 

(xxiii)    Credit Information.  Seller has full right and authority and is not
precluded by law or contract from furnishing to Buyer the applicable consumer
report (as defined in the Fair Credit Reporting Act, Public Law 91-508) and all
other credit information relating to each Purchased Mortgage Loan sold
hereunder, and Buyer will not be precluded from furnishing such materials to the
related Approved Takeout Investor by such laws.  Neither the foregoing nor any
other provision of this Agreement or any other Transaction Document shall be
construed to impose any obligation on Buyer to keep the above described
materials confidential or to otherwise comply with the Fair Credit Reporting Act
or any similar laws.

 

(xxiv)    No Discrimination.  Seller makes credit accessible to all qualified
applicants in accordance with all Requirements of Law.  Seller has not
discriminated, and will not discriminate, against credit applicants on the basis
of any prohibited characteristic, including race, color, religion, national
origin, sex, marital or familial status, age (provided that the applicant has
the ability to enter into a binding contract), handicap, sexual orientation or
because all or part of the applicant’s income is derived from a public
assistance program or because of the applicant’s good faith exercise of rights
under the Federal Consumer Protection Act.  Furthermore, Seller has not
discouraged, and will not discourage, the completion of any credit application
based on any of the foregoing prohibited bases.  In addition, Seller has
complied with all anti-redlining provisions and equal credit opportunity laws
applicable under all Requirements of Law.

 

(xxv)    Home Ownership and Equity Protection Act.  There is no litigation,
proceeding or governmental investigation existing or pending or to the knowledge
of Seller threatened, or any order, injunction or decree outstanding against or
relating to Seller, relating to any violation of the Home Ownership and Equity
Protection Act or any state, city or district high cost home mortgage or
predatory lending law.

 

(xxvi)    Place of Business and Formation.  The principal place of business of
Seller is located at the address set forth for Seller in Paragraph 15.  As of
the date hereof, and during the four (4) months immediately preceding that date,
the chief executive office of Seller and the office where it keeps its financial
books and records relating to its property and all contracts relating thereto
and all accounts arising therefrom is and has been located at the address set
forth for Seller in Paragraph 15.  As of the date hereof, Seller’s jurisdiction
of organization is the state specified in Paragraph 15.

 

(xxvii)   No Adverse Selection.  Seller used no selection procedures that
identified the Purchased Mortgage Loans offered to Buyer for purchase hereunder
as being less desirable or valuable than other comparable Mortgage Loans owned
by Seller.

 

(xxviii)     MERS.  Seller and each Approved Takeout Investor is a member of
MERS in good standing.

 

(xxix)    Seller is Principal.  Seller is engaging in the Transactions as a
principal.

 

(xxx)    No Default.  No Default or Event of Default has occurred.

 

42

--------------------------------------------------------------------------------

 

(b)        Mortgage Loan Representations.  Each Seller represents and warrants
to Buyer with respect to all Mortgage Loans that (i) each Purchased Mortgage
Loan is an Eligible Mortgage Loan on and as of the Purchase Date therefor,
(ii) each Mortgage Loan to be transferred from a Seller to Buyer as an
Additional Purchased Mortgage Loan is an Eligible Mortgage Loan on and as of the
date of transfer thereof and (iii) each Purchased Mortgage Loan identified as an
Eligible Mortgage Loan by a Seller in any report or other information delivered
to Buyer is an Eligible Mortgage Loan.  Each Seller further makes the
representations and warranties regarding all Purchased Mortgage Loans (including
all Additional Purchased Mortgage Loans) as are set forth in Exhibit B.

 

(c)        Survival of Representations.  All the representations and warranties
made by any Seller to Buyer in this Agreement are binding on all Sellers
regardless of whether the subject matter thereof was under the control of any
Seller or a third party.  Each Seller acknowledges that Buyer will rely upon all
such representations and warranties with respect to each Purchased Mortgage Loan
purchased by Buyer hereunder, and each Seller makes such representations and
warranties in order to induce Buyer to purchase the Mortgage Loans.  The
representations and warranties by a Seller in this Agreement with respect to a
Purchased Mortgage Loan shall be unaffected by, and shall supersede and control
over, any provision in any existing or future endorsement of any Purchased
Mortgage Loan or in any assignment with respect to such Purchased Mortgage Loan
to the effect that such endorsement or assignment is without recourse or without
representation or warranty.  All Seller representations and warranties shall
survive delivery of the Loan Files and the Confirmations, purchase by Buyer of
Purchased Mortgage Loans, transfer of the servicing for the Purchased Mortgage
Loans to a successor servicer, delivery of Purchased Mortgage Loans to an
Approved Takeout Investor, repurchases of the Purchased Mortgage Loans by a
Seller and termination of this Agreement. The representations and warranties of
a Seller in this Agreement shall inure to the benefit of Buyer and its
successors and assigns, notwithstanding any examination by Buyer of any Mortgage
Loan Documents, related files or other documents delivered to Buyer.

 

11.                            Sellers’ Covenants

 

Sellers agree jointly and severally to cause each Seller to perform, and cause
each of such Seller’s Subsidiaries to perform, the following duties at all times
during the term of this Agreement (and Sellers agree to be jointly and severally
liable for the performance by each Seller of such duties):

 

(a)        Maintenance of Existence; Conduct of Business.  Seller and each of
its Subsidiaries shall preserve and maintain its existence in good standing and
all of its rights, privileges, licenses and franchises necessary in the normal
conduct of its business, including without limitation its eligibility as lender,
seller/servicer and issuer described under Paragraph 10(a)(ix); and each of
Seller and its Subsidiaries shall conduct its business in an orderly and
efficient manner and shall keep adequate books and records of its business
activities, and make no material change in the nature or character of its
business or engage in any business in which it was not engaged on the date of
this Agreement.  Seller will not make any material change in its accounting
treatment and reporting practices except as required by GAAP.  Seller shall
remain a member of MERS in good standing.

 

43

--------------------------------------------------------------------------------

 

(b)        Compliance with Applicable Laws.  Seller and each of its Subsidiaries
shall comply with all Requirements of Law applicable to it and Seller, the
Purchased Mortgage Loans or any part thereof (including, without limitation, any
Agency Guidelines, all anti-money laundering laws and regulations, including,
without limitation, the USA Patriot Act of 2001, as amended, the GLB Act and all
consumer protection laws and regulations) or relating to the Mortgage Assets and
cause the Mortgage Assets to comply with all applicable Requirements of Law, a
breach of which could reasonably expected to have a Material Adverse Effect,
except where contested in good faith and by appropriate proceedings, and with
sufficient reserves established therefor.

 

(c)        Inspection of Properties and Books.  Seller shall permit authorized
representatives of Buyer to (i) discuss the business, operations, assets and
financial condition of Seller and Seller’s Subsidiaries with their officers and
employees and to examine their books of account, records, reports and other
papers and make copies or extracts thereof, (ii) inspect all of Seller’s
property and all related information and reports, and (iii) audit Seller’s
operations to ensure compliance with the terms of the Transaction Documents, the
GLB Act and other privacy laws and regulations, all at Seller’s expense and at
such reasonable times as Buyer may request.  Seller will provide its accountants
with a photocopy of this Agreement promptly after the execution hereof and will
instruct its accountants to answer candidly any and all questions that the
officers of Buyer or any authorized representatives of Buyer may address to them
in reference to the financial condition or affairs of Seller and Seller’s
Subsidiaries.  Seller may have its representatives in attendance at any meetings
between the officers or other representatives of Buyer and Seller’s accountants
held in accordance with this authorization.

 

(d)        Notices.  Seller will promptly notify Buyer, and in any event within
ten (10) Business Days of obtaining knowledge, of the occurrence of any of the
following with respect to any Seller and shall provide or cause the other
Sellers to provide such additional documentation and cooperation as Buyer may
request with respect to any of the following:

 

(i)         any change in Seller’s or any of its Subsidiary’s business address
and/or telephone number;

 

(ii)        any merger, consolidation or reorganization of Seller or any of its
Subsidiaries, or any changes in the ownership of Seller or any of its
Subsidiaries by direct or indirect means.  “Indirect” means any change in
ownership of a controlling interest of the relevant Person’s direct or indirect
parent;

 

(iii)       any change of the name or jurisdiction of organization of Seller,
any of its Subsidiaries;

 

(iv)       any significant adverse change in the financial position of Seller or
any of its Subsidiaries;

 

(v)        entry of any court judgment or regulatory order in which Seller or
any Subsidiary of Seller is or may be required to pay a claim or claims which
could have a material adverse effect on the financial condition of Seller or any
of Seller’s Subsidiaries or on Seller’s ability to perform its obligations under
any Transaction Document, or on

 

44

--------------------------------------------------------------------------------

 

the ability of Seller or any Subsidiary of Seller to continue its operations in
a manner similar to its current operations;

 

(vi)       the filing of any petition, claim or lawsuit against Seller or any of
Seller’s Subsidiaries which could have a material adverse effect on the
financial condition of Seller or any Subsidiary of Seller, on Seller’s ability
to perform its obligations under any Transaction Document, or on the ability of
Seller or any Subsidiary of Seller to continue its operations in a manner
similar to its current operations;

 

(vii)      Seller or any Subsidiary of Seller admits to committing, or is found
to have committed, a material violation of any Requirement of Law relating to
its business operations, including but not limited to, its loan generation, sale
or servicing operations;

 

(viii)      the initiation of any investigations, audits, examinations or
reviews of Seller or any Subsidiary of Seller by any Agency, Governmental
Authority, trade association or consumer advocacy group relating to the
Origination, sale or servicing of mortgage loans by Seller or any Subsidiary of
Seller or the business operations of Seller or any Subsidiary of Seller with the
exception of normally scheduled audits or examinations by the regulators of
Seller or any Subsidiary of Seller;

 

(ix)       any disqualification or suspension of Seller or any Subsidiary of
Seller by an Agency or any notification or knowledge, from any source, of any
disqualification or suspension, or any warning of any such disqualification or
suspension or impending disqualification or suspension;

 

(x)        the occurrence of any actions, inactions or events upon which an
Agency may, in accordance with Agency Guidelines, disqualify or suspend Seller
or any Subsidiary of Seller as a seller or servicer, including (if Seller is or
becomes a Freddie Mac-approved seller or servicer) those events or reasons for
disqualification or suspension enumerated in Chapter 5 of the Freddie Mac Single
Family Seller/Servicer Guide and (if Seller is or becomes a Fannie Mae-approved
seller or servicer) any breach of Seller’s “Lender Contract” (as defined in the
Fannie Mae Single Family 2010 Selling Guide) with Fannie Mae including the
breaches described or referred to in Section A2-3, 1-01 “Lender Breach of
Contract” of the Fannie Mae Single Family 2010 Selling Guide;

 

(xi)       the filing, recording or assessment of any federal, state or local
tax Lien against it or any Subsidiary of Seller, or any of its or any such
Subsidiary’s;

 

(xii)      the occurrence of any Event of Default hereunder or the occurrence of
any Default;

 

(xiii)      the suspension, revocation or termination of any licenses or
eligibility as described under Paragraph 10(a)(ix) of Seller or any Subsidiary
of Seller;

 

(xiv)     any other action, event or condition of any nature which could
reasonably be expected to result in a Material Adverse Effect or which, with or
without notice or lapse of time or both, will constitute a default under any
other agreement, instrument or

 

45

--------------------------------------------------------------------------------

 

indenture to which a Seller or any Subsidiary of a Seller is a party or to which
its properties or assets may be subject; or

 

(xv)      any alleged breach by Buyer of any provision of this Agreement or of
any of the other Transaction Documents.

 

(e)        Payment of Debt, Taxes, etc.

 

(i)         Seller shall pay and perform all obligations and Debt of Seller, and
cause to be paid and performed all obligations and Debt of its Subsidiaries in
accordance with the terms thereof, and pay and discharge or cause to be paid and
discharged all taxes, assessments and governmental charges or levies imposed
upon Seller, its Subsidiaries, or upon their respective income, receipts or
properties, before the same shall become past due, as well as all lawful claims
for labor, materials or supplies or otherwise which, if unpaid, might become a
Lien upon such properties or any part thereof; provided, however, that Seller
and its Subsidiaries shall not be required to pay obligations, Debt, taxes,
assessments or governmental charges or levies or claims for labor, materials or
supplies which are being contested in good faith and by proper proceedings that
are being reasonably and diligently pursued, if such proceedings do not involve
any likelihood of the sale, forfeiture or loss of any such property or any
interest therein while such proceedings are pending; and provided, further, that
book reserves adequate under GAAP shall have been established with respect
thereto.

 

(ii)        (A)       All payments made by Seller under this Agreement shall be
made free and clear of, and without deduction or withholding for or on account
of, any present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities (including penalties, interest and additions
to tax) with respect thereto imposed by any Governmental Authority, excluding
taxes imposed on (or measured by) its net income (however denominated) or
capital, branch profits taxes, franchise taxes or any other tax imposed on the
net income by the United States, a state or a foreign jurisdiction under the
laws of which Buyer is organized or of its applicable lending office, or any
political subdivision thereof (collectively, “Taxes”), all of which shall be
paid by Seller for its own account not later than the date when due.  If Seller
is required by a Requirement of Law 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 Buyer,
promptly, original tax receipts and other evidence satisfactory to Buyer of the
payment when due of the full amount of such Taxes; and (d) pay to Buyer such
additional amounts as may be necessary so that such Buyer receives, free and
clear of all Taxes, a net amount equal to the amount it would have received
under this Agreement, as if no such deduction or withholding had been made.

 

(B)       In addition, Seller agrees to pay to the relevant Governmental
Authority in accordance with all applicable Requirements of Law any current or
future stamp or documentary taxes or any other excise or property taxes, charges

 

46

--------------------------------------------------------------------------------

 

or similar levies (including, without limitation, mortgage recording taxes,
transfer taxes and similar fees) imposed by the United States or any taxing
authority thereof or therein that arise from any payment made hereunder or from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement (“Other Taxes”).

 

(C)       Seller agrees, jointly and severally with the other Sellers, to
indemnify Buyer 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 Paragraph 11(e), and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, provided that Buyer shall have provided a Seller with
evidence, reasonably satisfactory to such Seller, of payment of Taxes or Other
Taxes, as the case may be.

 

(D)       Any assignee of Buyer that is not incorporated or otherwise created
under the laws of the United States, any state thereof, or the District of
Columbia (a “Foreign Buyer”) shall provide Seller with properly completed United
States Internal Revenue Service (“IRS”) Form W-8BEN or W-8ECI or any successor
form prescribed by the IRS, certifying that such Foreign Buyer is entitled to
benefits under an income tax treaty to which the United States is a party which
reduces the rate of withholding tax on payments of interest or certifying that
the income receivable pursuant to this Agreement is effectively connected with
the conduct of a trade or business in the United States on or prior to the date
upon which each such Foreign Buyer becomes a purchaser of Mortgage Loans
hereunder.  Each Foreign Buyer will resubmit the appropriate form on the
earliest of (x) the third anniversary of the prior submission or (y) on or
before the expiration of thirty (30) days after there is a “change in
circumstances” with respect to such Foreign Buyer as defined in Treas. Reg.
Section 1.1441(e)(4)(ii)(D).  For any period with respect to which a Foreign
Buyer has failed to provide Seller with the appropriate form or other relevant
document pursuant to this subparagraph (unless such failure is due to a change
in any Requirement of Law occurring subsequent to the date on which a form
originally was required to be provided), such Foreign Buyer shall not be
entitled to any “gross-up” of Taxes or indemnification under this Paragraph
11(e) with respect to Taxes imposed by the United States; provided, however,
that should a Foreign Buyer, which is otherwise exempt from a withholding tax,
become subject to Taxes because of its failure to deliver a form required
hereunder, Seller shall take such steps as such Foreign Buyer shall reasonably
request to assist such Foreign Buyer to recover such Taxes.

 

(E)       Without prejudice to the survival or any other agreement of Seller
hereunder, the agreements and obligations of Seller contained in this Paragraph
11(e) shall survive the termination of this Agreement.  Nothing contained in
this Paragraph 11(e) shall require Buyer to make available any of its tax
returns or other information that it deems to be confidential or proprietary.

 

47

--------------------------------------------------------------------------------

 

(F)       Each Party acknowledges that it is its intent, for purposes of U.S.
federal, state and local income and franchise taxes only, to treat each purchase
transaction hereunder as indebtedness of Seller that is secured by the Purchased
Mortgage Loans and that the Purchased Mortgage Loans are owned by Seller in the
absence of an Event of Default by Seller.  All parties to this Agreement agree
to such treatment and agree to take no action inconsistent with this treatment,
unless required by law.

 

(f)         Insurance.  Seller shall, and shall cause its Subsidiaries to,
maintain (a) errors and omissions insurance or mortgage impairment insurance and
blanket bond coverage, with such companies and in such amounts as to satisfy
prevailing Agency Guidelines requirements applicable to a qualified mortgage
originating institution, and shall cause Seller’s policy to be endorsed with the
Blanket Bond Required Endorsement; (b) liability insurance and fire and other
hazard insurance on its properties, with responsible insurance companies
approved by Buyer, in such amounts and against such risks as is customarily
carried by similar businesses operating in the same vicinity; and (c) within
thirty (30) days after notice from Buyer, obtain such additional insurance as
Buyer shall reasonably require, all at the sole expense of Seller.  Photocopies
of such policies shall be furnished to Buyer without charge upon obtaining such
coverage or any renewal of or modification to such coverage.

 

(g)        Financial Statements and Other Reports.  Seller shall deliver, or
cause to be delivered together with the other Sellers, to Buyer:

 

(i)         As soon as available and in any event not later than thirty (30)
days after the end of each calendar month, statements of income and changes in
stockholders’ equity of Seller and, if applicable, Seller’s Subsidiaries, on a
consolidated and consolidating basis for the immediately preceding month, and
related balance sheet as at the end of the immediately preceding month, all in
reasonable detail, prepared in accordance with GAAP applied on a consistent
basis, and certified as to the fairness of presentation by the vice president
controller or treasurer of Seller, subject, however, to normal year-end audit
adjustments and footnotes;

 

(ii)        As soon as available and in any event not later than thirty (30)
days after the end of each calendar quarter, statements of cash flow of Seller
and, if applicable, Seller’s Subsidiaries, on a consolidated and consolidating
basis for the immediately preceding quarter, all in reasonable detail, prepared
in accordance with GAAP applied on a consistent basis, and certified as to the
fairness of presentation by the vice president controller or treasurer of
Seller, subject, however, to normal year-end audit adjustments and footnotes;

 

(iii)       As soon as available and in any event not later than ninety (90)
days after Seller’s fiscal year end, statements of income, changes in
stockholders’ equity and cash flows of Seller, and, if applicable, Seller’s
Subsidiaries, on a consolidated basis for the preceding fiscal year, the related
balance sheet as at the end of such year (setting forth in comparative form the
corresponding figures for the preceding fiscal year), all in reasonable detail,
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved, and accompanied by an opinion in form and substance

 

48

--------------------------------------------------------------------------------

 

satisfactory to Buyer and prepared by an accounting firm reasonably satisfactory
to Buyer, or other independent certified public accountants of recognized
standing selected by Seller and acceptable to Buyer, as to said financial
statements and a certificate signed by the vice president controller or
treasurer of Seller stating that said financial statements fairly present the
financial condition, results and cash flows of operations of Seller (and, if
applicable, Seller’s Subsidiaries on a consolidated basis) as at the end of, and
for, such year;

 

(iv)       Together with each delivery of financial statements required in this
Paragraph, a Compliance Certificate executed by the vice president controller or
treasurer of Seller;

 

(v)        Photocopies of all regular or periodic financial and other reports,
if any, which Seller or any Subsidiary of Seller shall file with the SEC or any
other Governmental Authority, not later than five (5) days after filing;

 

(vi)       Photocopies of any audits completed by any Agency of Seller or any of
its Subsidiaries, not later than five (5) days after receiving such audit;

 

(vii)      Not less frequently than once every week (and more often if requested
by Buyer), a report in form and substance satisfactory to Buyer summarizing the
Hedging Arrangements then in effect with respect to all Mortgage Loans then
owned by Buyer and interim serviced by Seller (or a Successor Servicer);

 

(viii)      On each Business Day, a data tape for Purchased Mortgage Loans
including the information described on Exhibit I and such other information
requested by Buyer from time to time; and

 

(ix)       From time to time, with reasonable promptness, such further
information regarding the Mortgage Assets, or the business, operations,
properties or financial condition of Seller as Buyer may reasonably request.

 

(h)        Limits on Distributions.  Any Seller may declare and pay dividends so
long as no Default or Event of Default exists or would result therefrom.

 

(i)         Use of Chase’s Name.  Seller shall and shall cause its Subsidiaries
to, confine its use of Buyer’s logo and the “JPMorgan” and “Chase” names to
those uses specifically authorized by Buyer in writing.  Except where required
by the federal Real Estate Settlement Procedures Act or HUD’s Regulation X
thereunder, or the Helping Families Save Their Homes Act of 2009, as amended
from time to time, in no instance may Seller or any of its Subsidiaries disclose
to any prospective Mortgagor, or the agents of the Mortgagor, that such
Mortgagor’s Mortgage Loan will be offered for sale to Buyer.  None of Seller or
its Subsidiaries may use Buyer’s name or logo to obtain any mortgage-related
services without the prior written consent of Buyer.

 

(j)         Reporting.  In its financial statements, Seller will report each
sale of a Mortgage Loan hereunder as a financing in accordance with GAAP.

 

49

--------------------------------------------------------------------------------

 

(k)        Transactions with Affiliates.  Seller will not and will not permit
any of its Subsidiaries to (i) 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 this Agreement, (b) in the ordinary course of Seller’s or such
Subsidiary’s business and (c) upon fair and reasonable terms no less favorable
to Seller or such Subsidiary than it would obtain in a comparable arm’s-length
transaction with a Person which is not an Affiliate, or (ii) make a payment that
is not otherwise permitted by this Paragraph 11 to any Affiliate.

 

(l)         Defense of Title; Preservation of Mortgage Assets.  Seller warrants
and will defend the right, title and interest of Buyer in and to all Mortgage
Assets against all adverse claims and demands of all Persons whomsoever.  Seller
shall do all things necessary to preserve the Mortgage Assets so that such
Mortgage Assets remain subject to a first priority perfected Lien hereunder. 
Without limiting the foregoing, Seller will comply with all Requirements of Law
applicable to Seller or relating to the Mortgage Assets and cause the Mortgage
Assets to comply with all applicable Requirements of Law.  Seller will not allow
any default to occur for which Seller is responsible under any Mortgage Assets
or any Transaction Documents and Seller shall fully perform or cause to be
performed when due all of its obligations under any Mortgage Assets and the
Transaction Documents.

 

(m)       Limitation on Sale of Assets. 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 of its Subsidiaries to Transfer all or substantially all
of its assets to any Person.

 

(n)        No Amendment or Compromise.  Without Buyer’s prior written consent,
none of Seller or those acting on Seller’s behalf shall amend or modify, or
waive any term or condition of, or settle or compromise any claim in respect of,
any item of the Purchased Mortgage Loans, any related rights or any of the
Transaction Documents.

 

(o)        Loan Determined to be Defaulted or Defective.  Upon discovery by
Seller that any Purchased Mortgage Loan is a Defaulted Loan or a Defective
Mortgage Loan, Seller shall promptly give notice of such discovery to Buyer.

 

(p)        Further Assurances.  Seller agrees to do such further acts and things
and to execute and deliver to Buyer such additional assignments,
acknowledgments, agreements, powers and instruments as are reasonably required
by Buyer to carry into effect the intent and purposes of this Agreement and the
other Transaction Documents, to perfect the interests of Buyer in the Mortgage
Assets or to better assure and confirm unto Buyer its rights, powers and
remedies hereunder and thereunder.

 

(q)        Hedging Arrangements.  If and to the extent (if any) that Buyer shall
approve in writing Seller’s use of Hedging Arrangements in lieu of Takeout
Commitments, Seller shall maintain Hedging Arrangements with respect to all
Mortgage Loans not the subject of Takeout Commitments reasonably satisfactory to
Buyer, with Persons reasonably satisfactory to Buyer, in order to mitigate the
risk that the Market Value of any such Mortgage Loan will change as a

 

50

--------------------------------------------------------------------------------

 

result of a change in interest rates or the market for mortgage loan assets
before the Mortgage Loan is purchased by an Approved Takeout Investor or
repurchased by Seller.

 

(r)        No Guaranties.  Without the prior written consent of Buyer, Seller
shall not, and shall not permit any of its Subsidiaries to, guaranty any Debt in
excess of $1,000,000 other than Debt incurred by a Subsidiary for a warehouse,
facility or early purchase facility for Mortgage Loans.

 

(s)        Underwriting Guidelines.  Seller will underwrite Eligible Mortgage
Loans in compliance with its underwriting guidelines in effect on the date
hereof.  Seller will not change its underwriting guidelines in any material
respect without the prior written consent of Buyer except as may be required
from time to time to comply with Agency Guidelines.

 

(t)         No Mergers, Acquisitions, Subsidiaries.  Seller will not, and will
not permit any of its Subsidiaries to, consolidate or merge with or into any
entity (unless Seller is the surviving entity and any of Seller’s Subsidiaries
may merge with or into Seller), consolidate, acquire any interest in any Person
or create, form or acquire any Subsidiary not listed in Exhibit G.

 

(u)        UCC.  Seller will not change its name, identity, corporate structure
or location (within the meaning of Paragraph 9-307 of the UCC) unless it shall
have (i) given Buyer at least forty-five (45) days’ prior written notice thereof
and (ii) delivered to Buyer all financing statements, amendments, instruments,
legal opinions and other documents requested by Buyer in connection with such
change.  Seller will keep its principal place of business and chief executive
office at the location specified in Paragraph 15, and the office where it
maintains any physical records of the Purchased Mortgage Loans at a corporate
facility of Seller, or, in any such case, upon thirty (30) days’ prior written
notice to Buyer, at another location within the United States.

 

(v)        Takeout Commitments.  Except to the extent superseded by this
Agreement, Seller covenants that it shall continue to perform all of its duties
and obligations to the Approved Takeout Investor, under any applicable Takeout
Commitment and Takeout Agreement and otherwise, with respect to a Purchased
Mortgage Loan as if such Mortgage Loan were still owned by Seller and to be sold
directly by Seller to the Approved Takeout Investor pursuant to such Takeout
Commitment on the date provided therein without the intervening ownership of
Buyer pursuant to this Agreement.  Without limiting the generality of the
foregoing, Seller shall timely assemble all records and documents concerning the
Mortgage Loan required under any applicable Takeout Commitment (except that
photocopies instead of originals shall be used for those documents already
provided to Buyer in the Loan File) and all other documents and information that
may have been required or requested by the Approved Takeout Investor, and Seller
shall make all representations and warranties required to be made to the
Approved Takeout Investor under the applicable Takeout Commitment and Takeout
Agreement.

 

(w)       Financial Covenants (Applicable to RMC Only).

 

(i)         Leverage Ratio.  RMC shall not permit the Leverage Ratio of RMC
(and, if applicable, its Subsidiaries, on a consolidated basis) to exceed 12 to
1 computed as of the end of each calendar month.

 

51

--------------------------------------------------------------------------------

 

(ii)        Minimum Adjusted Tangible Net Worth.  RMC shall not permit the
Adjusted Tangible Net Worth of RMC (and, if applicable, its Subsidiaries, on a
consolidated basis), computed as of the end of each calendar month to be less
than $10,000,000.

 

(iii)       Minimum Current Ratio.  RMC shall not permit the Current Ratio of
RMC (and, if applicable, its Subsidiaries, on a consolidated basis), computed as
of the end of each calendar month, to be less than 1.05 to 1.

 

(iv)       Maintenance of Liquidity.  RMC shall maintain at all times
unencumbered Liquidity in an amount greater than or equal to 3% of actual total
assets (including the balance on deposit in the Cash Pledge Account, but
excluding any restricted cash or cash pledged to third parties).

 

(v)        Net Income.  RMC shall not permit its net loss for its first (1st)
fiscal quarter of each fiscal year to be greater than One Million Dollars
($1,000,000) and shall not permit its net income before taxes for any other
fiscal quarter to be less than One Dollar ($1).

 

(vi)       Maximum Facility Ratio.  RMC shall not permit the Maximum Facility
Ratio of RMC (and, if applicable, its Subsidiaries, on a consolidated basis) to
exceed 30 to 1 computed as of the end of each calendar month.

 

(x)        Wholesale Originations.  No Seller shall Originate more than 20% of
its total Mortgage Loan originations in any calendar month through wholesale or
broker originations.

 

(y)        Government Regulation.  Seller shall not (1) be or become subject at
any time to any Requirement of Law (including, without limitation, the U.S.
Office of Foreign Asset Control list) that prohibits or limits Buyer from making
any advance or extension of credit to Seller or from otherwise conducting
business with Seller, or (2) fail to provide documentary and other evidence of
Seller’s identity as may be requested by Buyer at any time to enable Buyer to
verify Seller’s identity or to comply with any applicable Requirement of Law,
including, without limitation, Section 326 of the USA Patriot Act of 2001, 31
U.S.C. Section 5318.

 

(z)        Contribution Provisions.  Seller shall not enter into any additional
warehouse lines of credit, purchase facilities, repurchase facilities,
off-balance sheet funding facilities (whether committed or uncommitted) or any
similar contractual arrangement unless (A) Seller has given Buyer at least ten
(10) Business Days prior written notice to Buyer and (B) if Seller is jointly
and severally liable with any other Person, such contractual arrangement
contains contribution rights to the same extent as exist herein under Paragraph
30(d) and related provisions.

 

(aa)      Mortgage-Backed Securities.  Seller shall not create any
mortgage-backed securities backed by Purchased Mortgage Loans prior to the
repurchase of such Purchased Mortgage Loans by any Seller or purchase of such
Purchased Mortgage Loans by an Approved Takeout Investor in accordance with this
Agreement.

 

(bb)      No Loans or Investments Except Approved Investments.  Seller shall
not, and shall not permit any of its Subsidiaries to, make or permit to remain
outstanding any loans or

 

52

--------------------------------------------------------------------------------

 

advances to, or investments in, any Person, except that the foregoing
restriction shall not apply to:

 

(i)         investments in Cash Equivalents;

 

(ii)        Mortgage Loans; and

 

(iii)       other investments not to exceed Five Hundred Thousand Dollars
($500,000) in the aggregate without Buyer’s prior written consent.

 

(cc)      Only Permitted Debt.  Seller shall not, and shall not permit any of
its Subsidiaries to, incur, permit to exist or commit to incur any Debt that has
not been approved by Buyer in writing in advance, except the following
(collectively, “Permitted Debt”):

 

(i)         Seller’s obligations under this Agreement and the other Transaction
Documents;

 

(ii)        Seller’s and its Subsidiaries’ obligations under other Available
Facilities;

 

(iii)       obligations to pay taxes;

 

(iv)       liabilities for accounts payable, non-capitalized equipment or
operating leases and similar liabilities, but only if incurred in the ordinary
course of business;

 

(v)        accrued expenses, deferred credits and loss contingencies that are
properly classified as liabilities under GAAP;

 

(vi)       non-speculative Hedging Arrangements incurred in the ordinary course
of business; and

 

(vii)      other Debt approved in writing by Buyer, including the Permitted
Debt, if any, described in Exhibit M (Buyer shall have no obligation to approve
any other Debt, and may approve or disapprove it, in writing or otherwise, in
Buyer’s sole and absolute discretion).

 

Seller shall give Buyer written notice prior to entering into any facility of
the type described in the definition of Available Facilities.

 

12.                            Events of Default; Remedies.

 

(a)        Each of the following events shall, upon its occurrence and during
its continuance, be an “Event of Default”:

 

(i)         Sellers fail to remit any Price Differential, Income, fees,
Repurchase Price, escrow payment or any other amount due to Buyer pursuant to
the terms hereof or any other Transaction Document or fails to cure any Margin
Deficit as provided in Paragraph 4; or

 

53

--------------------------------------------------------------------------------

 

(ii)        Sellers fail to repurchase any Purchased Mortgage Loan at the time
and for the amount required hereunder; or

 

(iii)       (A)       any representation or warranty made by a Seller in this
Agreement or any other Transaction Document is untrue, inaccurate or incomplete
in any material respect (each such representation or warranty, a “Materially
False Representation”) on or as of the date made; provided that if any
representation or warranty in subparagraph 10(a)(i) or Paragraph 10(b) or on
Exhibit B (a “Loan Level Representation”) was when made, or has become, a
Materially False Representation, then that Materially False Representation will
not constitute a Default or an Event of Default — although such Materially False
Representation will cause each affected Purchased Mortgage Loan to cease to be
an Eligible Mortgage Loan and Sellers shall be obligated to repurchase it from
Buyer promptly after learning from any source of its ineligibility — unless both
(1) such Loan Level Representation relates to five (5) or more Purchased
Mortgage Loans and (2) when such Loan Level Representation was made, an
Authorized Officer of a Seller had actual knowledge that it was being made and
that it was untrue, inaccurate or incomplete in a material respect, in which
event such Materially False Representation will constitute an Event of Default;
or

 

(B)       any information contained in any written statement, report, financial
statement or certificate made or delivered by a Seller (either before or after
the date hereof) to Buyer pursuant to the terms of this Agreement or any other
Transaction Document is untrue or incorrect as of the date when made or deemed
made; or

 

(iv)       Sellers shall fail to comply with any of the requirements set forth
in Paragraph 11(c) (Inspection of Properties and Books), Paragraph 11(o) (Loan
Determined to be Defaulted or Defective) or Paragraph 11(w) (Financial
Covenants); or

 

(v)        a Seller, as applicable, shall fail to observe, keep or perform any
duty, responsibility or obligation imposed or required by this Agreement or any
other Transaction Document other than one of the Events of Default specified or
described in another subparagraph of this Paragraph 12(a)), and such failure
continues unremedied for a period of five (5) days; or

 

(vi)       any Act of Insolvency occurs with respect to a Seller, any of its
Subsidiaries; or

 

(vii)      one or more judgments or decrees are entered against a Seller, any of
its Subsidiaries involving claims not paid or not fully covered by insurance and
all such judgments or decrees are not vacated, discharged, or stayed or bonded
pending appeal within thirty (30) days after its entry; or

 

(viii)      any Agency, private investor or any other Person seizes or takes
control of the servicing portfolio of a Seller, any of its Subsidiaries or any
Subservicer for breach of any servicing agreement applicable to such servicing
portfolio or for any other reason whatsoever; or

 

54

--------------------------------------------------------------------------------

 

(ix)       any Agency or Governmental Authority revokes or materially restricts
the authority of a Seller, any of a Seller’s Subsidiaries or any Subservicer, to
Originate, purchase, sell or service Mortgage Loans, or a Seller, any of such
Seller’s Subsidiaries or any Subservicer shall fail to meet all requisite
servicer eligibility qualifications promulgated by any Agency; or

 

(x)        there is a default under any agreement other than a Transaction
Document that a Seller or any its Affiliates or Subsidiaries has entered into
with Buyer or any of its Affiliates or Subsidiaries; or

 

(xi)       a Seller or any of its Subsidiaries fails to pay when due any other
Debt in excess of Five Hundred Thousand Dollars ($500,000), individually or in
the aggregate, beyond any period of grace provided, or there occurs any breach
or default with respect to any material term of any such Debt, if the effect of
such failure, breach or default is to cause, or to permit the holder or holders
thereof (or a trustee on behalf of such holder or holders) to cause, such Debt
of such Person to become or be declared due prior to its stated maturity (upon
the giving or receiving of notice, lapse of time or both, or satisfaction of any
other condition to acceleration, whether or not any such condition to
acceleration has been satisfied); or

 

(xii)      there is a Material Adverse Effect; or

 

(xiii)      there is an Event of Default (however denominated in the agreement
for such repurchase or lending arrangement) by a Seller or any of its
Subsidiaries under (x) any mortgage loan repurchase arrangement similar to the
arrangement provided for in this Agreement, including off balance sheet
repurchase arrangements, or (y) any warehouse lending arrangement, including off
balance sheet warehouse lending arrangements, that such Seller or a Subsidiary
may have with any other Person, including both (1) any Default (however
denominated in such agreement) for which no notice or grace period is specified
and that therefore is an Event of Default (however denominated in such
agreement) immediately upon its occurrence, and (2) any Default for which such
agreement provides for notice, a grace period or both and that has continued
uncured by such Seller or such Subsidiary (as the case may be) and unwaived by
the counterparty to such agreement beyond the applicable notice and grace
periods; or

 

(xiv)     (A) a Seller shall assert that any Transaction Document is not in full
force and effect or shall otherwise seek to terminate or disaffirm its
obligations under any such Transaction Document at any time following the
execution thereof or (B) any Transaction Document ceases to be in full force and
effect, or any material obligations of a Seller under any Transaction Document
shall cease to be in full force and effect, or the enforceability thereof shall
be contested by a Seller; or

 

(xv)      any Governmental Authority or any Person 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 assets of a Seller, any of its Subsidiaries or any Subservicer, or shall
have taken any action to displace the management of a Seller, any of its
Subsidiaries or to curtail its authority in

 

55

--------------------------------------------------------------------------------

 

the conduct of the business of such Seller, any of its Subsidiaries, or to
restrict the payment of dividends to Seller by any Subsidiary of such Seller,
and such action shall not have been discontinued or stayed within thirty (30)
days; or

 

(xvi)     a default or an event of default shall have occurred under any other
Transaction Document; or

 

(xvii)     any Change in Control of a Seller, any of its Subsidiaries shall have
occurred without Buyer’s prior written consent or a material change in the
management of a Seller, any of its Subsidiaries shall have occurred that has not
been approved by Buyer in writing; or

 

(xviii)    any failure by a Seller to deliver assignments executed in blank to
Buyer or its designee for each Purchased Mortgage Loan then held by Buyer within
five (5) Business Days following any termination of a Seller’s MERS membership;
or

 

(xix)     a downgrade of any of a Seller’s or any of its Subsidiaries’ servicer
ratings below the ratings held by such Seller or such Subsidiary as of the date
of this Agreement or, for ratings initiated after the date of this Agreement,
below such initial ratings; or

 

(xx)      the initiation of any investigation or proceeding in respect of a
Seller by any Governmental Authority, that is reasonably likely to have a
material effect on such Seller’s ability to perform its obligations under this
Agreement or the other Transaction Documents, provided that such Seller is not
prohibited by law from disclosing the fact of the investigation; or

 

(xxi)     the Pension Benefit Guaranty Corp. shall, or shall indicate its
intention to, file notice of a Lien pursuant to Section 4068 of ERISA with
regard to any of the assets of a Seller or its Subsidiaries; or

 

(xxii)     a Seller shall become subject to registration as an “investment
company” as defined in, or subject to regulation under, the Investment Company
Act of 1940, as amended; or

 

(xxiii)    Buyer shall fail to have a valid and perfected first priority
security interest in any of the Purchased Mortgage Loans, including the
Servicing Rights thereto, or any other Mortgage Assets, in each case free and
clear of any other Lien.

 

(b)        If an Event of Default occurs, Buyer, at its option, may at any time
or times thereafter while such Event of Default is continuing, elect by written
notice to any Seller to do any or all of the following:

 

(i)         accelerate the Repurchase Date of each outstanding Transaction whose
Repurchase Date has not already occurred and cancel the Purchase Date for any
Transaction whose Purchase Date has not yet occurred;

 

(ii)        terminate and replace all Sellers as interim servicers with respect
to any Mortgage Assets at the cost and expense of Sellers;

 

56

--------------------------------------------------------------------------------

 

(iii)       direct Sellers to cause all Income to be transferred into the
Collection Account within one (1) Business Day after receipt by a Seller or any
Subservicer;

 

(iv)       direct or cause Sellers to direct, all Mortgagors to remit all Income
directly to an account specified by Buyer; and

 

(v)        terminate any commitment of Buyer to purchase Mortgage Loans under
this Agreement or otherwise.

 

(c)        If Buyer has exercised the option referred to in Paragraph 12(b)(i),
then (i) the applicable Seller’s obligations hereunder to repurchase all
Purchased Mortgage Loans in such Transactions on the Repurchase Date determined
in accordance with Paragraph 12(b)(i) shall thereupon become immediately due and
payable, (ii) to the extent permitted by applicable law, the Repurchase Price
with respect to each such Transaction shall be increased by the aggregate amount
obtained by daily application of (x) the greater of (1) the Pricing Rate for
such Transaction and (2) five percent (5.00%) plus the Prime Rate to (y) the
Repurchase Price for such Transaction as of the accelerated Repurchase Date as
determined pursuant to Paragraph 12(b) (decreased as of any day by (A) any
amounts retained by Buyer with respect to such Repurchase Price pursuant to
clause (iii) or clause (iv) of this Paragraph 12(c) and (B) any proceeds from
the sale of Purchased Mortgage Loans pursuant to Paragraph 12(e), on a 360 day
per year basis for the actual number of days during the period from and
including the date of the Event of Default giving rise to such option to but
excluding the date of payment of the Repurchase Price as so increased, (iii) all
Income paid after such exercise or deemed exercise shall be payable to and
retained by Buyer and shall be applied to the aggregate unpaid Repurchase Prices
and all other amounts owed by a Seller to Buyer or any other Indemnified Party
under the Transaction Documents, (iv) in accordance with Paragraphs 4 and 5, all
amounts on deposit in the Accounts, shall be applied by Buyer to the aggregate
unpaid Repurchase Prices and all other amounts owed by a Seller to Buyer or any
other Indemnified Party under the Transaction Documents, (v) Sellers shall, if
directed by Buyer in writing to any Seller, immediately deliver to Buyer any
documents then in Sellers’ possession relating to any Purchased Mortgage Loans
subject to such Transactions, and (vi) Buyer may, by notice to any Seller,
declare the Termination Date to have occurred.

 

(d)        Upon the occurrence of any Event of Default, without prior notice to
any Seller, Buyer may (A) immediately sell, on a servicing released or servicing
retained basis as Buyer deems desirable, in a recognized market at such price or
prices as Buyer may in its sole discretion deem satisfactory, any or all
Purchased Mortgage Loans of any or all Sellers subject to such Transactions and
apply the proceeds thereof to the aggregate unpaid Repurchase Prices and any
other amounts owing by Sellers to Buyer or any other Indemnified Party under the
Transaction Documents or (B) in its sole discretion elect, in lieu of selling
all or a portion of such Purchased Mortgage Loans, to give each Seller credit
for its Purchased Mortgage Loans in an amount equal to the Market Value therefor
on such date against the aggregate unpaid Repurchase Prices and any other
amounts owing by Sellers to Buyer or any other Indemnified Party under the
Transaction Documents.

 

(e)        The proceeds of any disposition described above shall be applied
first, to the reasonable costs and expenses incurred by Buyer in connection with
or as a result of an Event of

 

57

--------------------------------------------------------------------------------

 

Default (including, without limitation, legal fees, consulting fees, accounting
fees, file transfer and inventory fees, costs and expenses incurred in respect
of a transfer of the servicing of the Purchased Mortgage Loans and costs and
expenses incurred in connection with a disposition of the Purchased Mortgage
Loans); second, to costs of cover and/or related hedging transactions; third, to
the aggregate and accrued Price Differential owed hereunder, fourth, to the
remaining aggregate Repurchase Prices owed hereunder; fifth, to any other
accrued and unpaid obligations of Sellers hereunder and under the other
Transaction Documents, and sixth, any remaining proceeds shall be paid to
Sellers or other Person legally entitled thereto.

 

(f)         The Parties acknowledge and agree that:

 

(i)         Buyer has no desire or intention to hold any of the Purchased
Mortgage Loans for investment under any circumstances, and if (x) Sellers fail
to repurchase any Purchased Mortgage Loan when required to do so by this
Agreement, whether before or after its termination, or (y) any Event of Default
has occurred, and (z) Buyer has not made an affirmative election under the
circumstances then prevailing to retain such Purchased Mortgage Loan pursuant to
clause (B) of Paragraph 12(d), Buyer will sell it (i) if practicable and if the
sale can be made without Buyer’s having to undertake representation, warranty or
other obligations that Buyer, acting in its sole discretion, considers
unacceptable, to the relevant Approved Takeout Investor (if any), or (ii) by
private sale to another Person in the secondary mortgage market, undertaking
only such representation, warranty and other obligations, if any, to such Person
as Buyer, acting in its sole discretion, considers acceptable, at the earliest
reasonable opportunity and for such price as Buyer, acting in its sole
discretion, determines to be the optimal price available at the time of such
sale; provided that if at any time Buyer determines that the secondary market
for residential mortgage loans is illiquid, disrupted or dysfunctional, Buyer
may elect to postpone sales of Purchased Mortgage Loans for so long as Buyer
determines that any such market conditions persist, and no such delay shall be
construed to constitute or require a change in the classification of the
Purchased Mortgage Loans in Buyer’s hands from “held for sale” to “held for
investment”, and in all cases, to the maximum extent not prohibited by
applicable law, their Market Value shall be the only “reasonable determinant of
value” of Purchased Mortgage Loans for purposes of Section 562 of the Bankruptcy
Code;

 

(ii)        in the absence (whether because of market disruptions or for any
other reason whatsoever) of a generally recognized source for secondary mortgage
market prices of, or for bid or offer quotations for, any one or more Purchased
Mortgage Loans at any time, whether before or after any termination of this
Agreement, Buyer may determine the Market Values of such Purchased Mortgage
Loans using such means, methods, averaging, weighting, calculations and
assumptions as it shall determine in its sole discretion to be appropriate, and
Buyer’s determination shall be conclusive and binding, absent manifest error,
for all purposes, it being the Parties’ specific intention to include therein
the purposes of Sections 559 and 562 of the Bankruptcy Code;

 

(iii)       except to the extent, if any, contrary to market practice, in
determining values of Purchased Mortgage Loans, Buyer shall include all related
accrued Income

 

58

--------------------------------------------------------------------------------

 

available either to be transferred to a secondary market purchaser or to be
retained by Buyer to reduce their Repurchase Prices; and

 

(iv)       in determining the Market Value of any Purchased Mortgage Loans, it
is reasonable for Buyer to use and rely on the information provided by any
Seller on the daily data tape pursuant to Paragraph 11(g) without being required
to check or verify the accuracy or completeness of such information.

 

(g)        The Parties further recognize that if, under the circumstances
described in clause (x) or clause (y) of subparagraph 12(f)(i), Buyer has
elected to sell Purchased Mortgage Loans, the market for Mortgage Loans may then
be insufficiently liquid or dysfunctional in other respects, they agree that
Buyer may elect the time and manner of liquidating any Purchased Mortgage Loan,
and nothing contained herein shall obligate Buyer (i) to liquidate any Purchased
Mortgage Loan immediately after Sellers’ failure to repurchase it when required
by this Agreement, the occurrence of an Event of Default or any termination of
this Agreement, or (ii) to liquidate all Purchased Mortgage Loans in the same
manner or on the same day, and no exercise by Buyer of any right or remedy shall
constitute a waiver of any other right or remedy.  Sellers shall be jointly and
severally liable to Buyer for (i) the amount of all reasonable legal or other
expenses incurred by Buyer in connection with or as a result of an Event of
Default, (ii) damages in an amount equal to the cost (including all fees,
expenses and commissions reasonably incurred) of entering into replacement
transactions and entering into or terminating hedge transactions in connection
with or as a result of an Event of Default and (iii) any other loss, damage,
cost or expense directly arising or resulting from the occurrence of an Event of
Default.

 

(h)        To the extent permitted by applicable law, Sellers shall be jointly
and severally liable to Buyer for interest on any amounts owing by a Seller or
Sellers hereunder, from the date such Seller or Sellers become liable for such
amounts hereunder until such amounts are (i) paid in full by or on behalf of
such Seller or Sellers or (ii) satisfied in full by the exercise of Buyer’s
rights hereunder.  Interest on any sum payable by a Seller or Sellers to Buyer
under this Paragraph 12(h) shall be at a rate equal to the greater of (x) the
Pricing Rate for the relevant Transaction and (y) five percent (5%) plus the
Prime Rate.

 

(i)         If an Event of Default occurs, Buyer shall have, in addition to its
rights hereunder, any rights otherwise available to it under any other agreement
entered into in connection with the Transactions contemplated by this Agreement,
under applicable law or in equity.

 

(j)         Each Seller hereby acknowledges, admits and agrees that Sellers’
joint and several obligations under this Agreement are recourse obligations of
all Sellers.

 

(k)        Any provision hereof to the contrary notwithstanding, a Default or an
Event of Default with respect to any Seller shall be deemed to be a Default or
an Event of Default with respect to all Sellers.

 

13.       Servicing Rights Are Owned by Buyer; Interim Servicing of the
Purchased Mortgage Loans

 

(a)        As a condition of purchasing an Eligible Mortgage Loan, Buyer hereby
engages Sellers to interim service the related Purchased Mortgage Loans as agent
for Buyer for a term of

 

59

--------------------------------------------------------------------------------

 

thirty (30) days during the Post Origination Period (the “Interim Servicing
Term”), which is renewable as provided in clause (vi) below, on the following
terms and conditions applicable to each Seller and to all Sellers jointly and
severally:

 

(i)         Seller shall interim service and temporarily administer the
Purchased Mortgage Loan on behalf of Buyer in accordance with prudent mortgage
loan servicing standards and procedures generally accepted in the mortgage
banking industry and in accordance with all applicable requirements of the
Agencies, Requirements of Law, the provisions of any applicable servicing
agreement, and the requirements of any applicable Takeout Agreement and the
Approved Takeout Investor, so that the eligibility of the Purchased Mortgage
Loan for purchase under such Takeout Agreement is not voided or reduced by such
interim servicing and temporary administration;

 

(ii)        If any Eligible Mortgage Loan that is proposed to be sold on a
Purchase Date is serviced by a servicer other than Seller or any of its
Affiliates (a “Subservicer”), or if the interim servicing of any Purchased
Mortgage Loan is to be transferred to a Subservicer, Seller shall provide a copy
of the related subservicing agreement and a Subservicer Instruction Letter
executed by such Subservicer (collectively, the “Subservicing Agreement”) to
Buyer prior to such Purchase Date or interim servicing transfer date, as
applicable.  Each such Subservicing Agreement shall be in form and substance
acceptable to Buyer.  In addition, Seller shall have obtained the prior written
consent of Buyer for such Subservicer to subservice the Purchased Mortgage
Loans, which consent may be withheld in Buyer’s sole discretion.  In no event
shall Seller’s use of a Subservicer relieve Seller of its obligations hereunder,
and Seller shall remain liable under this Agreement as if Seller were interim
servicing such Purchased Mortgage Loans directly.  Any termination of Seller as
interim servicer shall automatically terminate each Subservicer.  In the event
that any Agency or Governmental Authority revokes or materially restricts any
Subservicer’s authority to originate, sell or service Mortgage Loans, or any
Subservicer shall fail to meet all requisite originator, seller and servicer
eligibility qualifications promulgated by any Agency, Buyer may direct Seller to
immediately terminate such Subservicer as a subservicer of any or all of the
Purchased Mortgage Loans and Seller shall promptly cause the termination of such
Subservicer as directed by Buyer.

 

(iii)       Seller acknowledges that it has no right, title or interest in the
Servicing Rights for any Purchased Mortgage Loan, and agrees that Seller may not
transfer or assign any rights to master service, service, interim service,
subservice or administer any Purchased Mortgage Loan prior to Seller’s
repurchase thereof from Buyer (by payment to Buyer of the Repurchase Price on
the applicable Repurchase Date) other than an interim servicing transfer to a
Subservicer approved by Buyer pursuant to a Subservicing Agreement approved by
Buyer as described above in this paragraph.

 

(iv)       Seller shall deliver all physical and contractual servicing
materials, files and records for the servicing of each Purchased Mortgage Loan,
together with all of the related Servicing Records that are not already in
Buyer’s possession, to Buyer’s designee upon the earliest of (w) the occurrence
of a Default or Event of Default hereunder, (x) the termination of Seller as
interim servicer by Buyer pursuant to Paragraph 13(a)(v), (y) the

 

60

--------------------------------------------------------------------------------

 

expiration (and non-renewal) of the Interim Servicing Term, or (z) the transfer
of servicing to any entity approved by Buyer and the assumption thereof by such
entity.  Seller’s transfer of the Servicing Records and the physical and such
contractual servicing materials, files and records under this Paragraph 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”).

 

(v)        Buyer shall have the right to terminate a Seller as interim servicer
of any of the Purchased Mortgage Loans, which right shall be exercisable at any
time in Buyer’s sole discretion, upon written notice to any Seller.

 

(vi)       The Interim Servicing Term will be deemed renewed on each Remittance
Date succeeding the related Purchase Date unless (i) a Seller has sooner been
terminated as interim servicer of all of the Purchased Mortgaged Loans or
(ii) an Event of Default has occurred on or before such Remittance Date, in
which latter event the Interim Servicing Term for all Sellers will expire on
such Remittance Date unless Buyer gives written notice to a Seller that the
Interim Servicing Term for such Seller is renewed and specifying the renewal
term.

 

(vii)      The Interim Servicing Term will automatically terminate and a Seller
shall have no further obligation to interim service such Purchased Mortgage Loan
as agent for Buyer or to make the delivery of documents required under this
Paragraph, upon receipt by Buyer of the Repurchase Price therefor.

 

(viii)      Buyer has no obligation to pay any Seller a fee for the interim
servicing obligations a Seller agrees to assume hereunder, no fee or other
compensation will ever accrue or be or become owing, due or payable for or on
account of such interim servicing and such interim servicing rights have no
monetary value.

 

(b)        During the period a Seller is interim servicing any Purchased
Mortgage Loans as agent for Buyer, Sellers agree that Buyer is the owner of the
related Servicing Rights, Credit Files and Servicing Records and a Seller acting
as interim servicer shall at all times maintain and safeguard, and cause any
Subservicer to maintain and safeguard, the Credit File for the Purchased
Mortgage Loan (including photocopies or images of the documents delivered to
Buyer), and accurate and complete records of its interim servicing of the
Purchased Mortgage Loan; a Seller’s possession of the Credit Files and Servicing
Records being for the sole purpose of interim servicing such Purchased Mortgage
Loans and such retention and possession by such Seller being in a temporary
custodial capacity only.

 

(c)        Each Seller (and all Sellers jointly and severally) further covenants
as follows:

 

(i)         Buyer may, at any time during Seller’s business hours on reasonable
notice (provided that upon or during the occurrence of a Default or Event of
Default, no such notice shall be required), examine and make copies of all such
documents and records relating to interim servicing and administration of the
Purchased Mortgage Loans;

 

61

--------------------------------------------------------------------------------

 

(ii)        At Buyer’s request, Seller shall promptly deliver to Buyer reports
regarding the status of any Purchased Mortgage Loan being interim serviced by
Seller, which reports shall include, but shall not be limited to, a description
of any event that would cause the Purchased Mortgage Loan to become a Defaulted
Loan or a Defective Mortgage Loan or any other circumstances that could cause a
material adverse effect on such Purchased Mortgage Loan, Buyer’s title to such
Purchased Mortgage Loan or the collateral securing such Purchased Mortgage Loan;
Seller may be required to deliver such reports until the repurchase of the
Purchased Mortgage Loan by Seller;

 

(iii)       Seller shall immediately notify Buyer if it becomes aware of any
payment default that occurs under any Purchased Mortgage Loan sold hereunder by
any Seller or any default under any Subservicing Agreement entered into by any
Seller that would materially and adversely affect any Purchased Mortgage Loan
subject thereto; and

 

(iv)       If, during the Post-Origination Period, any Mortgagor contacts Seller
requesting a payoff quote on the related Purchased Mortgage Loan, Seller shall
ensure that any payoff quote provided requires Mortgagor to wire payoff funds
directly to the Funding Account and includes wiring instructions therefor.

 

(d)        Each Seller shall release its custody of the contents of any Credit
File and any Loan File only (i) in accordance with the written instructions of
Buyer, (ii) upon the consent of Buyer when such release is required as
incidental to such Seller’s servicing of the Purchased Mortgage Loan, or is
required to complete the Takeout Funding or comply with the Takeout Guidelines,
or (iii) as required by any Requirements of Law.

 

(e)        Buyer reserves the right to appoint a successor interim servicer, or
a regular servicer, at any time to service any Purchased Mortgage Loan (each a
“Successor Servicer”) in its sole discretion.  If Buyer elects to make such an
appointment after the occurrence of a Default or an Event of Default, Sellers
shall jointly and severally be assessed all costs and expenses incurred by Buyer
associated with transferring the physical and contractual servicing materials,
files and records for the servicing of each Purchased Mortgage Loan, together
with all related Servicing Records, to the Successor Servicer.  In the event of
such an appointment, all Sellers shall perform all acts and take all action so
that any part of the Credit File and related Servicing Records held by any
Seller, together with all funds in the Collection Account and other receipts
relating to such Purchased Mortgage Loan, are promptly delivered to the
Successor Servicer, and shall otherwise fully cooperate with Buyer in
effectuating such transfer.  No Seller shall have any claim for lost interim
servicing income, any termination fee, lost profits or other damages if Buyer
appoints a Successor Servicer hereunder.  Buyer may, in its sole discretion if
an Event of Default shall have occurred and be continuing, without payment of
any termination fee or any other amount to any Seller, sell any or all of the
Purchased Mortgage Loans on a servicing released basis, at the sole cost and
expense of Sellers.

 

(f)         In the event a Seller is terminated as interim servicer of any
Purchased Mortgage Loan, whether by expiry of the Interim Servicing Term or by
any other means, Sellers shall all cooperate with Buyer in effecting such
termination and transferring all authority to interim service such Purchased
Mortgage Loan to the Successor Servicer.  Without limiting the generality of the
foregoing, each Seller shall, in the manner and at such times as the Successor

 

62

--------------------------------------------------------------------------------

 

Servicer or Buyer shall reasonably request (i) promptly transfer all data in its
possession relating to the applicable Purchased Mortgage Loans and other
Mortgage Assets to the Successor Servicer in such electronic format as the
Successor Servicer may reasonably request, (ii) promptly transfer to the
Successor Servicer, Buyer or Buyer’s designee all other files, records,
correspondence and documents relating to the applicable Purchased Mortgage Loans
and other Mortgage Assets and (iii) fully cooperate and coordinate with the
Successor Servicer and/or Buyer to comply with any applicable so-called
“goodbye” letter requirements, notices or other applicable requirements of the
Real Estate Settlement Procedures Act or other applicable Requirements of Law
applicable to the transfer of the servicing of the applicable Purchased Mortgage
Loans.  Each Seller agrees that if any Seller fails to cooperate with Buyer or
any Successor Servicer in effecting the termination of a Seller as servicer of
any Purchased Mortgage Loan or the transfer of all authority to service such
Purchased Mortgage Loan to such Successor Servicer in accordance with the terms
hereof, Buyer will be irreparably harmed and entitled to injunctive relief and
shall not be required to post bond.

 

(g)        Notwithstanding anything to the contrary in any Transaction Document,
each Seller and Buyer agree that all Servicing Rights with respect to the
Purchased Mortgage Loans are being transferred hereunder to Buyer on the
applicable Purchase Date, the Purchase Price for the Purchased Mortgage Loans
includes full and fair consideration for such Servicing Rights and such
Servicing Rights shall be transferred by Buyer to a Seller upon Sellers’ payment
of the Repurchase Price for such Purchased Mortgage Loans.

 

14.       Single Agreement

 

Buyer and Sellers acknowledge that, and have entered into this Agreement and
will enter into each Transaction hereunder in consideration of and in reliance
upon the fact that, all Transactions hereunder, together with the provisions of
the Side Letter, constitute a single business and contractual relationship and
have been made in consideration of each other.  Accordingly, Buyer and each
Seller agrees (i) to perform all of its obligations in respect of each related
Transaction hereunder and its obligations under the Side Letter, and that a
default in the performance by any Seller of any such obligations shall
constitute a default by all Sellers in respect of all Transactions hereunder,
(ii) that each of them shall be entitled to set off claims and apply property
held by them in respect of any Transaction against obligations owing to them in
respect of any other Transactions hereunder or any obligations under the Side
Letter and (iii) that payments, deliveries and other transfers made by any of
them in respect of any Transaction or any agreement under the Side Letter shall
be deemed to have been made in consideration of payments, deliveries and other
transfers in respect of any other Transactions hereunder or any agreement under
the Side Letter, and the obligations to make any such payments, deliveries and
other transfers may be applied against each other and netted.

 

15.       Notices and Other Communications

 

Except as otherwise expressly provided herein, all such notices, statements,
demands or other communications shall be in writing and shall be deemed to have
been duly given and received (i) if sent by facsimile, upon the sender’s receipt
of confirmation of transmission of such facsimile from the sending facsimile
machine, (ii) by email, upon confirmation of receipt by the recipient, (ii) if
hand delivered, when delivery to the address below is made, as evidenced by

 

63

--------------------------------------------------------------------------------

 

a confirmation from the applicable courier service of delivery to such address,
but without any need of evidence of receipt by the named individual required and
(iii) if mailed by overnight courier, on the following Business Day, in each
case addressed as follows:

 

if to RMC:

 

 

 

 

 

Ryland Mortgage Company

 

3011 Townsgate Road, Suite 200A

 

Westlake Village, California 91361

 

Attention:

Mr. Martyn Watson

 

Telephone:

(805) 367-3740

 

Facsimile:

(805) 367-3805

 

Email:

mwatson@ryland.com

 

 

 

if to RMCMC:

 

 

 

 

 

RMC Mortgage Corporation

 

3011 Townsgate Road, Suite 200A

 

Westlake Village, California 91361

 

Attention:

Mr. Martyn Watson

 

Telephone:

(805) 367-3740

 

Facsimile:

(805) 367-3805

 

Email:

mwatson@ryland.com

 

 

 

With copies to:

 

 

 

 

 

The Ryland Group, Inc.

 

3011 Townsgate Road, Suite 200

 

Westlake Village, CA 91361

 

Attention:

Mr. Timothy J. Geckle

 

 

Senior Vice President and General Counsel

 

Telephone:

(805) 367-3780

 

Facsimile:

(805) 367-3807

 

Cell:

(818) 292-0737

 

Email:

tgeckle@ryland.com

 

 

 

The Ryland Group, Inc.

 

3011 Townsgate Road, Suite 200

 

Westlake Village, CA 91361

 

Attention:

Kim Nelson

 

 

Treasurer

 

Telephone:

(805) 367-3723

 

Facsimile:

(805) 367-3802

 

Cell:

(805) 216-4571

 

Email:

knelson@ryland.com

 

64

--------------------------------------------------------------------------------

 

if to Buyer:

 

 

 

 

 

JPMorgan Chase Bank, N.A.

 

712 Main Street, 9th Floor

 

Houston, Texas 77002

 

Attention:

John Greene

 

Telephone:

(713) 216-0255

 

Facsimile:

(713) 216-2818

 

email:

john.r.greene@jpmorgan.com

 

 

 

with copies to:

 

 

 

 

 

Veronica J. Chapple

 

Chase Mortgage Warehouse Finance

 

3929 W. John Carpenter Fwy

 

Irving, Texas 75063

 

Phone:  214-492-4400

 

Fax:  972-870-3606

 

email:  vickie.j.chapple@jpmchase.com and cmwf.credit@jpmorganchase.com

and

 

 

Marjorie A. Hirsch

 

Vice President and Assistant General Counsel

 

Legal and Compliance Department

 

JPMorgan Chase Bank, N.A.

 

1111 Fannin, 10th Floor (Mail Code TX2-F069)

 

Houston, Texas 77002

 

Telephone:

713-750-2305

 

Facsimile:

713-750-2346

 

Email:

Midge.Hirsch@jpmorgan.com

 

Any Party may revise any information relating to it by notice in writing to the
other Party, in accordance with the provisions in this paragraph.  Any provision
hereof to the contrary notwithstanding, any notice, demand or other
communication provided by Buyer to any Seller shall be deemed to be effective
notice to all Sellers.

 

16.       Fees and Expenses; Indemnity

 

(a)        Sellers shall pay their own legal and accounting fees and other costs
incurred in respect of this Agreement, the other Transaction Documents and this
facility.  Sellers jointly and severally agree to promptly pay all out-of-pocket
costs and expenses incurred by Buyer, including, without limitation, reasonable
attorneys’ fees, in connection with (i) preparation, negotiation, and
documentation of this Agreement and the other Transaction Documents,
(ii) administration of this Agreement and the other Transaction Documents and
any amendment or waiver thereto and purchase and resale of Mortgage Loans by
Buyer hereunder, (iii) protection of the Purchased Mortgage Loans (including,
without limitation, all costs of filing or recording any assignments, financing
statements, amendments and other documents), (iv) performance of due diligence,
collateral audits and servicing appraisals by Buyer or any agent of Buyer

 

65

--------------------------------------------------------------------------------

 

conducted prior to and after the date hereof, and (v) enforcement of Buyer’s
rights hereunder and under any other Transaction Document (including, without
limitation, costs and expenses suffered or incurred by Buyer in connection with
any Act of Insolvency related to any Seller, appeals and any anticipated
post-judgment collection services).

 

(b)        In addition to its other rights hereunder, Sellers shall jointly and
severally indemnify Buyer and Buyer’s Affiliates and Subsidiaries and their
respective directors, officers, agents, advisors and employees (each, an
“Indemnified Party” and collectively the “Indemnified Parties”) against, and
hold Buyer and each of them harmless from, any losses, liabilities, damages,
claims, costs and expenses (including reasonable attorneys’ fees and
disbursements) suffered or incurred by any Indemnified Party (“Losses”) relating
to or arising out of this Agreement, any other Transaction Document or any other
related document, or any transaction contemplated hereby or thereby or any use
or proposed use of proceeds thereof and amendment or waiver thereof, or any
breach of any covenant, representation or warranty contained in any of such
documents, or arising out of, resulting from, or in any manner connected with,
the purchase by Buyer of any Mortgage Loan or the servicing of any Purchased
Mortgage Loans by any Seller or any Subservicer; provided that Sellers shall not
be required to indemnify any Indemnified Party to the extent such Losses result
from the gross negligence or willful misconduct of such Indemnified Party.  The
provisions of this Paragraph 16 shall survive the termination of this Agreement.

 

17.       Shipment to Approved Takeout Investor; Trust Release Letters

 

(a)        Shipping Instructions.  If a Seller desires that Buyer send a
Mortgage Note and the related Mortgage to an Approved Takeout Investor, rather
than to a Seller directly, in connection with Sellers’ repurchase of the related
Purchased Mortgage Loan, then a Seller shall prepare and send to Buyer Shipping
Instructions to instruct Buyer when and how to send such Mortgage Note and
related Mortgage to such Approved Takeout Investor.  Buyer shall use its best
efforts to send each Mortgage Note and related Mortgage on or before the date
specified for shipment in the Shipping Instructions in accordance with the
cutoff times specified in the “Chase Mortgage Warehouse Finance Customer
Reference Guide” provided by Buyer to such Seller, or otherwise specified by
Buyer to any Seller in writing from time to time.  If a Seller instructs Buyer
to send a Mortgage Note and related Mortgage before the Repurchase Date, Buyer
will send the Mortgage Note and related Mortgage under a Bailee Letter.  If a
Seller does not provide Buyer with Shipping Instructions with respect to a
Mortgage Loan, Buyer shall send the Mortgage Note and related Mortgage to a
Seller at such time as Buyer receives the Repurchase Price.

 

(b)        Trust Release Letters.  If a Seller believes that a Mortgage Note
contains one or more errors or omissions that are correctable and necessary to
facilitate the purchase or enforceability of that Mortgage Note, then a Seller
may deliver a Trust Release Letter to Buyer to request the release of the
Mortgage Note to a Seller for the purpose of making that correction.  If Buyer,
in its sole discretion, deems the reason stated by a Seller in the Trust Release
Letter to warrant return of the Mortgage Note to a Seller for correction, then
Buyer will deliver the Mortgage Note to such Seller at its earliest
convenience.  The related Seller shall return the corrected Mortgage Note to
Buyer no later than the fifth (5th) Business Day after the date of the related
Trust Release Letter.  At all times any Mortgage Note is in the possession
Sellers

 

66

--------------------------------------------------------------------------------

 

pursuant to a Trust Release Letter or otherwise, Sellers shall hold such
Mortgage Note in trust for the benefit of Buyer.  At no time shall the aggregate
original Outstanding Principal Balance of all Mortgage Notes released to all
Sellers pursuant to this Paragraph exceed $5,000,000.

 

18.         Further Assurances.

 

Each Seller shall (i) promptly provide such further assurances or agreements as
Buyer may request in good faith in order to effect the purposes of this
Agreement and (ii) on or prior to the date hereof, mark its systems and/or other
data processing records evidencing the Purchased Mortgage Loans with a legend or
other identifier, acceptable to Buyer, evidencing that Buyer has acquired an
interest therein as provided in this Agreement.

 

19.         Buyer as Attorney-in-Fact

 

Buyer is hereby appointed the attorney-in-fact of each Seller for the purpose of
carrying out the provisions of this Agreement and taking any action and
executing any instruments that Buyer may, in good faith, deem necessary or
advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest.  Without limiting
the generality of the foregoing, Buyer shall have the right and power to add and
amend endorsements in Seller’s name of Mortgage Notes either in blank or to any
Approved Takeout Investor or its designee, to cancel endorsements and to
re-endorse Mortgage Notes in Seller’s name and to receive, endorse and collect
all checks made payable to the order of a Seller representing any Income on any
of the Purchased Mortgage Loans and to give full discharge for the same.

 

20.         Wire Instructions

 

(a)          Unless otherwise specified in this Agreement, any amounts to be
transferred by Buyer to any Seller hereunder shall be sent by wire transfer in
immediately available funds to the account of Sellers (and to the account
specified in writing by any Seller) at:

 

Bank:

JPMorgan Chase Bank, New York, NY

Acct.  No.:

 

ABA No.:

 

Account Name:

 

 

 

Bank:

JPMorgan Chase Bank, New York, NY

Acct.  No.:

 

ABA No.:

 

Account Name:

 

 

(b)          Unless otherwise specified in this Agreement, any amounts to be
transferred by a Seller to Buyer hereunder shall be sent by wire transfer in
immediately available funds to the account of Buyer at:

 

67

--------------------------------------------------------------------------------

 

Bank:

JPMorgan Chase Bank, N.A.

Acct. No.:

 

ABA No.

 

Reference:

 

Attention:

 

 

(c)          Amounts received by Buyer after 4:00 p.m., Houston, Texas time, on
any Business Day shall be deemed to have been paid and received on the next
succeeding Business Day.

 

21.         Entire Agreement; Severability

 

This Agreement, as supplemented by the Side Letter, supersedes any existing
agreements between the Parties containing terms and conditions for repurchase
transactions.  Each provision and agreement of this Agreement and the other
Transaction Documents shall be treated as separate and independent from any
other provision or agreement of this Agreement and the other Transaction
Documents and shall be enforceable notwithstanding the unenforceability of any
of such other provisions or agreements.  Without limiting the generality of the
foregoing, if any phrase or clause of any Transaction Document would render any
provision or agreement of that (or any other) Transaction Document
unenforceable, such phrase or clause shall be disregarded and deemed deleted,
and such provision or agreement shall be enforced as fully as if the offending
phrase or clause had never appeared.

 

22.         Assignments; Termination

 

(a)          The rights and obligations of Sellers under this Agreement and
under any Transaction shall not be assigned by any Seller without the prior
written consent of Buyer and any such assignment without the prior written
consent of Buyer shall be null and void.

 

(b)          Buyer may assign all or any portion of its rights, obligations and
interest under this Agreement and in the Mortgage Assets at any time without the
consent of any Person, provided that any such assignment, other than an
assignment to an Affiliate of Buyer, is subject to the prior written consent of
Sellers so long as an Event of Default or Default has not occurred and is not
continuing.  Any such assignment shall be in a minimum amount of at least
$5,000,000 unless otherwise consented to by Sellers; provided that Sellers’
consent shall not be required if an Event of Default or Default has occurred and
is continuing.  Resales of Purchased Mortgage Loans by Buyer (subject to
Sellers’ right to repurchase the Purchased Mortgage Loans or, at Buyer’s
election, Equivalent Mortgage Loans before termination of this Agreement or
Buyer’s liquidation of the Purchased Mortgage Loans pursuant to Paragraph 12) in
accordance with applicable law, shall be permitted without restriction.  Buyer
may sell participation interests in all or any portion of its rights,
obligations and interest under this Agreement and in the Mortgage Assets to any
Person at any time without the consent of any Person.  In addition to, and
notwithstanding any provision to the contrary in, the foregoing, Buyer may
assign its rights to enforce this Agreement as to any Mortgage Loan to any
Person that subsequently purchases such Mortgage Loan from Buyer or provides
financing to Buyer with respect to such Mortgage Loan.

 

68

--------------------------------------------------------------------------------

 

(c)          In addition to the foregoing, Buyer may, at any time in its sole
discretion, pledge or grant a Lien in all or any portion of its rights under
this Agreement (including, without limitation, any rights to Mortgage Assets and
any rights to payment of the Repurchase Price) to secure obligations to a
Federal Reserve Bank, without notice to or consent of any Seller; provided that
no such pledge or grant of a security interest would release Buyer from any of
its obligations under this Agreement, or substitute any such pledgee or grantee
for Buyer as a party to this Agreement.

 

(d)          Subject to the foregoing, this Agreement and any Transactions shall
be binding upon and shall inure to the benefit of the Parties and their
respective successors and assigns.

 

(e)          Notwithstanding any of the foregoing provisions of this Paragraph,
Buyer shall not be precluded from assigning, charging or otherwise dealing with
all or any part of its interest in any sum payable to it under Paragraph 12.

 

(f)           This Agreement and all Transactions outstanding hereunder shall
terminate automatically without any requirement for notice on the date occurring
on or after the Termination Date on which all Repurchase Prices and all other
obligations of Sellers under the Transaction Documents have been paid in full. 
Any provision hereof to the contrary notwithstanding, any notice contemplated in
the definition of Termination Date in Paragraph 2 that is provided by a Seller
shall be binding on all Sellers.

 

23.         Counterparts

 

This Agreement may be executed in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.

 

24.         GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

 

(a)          THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH 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).

 

(b)          EACH SELLER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY
NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.  EACH SELLER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.  NOTHING IN

 

69

--------------------------------------------------------------------------------

 

THIS PARAGRAPH 24 SHALL AFFECT THE RIGHT OF BUYER TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY SELLER OR ITS PROPERTY IN THE COURTS OF OTHER
JURISDICTIONS.  EACH PARTY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO IT AT ITS
ADDRESS FOR NOTICES HEREUNDER SPECIFIED IN PARAGRAPH 15.

 

(c)          EACH SELLER AND BUYER (BY ITS ACCEPTANCE HEREOF) HEREBY
VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT, TORT, OR
OTHERWISE) BETWEEN ANY OR ALL SELLERS AND BUYER ARISING OUT OF OR IN ANY WAY
RELATED TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT. THIS PROVISION IS A
MATERIAL INDUCEMENT TO BUYER TO PROVIDE THE FACILITY EVIDENCED BY THIS
AGREEMENT.

 

25.         No Waivers, Etc.

 

No express or implied waiver of any Event of Default by Buyer shall constitute a
waiver of any other Event of Default and no exercise of any remedy hereunder by
Buyer 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 all of the Parties hereto. 
Without limitation on any of the foregoing, the failure to give a notice
pursuant to Paragraph 4(a) hereof will not constitute a waiver of any right to
do so at a later date.

 

26.         Use of Employee Plan Assets

 

(a)          If assets of an employee benefit plan subject to any provision of
the Employee Retirement Income Security Act of 1974 (“ERISA”) are intended to be
used by any Seller in a Transaction, a Seller shall so notify Buyer prior to the
Transaction.  Such Seller shall represent in writing to Buyer that the
Transaction does not constitute a prohibited transaction under ERISA or is
otherwise exempt therefrom, and Buyer may proceed in reliance thereon but shall
not be required so to proceed.

 

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

 

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

 

70

--------------------------------------------------------------------------------

 

27.         Intent

 

(a)          The Parties intend and acknowledge that each Transaction is a
“repurchase agreement” as that term is defined in Paragraph 101 of the
Bankruptcy Code, and a “securities contract” as that term is defined in
Paragraph 741 of the Bankruptcy Code.  Each Seller hereby agrees that it shall
not challenge the characterization of this Agreement as a “repurchase agreement”
as that term is defined in Paragraph 101 of the Bankruptcy Code, or as a
“securities contract” as that term is defined in Paragraph 741 of the Bankruptcy
Code in any dispute or proceeding.

 

(b)          It is understood that any Party’s right to accelerate or terminate
this Agreement or to liquidate Mortgage Loans delivered to it in connection with
Transactions hereunder or to exercise any other remedies pursuant to
Paragraph 12 hereof, is a contractual right to accelerate, terminate or
liquidate this Agreement or such Transaction as described in Paragraphs 555 and
559 of the Bankruptcy Code.

 

(c)          The Parties agree and acknowledge that if a Party hereto is an
“insured depository institution,” as such term is defined in the Federal Deposit
Insurance Act, as amended (“FDIA”), then each Transaction hereunder is a
“qualified financial contract,” as that term is defined in FDIA and any rules,
orders or policy statements thereunder (except insofar as the type of assets
subject to such Transaction would render such definition inapplicable).

 

(d)          It is understood that this Agreement constitutes a “netting
contract” as defined in and subject to Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (“FDICIA”) and each payment entitlement and
payment obligation under any Transaction hereunder shall constitute a “covered
contractual payment entitlement” or “covered contractual payment obligation”,
respectively, as defined in and subject to FDICIA (except insofar as any of the
Parties is not a “financial institution” as that term is defined in FDICIA).

 

(e)          It is understood and agreed that this Agreement constitutes a
“master netting agreement” as that term is defined in Paragraph 101 of the
Bankruptcy Code, and that any Party’s right to cause the termination,
liquidation, or acceleration of, or to offset net termination values, payment
amounts or other transfer obligations arising under or in connection with, this
Agreement or any Transaction is a contractual right to cause the termination,
liquidation, or acceleration of, or to offset net termination values, payment
amounts or other transfer obligations arising under or in connection with, this
Agreement or any Transaction as described in Paragraph 561 of the Bankruptcy
Code.

 

28.         Disclosure Relating to Certain Federal Protections

 

The Parties acknowledge that they have been advised that:

 

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

 

71

--------------------------------------------------------------------------------

 

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

 

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

 

29.         Confidentiality

 

(a)          Confidential Terms.  The Parties hereby acknowledge and agree that
all written or computer-readable information provided by one Party to any other
regarding the terms set forth in any of the Transaction Documents or the
Transactions contemplated thereby (the “Confidential Terms”) shall be kept
confidential and shall not be divulged to any Person (other than Affiliates and
Subsidiaries thereof) without the prior written consent of such other Party
except to the extent that (i) such Person is an Affiliate, division, or parent
holding company of a Party or a director, officer, employee or agent (including
an accountant, legal counsel and other advisor) of a Party or such Affiliate,
division or parent holding company, (ii) in such Party’s opinion it is necessary
to do so in working with legal counsel, auditors, taxing authorities or other
governmental agencies or regulatory bodies or in order to comply with any
applicable federal or state laws or regulations, (iii) any of the Confidential
Terms are in the public domain other than due to a breach of this covenant,
(iv) in the event of a Default or and Event of Default Buyer reasonably
determines such information to be necessary or desirable to disclose in
connection with the marketing and sales of the Purchased Mortgage Loans or
otherwise to enforce or exercise Buyer’s rights hereunder, or (v) to the extent
Buyer deems necessary or appropriate, in connection with an assignment or
participation under Paragraph 22 of this Agreement or in connection with any
hedging transaction related to Purchased Mortgage Loans.  Notwithstanding the
foregoing or anything to the contrary contained herein or in any other
Transaction Document, the Parties may disclose to any and all Persons, without
limitation of any kind, the U.S. federal, state and local tax treatment of the
Transactions, any fact that may be relevant to understanding the U.S. federal,
state and local tax treatment of the Transactions, and all materials of any kind
(including opinions or other tax analyses) relating to such U.S. federal, state
and local tax treatment and that may be relevant to understanding such tax
treatment; provided that no Seller may disclose (except as provided in clauses
(i) and (ii) of this paragraph (a)) the name of or identifying information with
respect to Buyer, the Side Letter, any terms contained therein (including the
Pricing Rate, Facility Fee, Purchase Price Percentage and Purchase Price) or
other nonpublic business or financial information (including any sublimits and
financial covenants) that is unrelated to the U.S. federal, state and local tax
treatment of the Transactions and is not relevant to understanding the U.S.
federal, state and local tax treatment of the Transactions, without the prior
written consent of Buyer. The provisions set forth in this Paragraph 29 shall
survive the termination of this Agreement for a period of one (1) year following
such termination.

 

(b)          Privacy of Sellers’ Customer Information.

 

72

--------------------------------------------------------------------------------

 

(i)            Each Sellers’ Customer Information in the possession of Buyer,
other than information independently obtained by Buyer and not derived in any
manner from or using information obtained under or in connection with this
Agreement, is and shall remain confidential and proprietary information of
Sellers.  Except in accordance with this Paragraph 29(b), Buyer shall not use
any Sellers’ Customer Information for any purpose, including the marketing of
products or services to, or the solicitation of business from, Customers, or
disclose any Sellers’ Customer Information to any Person, including any of
Buyer’s employees, agents or contractors or any third party not affiliated with
Buyer.  Buyer may use or disclose Sellers’ Customer Information only to the
extent necessary (i) for examination and audit of Buyer’s activities, books and
records by Buyer’s regulatory authorities, (ii) to protect or exercise Buyer’s
rights and privileges or (iii) to carry out Buyer’s express obligations under
this Agreement and the other Transaction Documents (including providing the
related Sellers’ Customer Information to Approved Takeout Investors), and for no
other purpose; provided that Buyer may also use and disclose Sellers’ Customer
Information as expressly permitted by a Seller in writing, to the extent that
such express permission is in accordance with the Privacy Requirements.  Buyer
shall take commercially reasonable steps to ensure that each Person to which
Buyer intends to disclose Sellers’ Customer Information, before any such
disclosure of information, agrees to keep confidential any such Sellers’
Customer Information and to use or disclose such Sellers’ Customer Information
only to the extent necessary to protect or exercise Buyer’s rights and
privileges, or to carry out Buyer’s express obligations, under this Agreement
and the other Transaction Documents (including providing the related Sellers’
Customer Information to Approved Investors).  Buyer agrees to maintain an
information security program and to assess, manage and control risks relating to
the security and confidentiality of Sellers’ Customer Information pursuant to
such program in the same manner as Buyer does in respect of its own customers’
information, and shall implement the standards relating to such risks in the
manner set forth in the Interagency Guidelines Establishing Standards for
Safeguarding Company Customer Information set forth in 12 CFR Parts 30, 208,
211, 225, 263, 308, 364, 568 and 570.  Without limiting the scope of the
foregoing sentence, Buyer shall use at least the same physical and other
security measures to protect all of Sellers’ Customer Information in its
possession or control as it uses for its own customers’ confidential and
proprietary information.

 

(ii)           Sellers shall indemnify the Indemnified Parties against, and hold
each of them harmless from, any losses, liabilities, damages, claims, costs and
expenses (including reasonable attorneys’ fees and disbursements) suffered or
incurred by any Indemnified Party relating to or arising out of any Seller’s
loss, improper disclosure or misuse of any Sellers’ Customer Information.

 

30.         Multiple Sellers

 

(a)          Sellers.  Each representation and warranty in the Transaction
Documents by a Seller shall be deemed to be its separate representation and
warranty and the joint and several representation and warranty of all Sellers. 
Each covenant and agreement by a Seller under the Transaction Documents is the
joint and several covenant and agreement of all Sellers.  Any notice or other
communication provided to a Seller pursuant hereto shall be deemed to have been

 

73

--------------------------------------------------------------------------------

 

given each Seller and any failure to receive any notice or communication
contemplated hereby shall not relieve a Seller from its joint and several
liability for the obligations of each Seller hereunder.

 

(b)          Basis for Structure.  RMC and RMCMC have each determined that they
will specifically and materially benefit from all Transactions hereunder.  They
intend, and Buyer has required, that RMC and RMCMC jointly and severally execute
and deliver this Agreement and certain other Transaction Documents.  Each Seller
has requested and bargained for the structure and terms of, and security for,
all Transactions.

 

(c)          Joint and Several Obligation.  Each Seller hereby irrevocably and
unconditionally agrees (i) that it is jointly and severally liable to Buyer for
full payment and performance of the obligations and liabilities of all Sellers,
including all obligations of each of RMC and RMCMC under the Transaction
Documents and (ii) to fully pay and perform all such obligations and
liabilities, including all indemnity obligations under the Transaction
Documents.  With respect to its obligations to repurchase Purchased Mortgage
Loans, transfer cash and/or Additional Purchased Mortgage Loans to Buyer to
eliminate any Margin Deficit, maintain the Required Amount in each Cash Pledge
Account, maintain the Tax and Insurance Amount in the Collection Account, pay
Taxes and Other Taxes, pay Price Differential, indemnify the Indemnified Parties
and pay Buyer’s fees, expenses and other obligations and liabilities of another
Seller to Buyer, each Seller agrees to the terms set forth in Schedule III. 
Each Seller further agrees that, notwithstanding any right of Buyer to
investigate fully the affairs of a Seller and notwithstanding any knowledge of
facts determined or determinable by Buyer, Buyer has the right to rely fully on
the representations, warranties, covenants and agreements of each Seller
contained in the Agreement and upon the accuracy of any document, instrument,
certificate or exhibit given or delivered hereunder.

 

(d)          Contribution Rights.  Each Seller intends that its joint and
several obligations under the Transaction Documents, and the security interest
granted by it in the Mortgage Assets pursuant to Paragraph 6(a), are not subject
to challenge or repudiation on any basis (other than the defense if, and on the
basis that, such obligations have been paid to the extent that they have been
paid).  Therefore, as of the date any transfer — as that term is defined in
Bankruptcy Code § 101(54) — is deemed to occur under the Transaction Documents,
each Seller’s liabilities under the Transaction Documents and all of such
Seller’s other liabilities, calculated in each case to the full extent of that
Seller’s probable net exposure when and if those liabilities become absolute and
mature (“Dated Liabilities”), are intended by that Seller to be less than the
fair valuation of all of its assets as of that date (“Dated Assets”).  To that
end, each Seller hereby (i) grants to each other Seller, and recognizes each
other Seller as having, ratable rights of subrogation and contribution in the
amount, if any, by which the granting Seller’s Dated Assets (but for the total
subrogation and contribution in its favor under this paragraph) would exceed the
granting Seller’s Dated Liabilities, and (ii) acknowledges receipt of and
recognizes its ratable rights to subrogation and contribution from such other
Seller in the amount that such other Seller’s Dated Assets (but for the total
subrogation and contribution in its favor under this paragraph) would exceed
such other Seller’s Dated Liabilities.  It is a material objective of this
Paragraph 30 that each Seller recognizes rights to subrogation and contribution
rather than be deemed not to be solvent by reason of an interpretation of its
joint and several obligations under the Transaction Documents.

 

74

--------------------------------------------------------------------------------

 

31.         Contribution with Respect to Seller Obligations

 

(a)          To the extent that any Seller shall make a payment under this
Agreement or any other Transaction Document (a “Seller Payment”) which, taking
into account all other Seller Payments then previously or concurrently made by
any other Seller, exceeds the amount which otherwise would have been paid by or
attributable to such Seller if each Seller had paid the aggregate obligations of
Sellers hereunder and under the other Transaction Documents (collectively, the
“Seller Obligations”) satisfied by such Seller Payment in the same proportion as
such Seller’s “Allocable Amount” (as defined below) (as determined immediately
prior to such Seller Payment) bore to the aggregate Allocable Amounts of each of
Sellers as determined immediately prior to the making of such Seller Payment,
then, following payment in full in cash of Seller Payment and Seller
Obligations, such Seller shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Seller for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Seller Payment.

 

(b)          As of any date of determination, the “Allocable Amount” of any
Seller shall be equal to the maximum amount of the claim which could then be
recovered from such Seller under this Agreement and the other Transaction
Documents without rendering such claim voidable or avoidable under Section 548
of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform
Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or
common law.

 

(c)          This Paragraph 31 is intended only to define the relative rights of
Sellers, and nothing set forth in this Paragraph 31 is intended to or shall
impair the obligations of Sellers, jointly and severally, to pay any amounts as
and when the same shall become due and payable in accordance with the terms of
this Agreement and the other Transaction Documents.  The Parties acknowledge
that the rights of contribution and indemnification hereunder shall constitute
assets of Seller or Sellers to which such contribution and indemnification is
owing.  The rights of the indemnifying Sellers against other Sellers under this
Paragraph 31 shall be exercisable upon the full and indefeasible payment of
Seller Obligations in cash.

 

32.         Setoff

 

Except to the extent specifically permitted herein, each Seller hereby
irrevocably and unconditionally waives all right to setoff that it may have
under contract (including this Agreement), applicable law, in equity or
otherwise with respect to any funds or monies of Buyer (or any disclosed
principal for which Buyer is acting as agent) at any time held by or in the
possession of a Seller.

 

Each Seller agrees that Buyer may set off any funds or monies of any Seller at
any time held by or in the possession of Buyer, whether in connection with this
Agreement, any other Transaction Document or otherwise, against any amounts
Sellers owe to Buyer, or against any amounts Sellers owe to any other
Indemnified Party, whether pursuant to the terms of this Agreement or any other
Transaction Document or otherwise.

 

75

--------------------------------------------------------------------------------

 

33.         WAIVER OF SPECIAL DAMAGES.

 

EACH SELLER WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT SUCH
SELLER MAY HAVE TO CLAIM OR RECOVER FROM BUYER IN ANY LEGAL ACTION OR PROCEEDING
ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.

 

34.         USA PATRIOT ACT NOTIFICATION.

 

The following notification is provided to each Seller pursuant to Section 326 of
the USA Patriot Act of 2001, 31 U.S.C. Section 5318:

 

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT.  To help the
government fight the funding of terrorism and money laundering activities,
federal law requires all financial institutions to obtain, verify, and record
information that identifies each person or entity that opens an account,
including any deposit account, treasury management account, loan, other
extension of credit, or other financial services product. What this means for
each Seller:  When Seller opens an account, if Seller is an individual, Buyer
will ask for Seller’s name, taxpayer identification number, residential address,
date of birth, and other information that will allow Buyer to identify Seller,
and if Seller is not an individual, Buyer will ask for Seller’s name, taxpayer
identification number, business address, and other information that will allow
Buyer to identify Seller.  Buyer may also ask, if Seller is an individual, to
see Seller’s driver’s license or other identifying documents, and if Seller is
not an individual to see Seller’s legal organizational documents or other
identifying documents.

 

[Remainder of page intentionally blank.]

 

76

--------------------------------------------------------------------------------

 

JPMORGAN CHASE BANK, N.A.

 

 

 

 

 

By:

/s/ John Greene

 

 

John Greene

 

 

Assistant Vice President and Underwriter

 

 

 

 

 

 

 

RYLAND MORTGAGE COMPANY,

 

jointly and severally with the

 

other Sellers

 

 

 

 

 

By:

/s/ David A. Brown

 

Name:  David A. Brown

 

Title:  President

 

 

 

 

 

RMC MORTGAGE CORPORATION,

 

jointly and severally with the

 

other Sellers

 

 

 

 

 

By:

/s/ Martyn Watson

 

Name:  Martyn Watson

 

Title:  Assistant Treasurer

 

 

Signature Page to
Master Repurchase Agreement

 

--------------------------------------------------------------------------------

 

List of Exhibits and Schedules

 

Exhibit A

Form of Confirmation

 

 

Exhibit B

Mortgage Loan Representations and Warranties

 

 

Exhibit C

Form of Compliance Certificate

 

 

Exhibit D

Form of Shipping Instructions

 

 

Exhibit E

Conditions Precedent Documents

 

 

Exhibit F

Required Opinions of Counsel

 

 

Exhibit G

Subsidiary Information

 

 

Exhibit H

Form of Subservicer Letter

 

 

Exhibit I

Fields for Daily Data Tape

 

 

Exhibit J

Form of Bailee Letter

 

 

Exhibit K

Seller Names from Tax Returns

 

 

Exhibit L

Form of Trust Release Letter

 

 

Exhibit M

Permitted Debt

 

 

Schedule I

Approved Takeout Investors

 

 

Schedule II

Sellers’ Authorized Signers

 

 

Schedule III

Terms of each Seller’s Obligations to pay transactions by another of them

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

FORM OF CONFIRMATION

 

CONFIRMATION

 

TO:

[NAME OF SELLER]

 

 

FROM:

JPMorgan Chase Bank, N.A.

 

 

RE:

Confirmation under Master Repurchase Agreement (the “Agreement”) between
JPMorgan Chase Bank, N.A. and [NAME OF SELLER]

 

JPMorgan Chase Bank, N.A. (“Buyer”) is pleased to confirm your sale and its
purchase of the Mortgage Loans described below and listed on the attached Loan
Purchase Detail pursuant to the Agreement under the following terms and
conditions:

 

ORIG. PRINCIPAL AMOUNT OF MORTGAGE LOANS:

 

As set forth on attached Loan Purchase Detail

 

 

 

CURRENT PRINCIPAL AMOUNT OF MORTGAGE LOANS:

 

As set forth on attached Loan Purchase Detail

 

 

 

PURCHASE DATE:

 

The date specified as the Purchase Date in the request related to this
Confirmation

 

 

 

REPURCHASE DATE:

 

45 days after the Purchase Date (30 days after the Purchase Date if a Jumbo
Loan) or such other date as required by, or otherwise determined in accordance
with, the Agreement

 

 

 

PURCHASE PRICE:

 

(a)    for any CL Loan, the Purchase Price set forth in the Side Letter
applicable to CL Loans on the Purchase Date; and

 

(b)    for any other Eligible Mortgage Loan, the Purchase Price set forth in the
Side Letter as applicable to Eligible Mortgage Loans other than CL Loans on the
Purchase Date.

 

Exhibit A-1

--------------------------------------------------------------------------------

 

PRICING RATE:

 

(a)    for any CL Loan, the per annum percentage rate set forth in the Side
Letter as applicable to CL Loans on the Purchase Date; and

 

(b)    for any other Eligible Mortgage Loan, the per annum percentage rate set
forth in the Side Letter as applicable to Eligible Mortgage Loans other than CL
Loans on the Purchase Date.

 

 

 

PRICE DIFFERENTIAL (TO BE PAID ON EACH APPLICABLE REMITTANCE DATE):

 

For each month (or portion thereof) during which the Transaction is outstanding,
the sum of the following amount for each day during that month (or portion
thereof): the weighted average of the applicable Pricing Rates for such day
multiplied by the Aggregate Purchase Price on such day divided by 360. The Price
Differential for the Transaction shall accrue during the period commencing on
(and including) the day on which the Purchase Price is transferred into the
Funding Account (or otherwise paid to or for the account of Seller) for the
Transaction and ending on (but excluding) the date on which the Repurchase Price
is paid.

 

The Agreement is incorporated by reference into this Confirmation and made a
part hereof as if it were fully set forth herein.  All capitalized terms used
herein but not otherwise defined shall have the meanings specified in the
Agreement.

 

Exhibit A-2

--------------------------------------------------------------------------------

 

EXHIBIT B

 

MORTGAGE LOAN
REPRESENTATIONS AND WARRANTIES

 

With respect to each Mortgage Loan sold under this Agreement, (i) as of the
Purchase Date for the purchase of any Purchased Mortgage Loans by Buyer from any
Seller and as of the date of this Agreement and any related Transaction
hereunder, and (ii) at all times while the Transaction Documents or any
Transaction hereunder is in force and effect, each Seller represents and
warrants to Buyer that each of the statements set forth in the lettered
paragraphs of this Exhibit B is true and correct.  For purposes of this
Exhibit B and the representations and warranties set forth herein, a breach of a
representation or warranty shall be deemed to have been cured with respect to a
Mortgage Loan if and when a Seller has taken or caused to be taken action such
that the event, circumstance or condition that gave rise to such breach no
longer adversely affects such Mortgage Loan.  With respect to those
representations and warranties which are made to the best of Seller’s knowledge,
if it is discovered by Buyer or any Seller that the substance of such
representation and warranty is inaccurate, notwithstanding any Seller’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.

 

(a)                               Mortgage Loans as Described.  The information
set forth in the related Loan Purchase Detail is complete, true and correct.

 

a.                                   Valid First Lien.  The Mortgage is properly
recorded and is a valid, existing and enforceable first Lien with respect to
each Mortgage Loan which is indicated by Seller to be a first Lien on the
Mortgaged Property, including all improvements on the Mortgaged Property, free
and clear of all adverse claims, and Liens having priority over the Lien of the
Mortgage, 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 being acceptable to mortgage lending institutions
generally and specifically referred to in the lender’s title insurance policy
delivered to Seller and which do not adversely affect the purchase by, or the
purchase price to be paid by, the Approved Takeout Investor, and (iii) other
matters to which like properties are commonly subject which do not individually
or in the aggregate materially interfere with the benefits of the security
intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property.  Any security agreement,
chattel mortgage or equivalent document related to and delivered in connection
with the Mortgage Loan establishes and creates a valid, existing and enforceable
first lien and first priority security interest securing the related Mortgage
Loan on the property described therein and Seller has full right to sell and
assign the related Mortgage Assets to Buyer.

 

b.                                  Validity of Mortgage Documents.  With
respect to each Mortgage Loan, Seller or its designee has in its possession all
Servicing Files, or any miscellaneous items (except for those Servicing Files
disclosed to Buyer by Seller as outstanding). 

 

Exhibit B-1

--------------------------------------------------------------------------------

 

The Mortgage Note and the related Mortgage are original and genuine and each is
the legal, valid and binding obligation of the Mortgagor thereof, enforceable in
all respects in accordance with its terms except as enforceability may be
limited by (i) bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the enforcement of the rights of
creditors and (ii) general principles of equity, whether enforcement is sought
in a proceeding in equity or at law, and Seller has taken all action necessary
to transfer such rights of enforceability to Buyer.  Neither the operation of
any of the terms of any Mortgage or Mortgage Note, nor the exercise by any
holder of any right thereunder, will render the Mortgage or Mortgage Note
unenforceable, in whole or in part, or subject to any right of rescission,
setoff, counterclaim or defense, and no such right of rescission, setoff,
counterclaim or defense has been asserted with respect thereto.  All parties to
the Mortgage Note and the Mortgage had the legal capacity to enter into the
Mortgage Loan and to execute and deliver the Mortgage Note and the Mortgage, and
the Mortgage Note and the Mortgage have been duly and properly executed by such
parties. All items required to be delivered pursuant to this Agreement shall be
delivered to Buyer, within the time frames set forth in this Agreement, and if a
document is delivered in imaged format, such images must be of sufficient
quality to be readable and able to be copied.  There is only one original
executed Mortgage Note with respect to such Mortgage Loan.

 

c.                                   Customary Provisions.  The Mortgage and
related Mortgage Note contain 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 or right available
to the Mortgagor or any other person which would interfere with the right to
sell the Mortgaged Property at a trustee’s sale or the right to foreclose the
Mortgage.  The Mortgage Note and Mortgage are on forms that are conforming to
Agency Guidelines and the Takeout Guidelines, as applicable.

 

d.                                  Original Terms Unmodified.  The terms of the
Mortgage Note and the Mortgage have not been impaired, waived, altered or
modified in any respect, except by written instruments which (a) have been
recorded in the applicable public recording office if required by law or if
necessary to maintain the lien priority of the Mortgage, and (b) which have been
delivered to Buyer; the substance of any such waiver, alteration or modification
has been approved by the insurer under the private mortgage insurance policy, if
any, and by the title insurer, to the extent required by the related policy
provided by Seller and is reflected appropriately on any and all documentation
or data and is true and accurate in all respects.  No other instrument of
waiver, alteration or modification has been executed, and no

 

Exhibit B-2

--------------------------------------------------------------------------------

 

Mortgagor has been released, in whole or in part, except in connection with an
assumption agreement approved by the insurer under the private mortgage
insurance policy, if any, and by the title insurer, to the extent required by
the policy, and which assumption agreement is a part of the loan file. As of the
Purchase Date, the full original principal amount of each Mortgage Loan has been
fully disbursed as provided for in the Mortgage Loan Documents, and there is no
requirement for any future advances.

 

e.                                   No Defenses.  The Mortgage Note and the
Mortgage are 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 and the Mortgage, or the
exercise of any right thereunder, render either the Mortgage Note or the
Mortgage unenforceable, in whole or in part, or subject to any right of
rescission, set off, counterclaim or defense, including, without limitation, the
defense of usury, and no such right of rescission, set off, counterclaim or
defense has been asserted with respect thereto; and neither the Mortgagor nor
the Mortgaged Property is as of the Purchase Date or was as of the Origination
Date, subject to an Act of Insolvency.

 

f.                                      No Outstanding Charges.  There are no
defaults by Seller or any Subservicer in complying with the terms of the
Mortgage, and (1) all taxes, ground rents, special assessments, governmental
assessments, insurance premiums, leasehold payments, water, sewer and municipal
charges which previously became due and owing have been paid, or escrow funds
have been established in an amount sufficient to pay for every such escrowed
item which remains unpaid and which has been assessed but is not yet due and
payable prior to any “economic loss” dates or discount dates (or if payments
were made after any “economic loss” date or discount date, then Seller has paid
any penalty or reimbursed any discount out of Seller’s funds) and (2) all flood
and hazard insurance premiums and private mortgage insurance premiums which are
due, have been paid without loss or penalty to the Mortgagor.  As of the
Purchase Date, 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 under a Mortgage Loan has occurred, including
but not limited to a violation of applicable law, local ordinances or city codes
resulting from a deterioration or defect existing in any Mortgaged Property, and
neither Seller nor its predecessors have waived any default, breach, violation
or event of acceleration.  Seller has received no notice of, and has no
knowledge of, any event, including but not limited to the bankruptcy filing or
death of a Mortgagor, which may or could give rise to a Mortgagor default under
the Mortgage Note or Mortgage.  None of Seller or any Subservicer has advanced
funds, or induced, solicited or knowingly received any advance from any Person
other than the Mortgagor, directly or indirectly, for the payment of any amount
due under the Mortgage Loan, unless otherwise permitted in the Takeout
Guidelines.

 

g.                                   No Satisfaction of Mortgage.  The Mortgage
has not been satisfied, canceled, subordinated or rescinded, in whole or in
part, and the Mortgaged Property has

 

Exhibit B-3

--------------------------------------------------------------------------------

 

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 satisfaction,
cancellation, subordination, rescission or release.  Neither Seller nor any
Subservicer 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, and neither Seller nor any Subservicer has waived any default.

 

h.                                   No Default.  There is no default, breach,
violation or event of acceleration existing under the Mortgage or the Mortgage
Note 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 permitting acceleration, and neither Seller nor any
Subservicer has waived any default, breach, violation or event permitting
acceleration.  With respect to each Mortgage Loan (i) the first Lien securing
the Mortgage Loan is in full force and effect, (ii) there is no default, breach,
violation or event of acceleration existing under such first Lien Mortgage or
the related Mortgage Note, and (iii) 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 thereunder.

 

i.                                       Full Disbursement of Proceeds.  The
Mortgage Loan has been closed and the proceeds of the Mortgage Loan have been
fully disbursed to or for the account of the Mortgagor and there is no
obligation for the mortgagee to advance additional funds 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 have been paid, and the Mortgagor is not entitled
to any refund of any amounts paid or due to the mortgagee pursuant to the
Mortgage Note or Mortgage with exception to escrow holdbacks.

 

j.                                      No Mechanics’ Liens.  There are no
mechanics’ or similar Liens or claims filed for work, labor or material (and no
rights are outstanding that under law could give rise to such lien) affecting
the related Mortgaged Property which are or may be Liens prior to, or equal or
coordinate with, the lien of the related Mortgage.

 

k.                                  No Additional Collateral.  The Mortgage Note
is not and has not been secured by any collateral except the Lien of the
corresponding Mortgage on the Mortgaged Property and the security interest of
any applicable security agreement.

 

l.                                       Origination; Payment Terms.  The
Mortgage Loan was originated by Seller, which is a mortgagee approved by the
Secretary of Housing and Urban Development pursuant to Paragraphs 203 and 211 of
the National Housing Act, a savings and loan association, a savings bank, a
commercial bank, credit union, insurance company or other similar institution
which is supervised and examined by a federal or state authority or duly
licensed by state licensing authority, if applicable.  Seller and all other
parties which have had any interest in the Mortgage Loan, whether as mortgagee,
assignee, pledgee or otherwise, are (or,

 

Exhibit B-4

--------------------------------------------------------------------------------

 

during the period in which they held and disposed of such interest, were) (1) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2) organized under the
laws of such state, or (3) qualified to do business in such state, or
(4) federal savings and loan associations or national banks having principal
offices in such state, or (5) not doing business in such state.  Principal
payments on the Mortgage Loan commenced or will commence no more than sixty (60)
days after the proceeds of the Mortgage Loan were disbursed.  The Mortgage Loan
requires interest payable in arrears on the first day of the month.  Each
Mortgage Note requires a monthly payment which is sufficient (i) during the
period prior to the first adjustment to the Mortgage interest rate, to amortize
the original principal balance fully over the original term thereof (unless
otherwise provided in the Takeout Guidelines) and to pay interest at the related
Mortgage interest rate, and (ii) during the period following each interest rate
adjustment date in the case of each adjustable rate Mortgage Loan, to amortize
the outstanding principal balance fully as of the first day of such period over
the then remaining term of such Mortgage Note and to pay interest at the related
Mortgage interest rate.  The Mortgage Note does not permit negative
amortization.  Interest on the Mortgage Note is calculated on the basis of a 360
day year consisting of twelve 30 day months.  The Mortgage Loan is not a simple
interest Mortgage Loan.  The Mortgage Loan does not require a balloon payment
upon the maturity thereof. The Mortgage Note does not by its terms provide for
the capitalization or forbearance of interest.

 

m.                               Ownership.  Immediately prior to Buyer’s
payment of the Purchase Price, Seller was the sole owner and holder of the
Mortgage Loan and the indebtedness evidenced by the Mortgage Note.  The Mortgage
Loan, including the Mortgage Note and the Mortgage, were not assigned or pledged
by Seller and Seller had good and marketable title thereto, and Seller had full
right to transfer and sell the Mortgage Loan to Buyer free and clear of any
Lien, participation interest, equity, pledge or claim and had full right and
authority subject to no interest or participation in, or agreement with any
other Person to sell or otherwise transfer the Mortgage Loan.  Following the
sale of the Mortgage Loan, Buyer will own such Mortgage Loan and the other
Mortgage Assets free and clear of any Lien and shall have a valid and perfected
first priority security interest in such Mortgage Loan and the other Mortgage
Assets then existing and thereafter arising in each case free and clear of any
Lien.  After the related Purchase Date, Seller will not have any right to modify
or alter the terms of the sale of the Mortgage Loan and Seller will not have any
obligation or right to repurchase the Mortgage Loan, except as provided in this
Agreement or as otherwise agreed to by Seller and Buyer.  Seller has full right
to sell, assign and transfer the Mortgage Loan without the consent of the
related Mortgagor or any other Person.

 

n.                                   Transfer of Mortgage Loan.  The Mortgage
Loan is a MERS Designated Mortgage Loan.  The original Mortgage was recorded in
the appropriate jurisdictions wherein such recordation is necessary to perfect
the Lien thereof as against creditors of Seller, or is in the process of being
recorded.  Seller has designated Buyer as the “Interim Funder” on the
MERS® System with respect to

 

Exhibit B-5

--------------------------------------------------------------------------------

 

such Mortgage Loan and unless otherwise authorized by Buyer, no Person is listed
as interim funder on the MERS® System with respect to such Mortgage Loan.

 

o.                                  Hazard Insurance.  All buildings or other
customarily insured improvements upon the Mortgaged Property are insured by an
insurer generally acceptable under the Takeout Guidelines and to prudent
mortgage lending institutions against loss by fire, hazards of extended coverage
and such other hazards as are required in the Takeout Guidelines pursuant to an
insurance policy conforming to the requirements of Takeout Guidelines and
providing coverage in an amount equal to the lesser of (i) the full insurable
value of the Mortgaged Property or (ii) the outstanding principal balance owing
on the Mortgage Loan.  All such insurance policies are in full force and effect
and contain a standard mortgagee clause naming the originator of the Mortgage
Loan, its successors and assigns as mortgagee and all premiums thereon have been
paid.  If the Mortgaged Property is in an area identified on a flood hazard map
or flood insurance rate map issued by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available),
a flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration is in effect which policy conforms to the
requirements of the Takeout Guidelines.  The Mortgage obligates the Mortgagor
thereunder to maintain all such insurance at the Mortgagor’s cost and expense,
and on the Mortgagor’s failure to do so, authorizes the holder of the Mortgage
to maintain such insurance at the Mortgagor’s cost and expense and to seek
reimbursement therefor from the 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 the common facilities of a planned
unit development.  The hazard insurance policy is the valid and binding
obligation of the insurer, is in full force and effect, and will be in full
force and effect and inure to the benefit of Buyer upon the consummation of the
transactions contemplated by this Agreement.  Seller has not engaged in, and has
no knowledge of the Mortgagor, any Subservicer or any prior servicer 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 or entity, and no such unlawful items have been received, retained or
realized by Seller.

 

p.                                  Title Insurance.  The Mortgage Loan is
covered by an ALTA, CLTA or TLTA lender’s title insurance policy, acceptable to
Fannie Mae or Freddie Mac, or state law, issued by a title insurer acceptable to
Fannie Mae or Freddie Mac, or state law and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring in (h)(iv))
Seller, its successors and assigns as to the first priority lien of the Mortgage
in the original principal amount of the Mortgage Loan and, if such Mortgage Loan
is an adjustable rate Mortgage Loan, against

 

Exhibit B-6

--------------------------------------------------------------------------------

 

any loss by reason of the invalidity or unenforceability of the lien resulting
from the provisions of the Mortgage providing for adjustment in the Mortgage
interest rate or 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.  Seller
and its successors and assigns are the sole insureds of such lender’s title
insurance policy, and such lender’s title insurance policy is in full force and
effect and will be in full force and effect upon the consummation of the
transactions contemplated by this Agreement and will inure to the benefit of
Buyer and its assigns without any further act.  No claims have been made under
such lender’s title insurance policy, and Seller has not done, by act or
omission, anything which would impair the coverage of such lender’s title
insurance policy.

 

q.                                  Insured Closing Letter and Escrow Letter. 
There is, with respect to such Mortgage Loan, a valid and enforceable Insured
Closing Letter and escrow letter duly executed by the Settlement Agent.

 

r.                                     Private Mortgage Insurance Policy.  In
the event that a private mortgage insurance policy is required by Buyer, the
Mortgage Loan has a valid and transferable private mortgage insurance policy. 
Unless the private mortgage insurance policy for a Mortgage Loan was cancelled
at the request of the Mortgagor or automatically terminated, in either case in
accordance with applicable law, all premiums have been paid and all provisions
of such private mortgage insurance policy have been and are being complied
with.  With respect to a purchase money Mortgage Loan, both the original
appraised value and the purchase price are accurately depicted as such on
Seller’s (or, as applicable, Subservicer’s) servicing system. Where a Mortgage
Loan was closed as a streamlined refinance and a new appraisal was not required,
the prior appraised value that was relied on in making the credit decision for
the Mortgage Loan is accurately depicted on Seller’s (or, as applicable,
Subservicer’s) servicing system.  Seller has not funded the private mortgage
insurance policy premium, if any, with respect to such Mortgage Loan.  The
Mortgage interest rate for the Mortgage Loan is net of any such insurance
premium.

 

s.                                    Optional Insurance. No single payment
credit life insurance or other optional insurance product that has been
considered “predatory” by Fannie Mae or Freddie Mac has been obtained in
connection with such Mortgage Loan.  If such Mortgage Loan involved any type of
optional insurance, such insurance was properly serviced including, without
limitation, by use of the proper application and collection of premiums, the
maintenance of complete and accurate records, processing and payment of claims
and the handling of correspondence.  The

 

Exhibit B-7

--------------------------------------------------------------------------------

 

Mortgage Loan does not involve an optional insurance product that was or is
being provided free of charge to the Mortgagor.

 

t.                                      Insurance.  All required insurance
policies, of whatever type, remain in full force and effect.  Seller has not
engaged in, and has no knowledge of the Mortgagors having engaged in, any act or
omission which would impair the coverage validity or binding effect of any such
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 Seller or any Subservicer or any designee of Seller or any
Subservicer or any corporation in which Seller, any Subservicer or any officer,
director, or employee of Seller or any Subservicer had a financial interest at
the time of placement of such insurance.

 

u.                                   Mortgaged Property Undamaged; No
Condemnation Proceedings.  As of the related Purchase Date, there are no
uninsured casualty losses or casualty losses where coinsurance has been, or
Seller has reason to believe will be, claimed by the insurance company or where
the loss, exclusive of contents, is, or will be, greater than the recovery (less
actual costs and expenses incurred in connection with such recovery) from the
insurance carrier.  No casualty insurance proceeds have been used to reduce
Mortgage Loan balances or for any other purpose except to make repairs to the
Mortgaged Property, except as allowed pursuant to applicable law and the
Mortgage Loan documents.  All damage with respect to which casualty insurance
proceeds have been received by or through Seller has been properly repaired or
is in the process of being repaired using such proceeds.  There is no damage to
the Mortgaged Property from waste, fire, windstorm, flood, tornado, earthquake
or earth movement, hazardous or toxic substances, other casualty, or any other
property related circumstances or conditions that would adversely affect the
value or marketability of any Mortgage Loan or Mortgaged Property, and adequate
insurance is in place to cover all such events.  There is no proceeding pending
or, to the best of Seller’s knowledge, threatened for the partial or total
condemnation of the Mortgaged Property that would adversely affect the Mortgage
Loan.

 

v.                                   Location of Improvements; No
Encroachments.  All improvements subject to the Mortgage 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
wholly within the project with respect to a condominium unit) and no
improvements on adjoining properties encroach upon the Mortgaged Property except
those which are insured against by the title insurance policy referred to in
(p) above and all improvements on the Mortgaged Property comply with all
applicable zoning and subdivision laws and ordinances.

 

Exhibit B-8

--------------------------------------------------------------------------------

 

w.                               Appraisal.  The loan file contains an appraisal
or an underwriting property valuation using an automated valuation model of the
related Mortgaged Property, in each case, in a form acceptable to the applicable
Agency, Buyer and CL and consistent with the Takeout Guidelines, made and
signed, prior to the approval of the Mortgage Loan application, by a qualified
appraiser, duly appointed by Seller, who had no interest, direct or indirect in
the Mortgaged Property or in any loan made on the security thereof, whose
compensation is not affected by the approval or disapproval of the Mortgage Loan
and who met the minimum qualifications of the applicable Agency. Each appraisal
of the Mortgage Loan was made in accordance with the requirements of Title XI of
the Federal Institutions Reform, Recovery, and Enforcement Act of 1989 and the
regulations promulgated thereunder, all as in effect on the Date of Origination
of the Mortgage Loan;

 

x.                                   Construction Defects.  Any home or other
improvement included within the Mortgaged Property was constructed in a
workmanlike manner, and was accepted by the original homeowner or Mortgagor in
good and habitable condition and working order, and conforms with all
warranties, express or implied, representations, legal obligations, and local,
state and federal requirements and codes concerning the condition, construction,
and placement of the home or improvement.

 

y.                                   Occupancy of the Mortgaged Property.  The
Mortgaged Property 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,
have been made or obtained from the appropriate authorities and no improvement
located on or part of the Mortgaged Property is in violation of any zoning law
or regulation.

 

z.                                    Type of Mortgaged Property.  The Mortgaged
Property is located in the United States and consists of a single parcel of real
property with a detached single family residence erected thereon, or a two to
four family dwelling, or an individual condominium unit, or an individual unit
in a planned unit development, or a Cooperative Unit in a Cooperative Project;
provided, however, that any condominium project or planned unit development
generally conforms to the Takeout Guidelines regarding such dwellings.  As of
the date of origination, no portion of the Mortgaged Property was used for
commercial purposes, and since the date of origination, no portion of the
Mortgaged Property has been 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.  If the Mortgaged Property is a condominium unit or a
planned unit development (other than a de minimis planned unit development) such
condominium or planned unit development project is acceptable to Buyer.  The
Mortgaged Property is not a Manufactured Home or a mobile home.

 

Exhibit B-9

--------------------------------------------------------------------------------

 

aa.                            Environmental Matters.  There is no pending
action or proceeding directly involving any Mortgaged Property of which Seller
is aware in which compliance with any environmental law, rule or regulation is
an issue 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.  The Mortgaged Property is free from any and
all toxic or hazardous substances and there exists no violation of any local,
state or federal environmental law, rule or regulation.

 

bb.                          Flood Certification Contract.  If the Mortgaged
Property relating to such Mortgage Loan is in an area designated as a flood area
by the Federal Emergency Management Agency, a flood insurance policy complying
with all Requirements of Law is in effect.

 

cc.                            Unacceptable Investment.  Seller has no 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 investors to regard the Mortgage Loan as an unacceptable
investment, cause the Mortgage Loan to become delinquent or materially adversely
affect the value or the marketability of the Mortgage.

 

dd.                          Servicemembers Civil Relief Act.  The Mortgagor has
not notified Seller or any Subservicer, and Seller has no knowledge of any
relief requested or allowed to the Mortgagor under the Servicemembers Civil
Relief Act of 2003, as amended, or other similar state or federal law.

 

ee.                            No Fraud.  No fraud, error, omission,
misrepresentation, negligence or similar occurrence with respect to the Mortgage
Loan has taken place on the part of Seller, any Subservicer or any other Person
involved in the origination of the Mortgage Loan or in the application for any
insurance in relation to such Mortgage Loan, including without limitation the
Mortgagor, any appraiser, any builder or developer.  The documents, instruments
and agreements submitted for loan underwriting were not falsified and contain no
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the information and statements therein
not misleading.  Seller has reviewed all of the documents constituting the Loan
File and has made such inquiries as it deems necessary to make and confirm the
accuracy of the representations set forth herein.

 

ff.                                  Delinquency.  All payments required to be
made prior to the related Purchase Date for such Mortgage Loan under the terms
of the Mortgage Note have been made, the Mortgage Loan has not been dishonored,
and the Mortgage Loan is not and has never been a Delinquent Loan or a Defaulted
Loan.

 

gg.                            Compliance with Applicable Laws.  Any and all
requirements of any applicable federal, state or local law including, without
limitation, usury, truth in lending, real estate settlement procedures, consumer
credit protection, fair credit billing,

 

Exhibit B-10

--------------------------------------------------------------------------------

 

fair credit reporting, fair debt collection practices, predatory and abusive
lending laws, equal credit opportunity, fair housing and disclosure laws or
unfair and deceptive practices laws applicable to the origination and servicing
of the Mortgage Loan including, without limitation, any provisions relating to
prepayment penalties, have been complied with, the consummation of the
transactions contemplated hereby will not involve the violation of any such laws
or regulations. Seller maintains, and shall maintain, evidence of such
compliance as required by applicable law or regulation and shall make such
evidence available for inspection at Seller’s office during normal business
hours upon reasonable advance notice.  Each Mortgage Loan at the time it was
made complied in all material respects with applicable local, state, and federal
laws, including, but not limited to, all applicable predatory and abusive
lending laws.

 

hh.                            Disclosure and Rescission Materials.  The
Mortgagor has received all disclosure materials required by applicable law with
respect to the making of mortgage loans of the same type as the Mortgage Loan
and rescission materials required by applicable law and has acknowledged receipt
of such materials to the extent required by applicable law and such documents
will remain in the loan file.

 

ii.                                    Texas Refinance Loans.  Each Mortgage
Loan originated in the State of Texas pursuant to Article XVI, Paragraph
50(a)(6) of the Texas Constitution (a “Texas Refinance Loan”) has been
originated in compliance with the provisions of Article XVI, Paragraph
50(a)(6) of the Texas Constitution, Texas Civil Statutes and the Texas Finance
Code.  With respect to each Texas Refinance Loan that is a cash out refinancing,
the related Mortgage Loan Documents state that the Mortgagor may prepay such
Texas Refinance Loan in whole or in part without incurring a prepayment
penalty.  Seller does not collect any such prepayment penalties in connection
with any such Texas Refinance Loan.

 

jj.                                  Anti-Money Laundering Laws.  Seller and its
agents have at all times complied with all applicable federal, state and local
anti-money laundering laws, orders and regulations to the extent applicable to
Seller or its agent, including without limitation the USA PATRIOT Act of 2001,
the Bank Secrecy Act and the regulations of the Office of Foreign Asset Control
(collectively, the “Anti-Money Laundering Laws”), in respect of the origination
and servicing of each Mortgage Loan; Seller has established an anti-money
laundering compliance program as and to the extent required by the Anti-Money
Laundering Laws, has conducted the requisite due diligence in connection with
the origination and servicing of each Mortgage Loan for purposes of the
Anti-Money Laundering Laws to the extent applicable to Seller, and, to the
extent required by applicable law, maintains, and will maintain, either directly
or through third parties, sufficient information to identify the applicable
Mortgagor for purposes of the Anti-Money Laundering Laws. No Mortgage Loan is
subject to nullification pursuant to Executive Order 13224 (the “Executive
Order”) or the regulations promulgated by the Office of Foreign Assets Control
of the United States Department of the Treasury (“OFAC Regulations”) or in
violation of the Executive Order or the OFAC Regulations, and no Mortgagor is
subject to the provisions of such Executive Order or the

 

Exhibit B-11

--------------------------------------------------------------------------------

 

OFAC Regulations nor listed as a “blocked person” for purposes of the OFAC
Regulations.

 

kk.                          Predatory Lending Regulations.  The Mortgage Loan
is not classified as (a) a “high cost” loan under the Home Ownership and Equity
Protection Act of 1994 (“HOEPA”) or (b) a “high cost,” “threshold,” “covered,”
or “predatory” loan under any other applicable state, federal or local law.  The
Mortgage Loan does not have an “annual percentage rate” or total “points and
fees” payable by the related Mortgagor (as each such term is calculated under
HOEPA) that exceed the thresholds set forth by HOEPA and its implementing
regulations, including 12 C.F.R. § 226.32(a)(1)(i). 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. No term or condition of, and no practice used
in connection with the Origination of, such Mortgage Loan has been categorized
as an “unfair” or “deceptive” term, condition or practice under any applicable
federal, state or local law (or regulation promulgated thereunder) and the
Mortgage Loan does not have any terms which expose Buyer to regulatory action or
enforcement proceedings, penalties or other sanctions.

 

ll.                                    State Laws.  No Mortgage Loan is a
“High-Cost Home Loan” as defined in the Arkansas Home Loan Protection Act
effective July 16, 2003 (Act 1340 of 2003); no Mortgage Loan is a “High-Cost
Home Loan” as defined in the Kentucky high-cost home loan statute effective
June 24, 2003 (Ky. Rev. Stat. Paragraph 360.100); no Mortgage Loan is a
“High-Cost Home Loan” as defined in the New Jersey Home Ownership Act effective
November 27, 2003 (N.J.S.A. 46:10B-22 et seq.); no Mortgage Loan is a “High-Cost
Home Loan” as defined in the New Mexico Home Loan Protection Act effective
January 1, 2004 (N.M. Stat. Ann. §§ 58-21A-1 et seq.); no Mortgage Loan is a
“High-Risk Home Loan” as defined in the Illinois High-Risk Home Loan Act
effective January 1, 2004 (815 Ill. Comp. Stat. 137/1 et seq.); no Mortgage Loan
is a “High-Cost Home Mortgage Loan” as defined in the Massachusetts Predatory
Home Loan Practices Act, effective November 7, 2004 (Mass. Ann. Laws Ch. 183C);
no Mortgage Loan is a “High Cost Home Loan” as defined in the Indiana Home Loan
Practices Act, effective January 1, 2005 (Ind. Code Ann. Paragraphs 24-9-1
through 24-9-9); no Mortgage Loan that was originated on or after October 1,
2002 and on or prior to March 7, 2003, which is secured by property located in
the State of Georgia; no Mortgage Loan that was originated after March 7, 2003,
which is a “high cost home loan” as defined under the Georgia Fair Lending Act,
as amended (the “Georgia Act”); no Mortgage Loan is a “high cost home loan,” as
defined in Paragraph 6 L of the New York State Banking Law; and no Mortgage Loan
is a “covered loan” as contemplated in the California Predatory Lending Act set
forth in California Finance Code Sections 4970 to 4979.8.

 

mm.                    Arbitration.  No Mortgagor agreed to submit to
arbitration to resolve any dispute arising out of or relating in any way to the
mortgage loan transaction; any breach

 

Exhibit B-12

--------------------------------------------------------------------------------

 

of this representation shall be deemed to materially and adversely affect the
value of the Mortgage Loan and shall require a repurchase of the affected
Mortgage Loan.

 

nn.                            Higher Cost Products.  The Mortgagor was not
encouraged or required to select a Mortgage Loan product offered by the Mortgage
Loan’s originator which is a higher cost product designed for less creditworthy
Mortgagors, unless at the time of the Mortgage Loan’s origination, such
Mortgagor did not qualify taking into account such facts as, without limitation,
the Mortgage Loan’s requirements and the Mortgagor’s credit history, income,
assets and liabilities and debt-to-income ratios for a lower-cost credit product
then offered by the Mortgage Loan’s originator or any affiliate of the Mortgage
Loan’s originator.  If, at the time of loan application, the Mortgagor may have
qualified for a lower-cost credit product then offered by any mortgage lending
affiliate of the Mortgage Loan’s originator, the Mortgage Loan’s originator
referred the Mortgagor’s application to such affiliate for underwriting
consideration.  For a Mortgagor who seeks financing through a Mortgage Loan
originator’s higher-priced nonprime lending channel, the Mortgagor was directed
towards or offered the Mortgage Loan originator’s standard mortgage line if the
Mortgagor was able to qualify for one of the standard products.

 

oo.                          Underwriting Methodology.  With respect to
delegated underwritten loans, the methodology used in underwriting the extension
of credit for each Mortgage Loan does not rely solely on the extent of the
Mortgagor’s equity in the collateral as the principal determining factor in
approving such extension of credit.  The methodology employed objective criteria
such as the Mortgagor’s income, assets and liabilities, to the proposed mortgage
payment and, based on such methodology, the Mortgage Loan’s originator made a
reasonable determination that at the time of origination the Mortgagor had the
ability to make timely payments on the Mortgage Loan.

 

pp.                          Points and Fees. No Mortgagor was charged “points
and fees” (whether or not financed) in an amount greater than (i) $1,000, or
(ii) 5% of the principal amount of such Mortgage Loan, whichever is greater. 
For purposes of this representation, such 5% limitation is calculated in
accordance with Fannie Mae’s anti-predatory lending requirements as set forth in
the Agency Guidelines and “points and fees” (x) include origination,
underwriting, broker and finder fees and charges that the mortgagee imposed as a
condition of making the Mortgage Loan, whether they are paid to the mortgagee or
a third party, and (y) exclude bona fide discount points, fees paid for actual
services rendered in connection with the origination of the Mortgage Loan (such
as attorneys’ fees, notaries fees and fees paid for property appraisals, credit
reports, surveys, title examinations and extracts, flood and tax certifications,
and home inspections), the cost of mortgage insurance or credit-risk price
adjustments, the costs of title, hazard, and flood insurance policies, state and
local transfer taxes or fees, escrow deposits for the future payment of taxes
and insurance premiums, and other miscellaneous fees and charges which
miscellaneous fees and charges, in total, do not exceed 0.25% of

 

Exhibit B-13

--------------------------------------------------------------------------------

 

the principal amount of such Mortgage Loan.  All fees and charges (including
finance charges) and whether or not financed, assessed, collected or to be
collected in connection with the origination and servicing of each Mortgage Loan
have been disclosed in writing to the Mortgagor in accordance with applicable
state and federal law and regulation.

 

qq.                          Prepayment Penalties. With respect to any Mortgage
Loan that contains a provision permitting imposition of a penalty upon a
prepayment prior to maturity: (i) the Mortgage Loan provides some benefit to the
Mortgagor (e.g., a rate or fee reduction) in exchange for accepting such
prepayment penalty, (ii) the Mortgage Loan’s originator had a written policy of
offering the Mortgagor the option of obtaining a mortgage loan that did not
require payment of such a penalty, (iii) the prepayment penalty was adequately
disclosed to the Mortgagor in the mortgage loan documents pursuant to applicable
state, local and federal law, and (v) notwithstanding any state or federal law
to the contrary, neither Seller nor any Subservicer shall impose such prepayment
premium in any instance when the mortgage debt is accelerated as the result of
the Mortgagor’s default in making the loan payments.

 

rr.                                Single Premium Credit Insurance Policies.  No
Mortgagor was required to purchase any single premium credit insurance policy
(e.g., life, mortgage, disability, accident, unemployment, or health insurance
product) or debt cancellation agreement as a condition of obtaining the
extension of credit.  No Mortgagor obtained a prepaid single premium credit
insurance policy (e.g., life, mortgage, disability, accident, unemployment, or
health insurance product) in connection with the origination of the Mortgage
Loan.  No proceeds from any Mortgage Loan were used to purchase single premium
credit insurance policies or debt cancellation agreements as part of the
origination of, or as a condition to closing, such Mortgage Loan; any breach of
this representation shall be deemed to materially and adversely affect the value
of the Mortgage Loan and shall require a repurchase of the affected Mortgage
Loan.

 

ss.                              Origination Practices; Servicing.  The
origination practices used by Seller and the collection and servicing practices
used by Seller and any Subservicer with respect to each Mortgage Loan have been
in all respects legal and customary in the mortgage origination and servicing
industry and the collection and servicing practices used by Seller and any
Subservicer have been consistent with customary servicing procedures.  The
Mortgage Loan satisfies, and has been originated and underwritten in accordance
with, all applicable requirements of Seller’s underwriting guidelines.  Seller
has serviced the Mortgage Loan at all times since its origination.

 

tt.                                  Escrow Payments.  With respect to escrow
deposits and payments that Seller is entitled to collect, all such payments are
in the possession of, or under the control of 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 and

 

Exhibit B-14

--------------------------------------------------------------------------------

 

the provisions of the related Mortgage Note and Mortgage.  As to any Mortgage
Loan that is the subject of an escrow, escrow of funds is not prohibited by
applicable law and has been established in an amount sufficient to pay for every
escrowed item that remains unpaid and has been assessed but is not yet due and
payable.  No escrow deposits or other charges or payments due under the Mortgage
Note have been capitalized under any Mortgage or the related Mortgage Note.

 

uu.                            Interest on Escrows.  As of the related Purchase
Date, Seller has credited to the account of the related Mortgagor under the
Mortgage Loan all interest required to be paid by applicable law or by the terms
of the related Mortgage Note on any escrow account.  Evidence of such credit
shall be provided to Buyer upon request.

 

vv.                            Escrow Analysis.  Seller has properly conducted
an escrow analysis for each escrowed Mortgage Loan in accordance with applicable
law.  All books and records with respect to each Mortgage Loan comply with
applicable law and regulations, and have been adjusted to reflect the results of
the escrow analyses.  Except as allowed by applicable law, no inflation factor
was used in the escrow analysis. Seller has delivered notification to the
Mortgagor(s) under each Mortgage Loan of all adjustments resulting from such
escrow analyses.

 

ww.                    Escrow Holdbacks.  The Mortgage Loan is not subject to
outstanding escrow holdbacks except those specifically identified by Seller as
defined in the Takeout Guidelines.

 

xx.                            Credit Reporting.  If applicable, Seller has
caused to be fully furnished, in accordance with the Fair Credit Reporting Act
and its implementing regulations, accurate and complete information (i.e.,
favorable and unfavorable) on its Mortgagor loan files to Equifax, Experian, and
Trans Union Credit Information Company (three of the credit repositories), on a
monthly basis; any breach of this representation shall be deemed to materially
and adversely affect the value of the Mortgage Loan and shall require a
repurchase of the affected Mortgage Loan.

 

yy.                            Interest Rate Adjustments.  If applicable, with
respect to each adjustable rate Mortgage Loan, all 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
and local law has been properly paid and credited.  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.

 

zz.                              Regarding the Mortgagor.  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 Agency
Guidelines for such trusts.  The Mortgagor is a natural person.  The Mortgagor
is not an owner, officer, director, employee, relative or agent of Seller or an
Affiliate of Seller.  The Mortgagor is not a

 

Exhibit B-15

--------------------------------------------------------------------------------

 

government or a governmental subdivision or agency.  The Mortgagor occupies the
Mortgaged Property unless the Mortgaged Property is an Investor Loan.

 

aaa.                     Fannie Mae Takeout Guidelines Announcement 95-19. 
Seller will transmit full file credit reporting data for each Mortgage Loan
pursuant to Fannie Mae Announcement 95-19 and that for each Mortgage Loan,
Seller agrees it shall report one of the following statuses each month as
follows:  new origination, current, delinquent (30 or more days), foreclosed, or
charged-off.

 

bbb.                  Tax Identification/Back Up Withholding.  All tax
identifications for individual Mortgagors, have been certified as required by
law.  Seller has complied with all IRS requirements regarding the obtainment and
solicitation of taxpayer identification numbers and the taxpayer identification
numbers provided to Buyer as reflected on the system are correct. To the extent
a Mortgage Loan is on back up withholding, Seller has substantiated both the
initial reason for the back up withholding and the amount of such back up
withholding and the reason for such back up withholding in the amount currently
withheld still exists.

 

ccc.                     IRS Forms.  All IRS forms, including, but not limited
to, Forms 1099, 1098, 1041 and K-1, as appropriate, which are required to be
filed with respect to activity occurring on or before the year in which the
Purchase Date occurs and have been filed or will be filed in accordance with
applicable law.

 

ddd.                  Electronic Drafting of Payments.  If Seller or a
Subservicer drafts monthly payments electronically from the Mortgagor’s bank
account, such drafting occurs in compliance with applicable federal, state, and
local laws and regulations; and the applicable agreement with the Mortgagor; and
such applicable agreement with the Mortgagor both legally and contractually can
be fully assigned to Buyer pursuant to the assignment provisions contained
therein, and will be fully assigned to Buyer pursuant to this Agreement.

 

eee.                     Third Party Originators and TPO Loans.  The Mortgage
Loan is not a TPO Loan, nor was it originated by a Third Party Originator.

 

fff.                              U.S. Loan; Mortgagor.  The Mortgage Loan is
denominated and payable only in United States dollars within the United States
and the related Mortgagor is a United States citizen or resident alien or, only
if the Mortgagor is a trustee as described in item (aaa) in this Exhibit B that
is not a natural person, Mortgagor is a corporation or other legal entity
organized under the laws of the United States or any state thereof or the
District of Columbia.

 

ggg.                     Representations and Warranties to Approved Takeout
Investor.  Any representations or warranties made by Seller to the Approved
Takeout Investor upon final sale of the Mortgage Loan are hereby incorporated
into this Agreement, and Seller is deemed to make the same representations and
warranties to Buyer, as if such representations and warranties were fully set
forth herein.

 

Exhibit B-16

--------------------------------------------------------------------------------

 

hhh.                     CL Eligible.  The Mortgage Loan is eligible for sale to
CL (even if CL is not the Approved Takeout Investor).

 

iii.                                 Takeout Commitment/Hedging Arrangement. 
The Mortgage Loan is subject to (a) a legally valid and binding Takeout
Commitment and satisfies all of the requirements related to such Takeout
Commitment; or (b) a legally valid and binding Hedging Arrangement and satisfies
all the requirements related to such Hedging Arrangement.

 

jjj.                              Agency Guidelines.  The Mortgage Loan
satisfies, and has been originated in accordance with, all applicable
requirements of the applicable Agency Guidelines;

 

kkk.                  MERS.  The Mortgage Loan is a MERS Designated Mortgage
Loan.

 

lll.                                 Whole Loan.  The Mortgage Loan is a whole
loan and not a participation interest.

 

mmm.         UCC Characterization.  The Mortgage Loan is an “account”, “chattel
paper”, “promissory note” or “payment intangible” within the meaning of
Article 9 of the UCC of all applicable jurisdictions.

 

nnn.                     Bankruptcy Code Characterization.  The Mortgage Loan is
a “mortgage loan” within the meaning of the Bankruptcy Code.

 

ooo.                  No Previous Financing.  The Mortgage Loan has not been
previously financed by any other Person.

 

ppp.                  Ineligible Loan Types.  The Mortgage Loan is not (i) a
negative amortization loan, (ii) a second lien loan, (iii) a home equity line of
credit or similar loan, (iv) secured by Mortgaged Property which is not occupied
by the Mortgagor unless the Mortgage Loan is an Investor Loan, (v) secured by
Mortgaged Property which is a vacation home or second home of Mortgagor unless
the Mortgage Loan is a Second Home Loan, (vi) a reverse mortgage, (vii) a
subprime Mortgage Loan or alt-A Mortgage Loan, or (viii) considered an “Expanded
Approval” loan or a similar loan such as is described in the applicable Agency’s
eligibility certification.

 

qqq.                  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 Seller has not financed nor does it own
directly or indirectly, any equity of any form in the Mortgaged Property or the
Mortgagor.

 

rrr.                           Condominiums/ Planned Unit Developments.  If the
Mortgage Loan is a condominium loan, the related residential dwelling is a
condominium unit or a unit in a planned unit development (other than a de
minimis planned unit development) and such condominium or planned unit
development project meets

 

Exhibit B-17

--------------------------------------------------------------------------------

 

the eligibility requirements of Fannie Mae and Freddie Mac including Fannie Mae
eligibility requirements for sale to Fannie Mae or is located in a condominium
or planned unit development project which has received Fannie Mae project
approval and the representations and warranties required by Fannie Mae with
respect to such condominium or planned unit development have been made and
remain true and correct in all respects.

 

sss.                        Downpayment.  The source of the down payment with
respect to such Mortgage Loan has been fully verified by Seller.

 

ttt.                              Due on Sale.  The related 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.

 

uuu.                     Flood Certification Contract. Seller has obtained a
life of loan, transferable flood certification contract for such Mortgage Loan
and such contract is assignable without penalty, premium or cost to Buyer.

 

vvv.                     No Construction Loans.  The Mortgage Loan was not made
in connection with (a) the construction or rehabilitation of a Mortgaged
Property or (b) facilitating the trade-in or exchange of a Mortgaged Property.

 

Exhibit B-18

--------------------------------------------------------------------------------

 

EXHIBIT C

 

FORM OF COMPLIANCE CERTIFICATE

 

COMPLIANCE CERTIFICATE

 

SELLER:

RYLAND MORTGAGE COMPANY

 

 

BUYER:

JPMORGAN CHASE BANK, N.A.

 

a national banking association

 

 

TODAY’S DATE:

____/____/____

 

 

REPORTING PERIOD ENDED:                                  ______ month(s) ended
____/____/____

 

This certificate is delivered to Buyer under the Master Repurchase Agreement
dated effective as of July __, 2011, between Sellers and Buyer (the
“Agreement”), all the defined terms of which have the same meanings when used
herein.

 

I hereby certify that with respect to Seller indicated above:  (a) I am, and at
all times mentioned herein have been, the duly elected, qualified, and acting
Treasurer of Seller; (b) to the best of my knowledge, the Financial Statements
of Seller and any footnotes thereto from the period shown above (the “Reporting
Period”) and which accompany this certificate were prepared in accordance with
GAAP and present fairly the financial condition of Seller as of the end of the
Reporting Period and the results of its operations for Reporting Period; (c) a
review of the Agreement and of the activities of Seller during the Reporting
Period has been made under my supervision with a view to determining Seller’s
compliance with the covenants, requirements, terms, and conditions of the
Agreement, and such review has not disclosed the existence during or at the end
of the Reporting Period (and I have no knowledge of the existence as of the date
hereof) of any Default or Event of Default with respect to any Seller, except as
disclosed herein (which specifies the nature and period of existence of each
Default or Event of Default, if any, and what action Seller has taken, is
taking, and proposes to take with respect to each); (d) the calculations
described on the pages attached hereto evidence that Seller is in compliance
with the requirements of the Agreement at the end of the Reporting Period (or if
Seller is not in compliance, showing the extent of non-compliance and specifying
the period of non-compliance and what actions Seller proposes to take with
respect thereto); and (e) Seller was, as of the end of the Reporting Period, in
compliance and good standing with applicable CL, Fannie Mae, Ginnie Mae, Freddie
Mac, and HUD net worth requirements.

 

 

By:

 

 

 

Name:

 

 

Title: Treasurer

 

 

Exhibit C-1

--------------------------------------------------------------------------------

 

SELLER:

 

REPORTING PERIOD ENDED:                          ____/____/____

 

All financial calculations set forth herein are as of the end of the Reporting
Period.

 

I.                              TANGIBLE NET WORTH

 

The Tangible Net Worth is:

 

Shareholder’s equity:

$

Minus: intangible assets – goodwill, intellectual property, etc.

$

Minus: capitalized servicing rights

$

Minus: Employee Loans
(unless they are advances against commissions)

$

Minus: Assets pledged to secure liabilities not included in Debt

$

Minus: Advances or loans to Shareholders and Affiliates

$

Minus: Any assets unacceptable to Buyer or Agencies

$

Minus: Unconsolidated Investments in Affiliates (including any unconsolidated
Subsidiary)

$

Minus: deferred tax assets, pledged assets, assets deemed unacceptable by
Agencies and assets unacceptable to Buyer or CL (per definition)

$

TANGIBLE NET WORTH:

$

 

II.                        ADJUSTED TANGIBLE NET WORTH

 

Adjusted Tangible Net Worth is:

 

Tangible Net Worth (from above):

$

Plus: Lesser of (i) 1.00% times unpaid principal balance of Seller’s Mortgage
Loans with Servicing Rights and (ii) capitalized value of Seller’s Servicing
Rights

$

Plus:  Qualified Subordinated Debt:

$

Minus: 100% of net book value of Mortgage Loans held for investment

$

Plus:  Lesser of (A) 50% of net book value of Mortgage Loans held for investment
and (B) net book value of Mortgage Loans held for investment

$

Minus: net book value of REO Property

$

Plus: Lesser of (A) 50% of net book value of REO Property and (B) net book value
of REO Property

 

 

Exhibit C-2

--------------------------------------------------------------------------------

 

Minus: 50% of net book value of other illiquid investments

$

ADJUSTED TANGIBLE NET WORTH:

$

REQUIRED MINIMUM (through Termination Date)

$10,000,000

In compliance? 

Yes No

 

 

III.                  DEBT OF SELLER

 

Total Liabilities

$

Plus:  off balance sheet debt: 

$

Minus:  loan loss reserves (if included in liabilities):

$

Minus:  deferred taxes arising from capitalized excess servicing fees:

$

Minus: operating leases

$

Minus: Qualified Subordinated Debt

$

DEBT:

$

 

IV.                   LEVERAGE RATIO:  DEBT TO ADJUSTED TANGIBLE NET WORTH

 

Debt (from above):

$

Adjusted Tangible Net Worth:

$

RATIO OF DEBT/ADJUSTED TANGIBLE NET WORTH:

__:1

Maximum permitted

12:1

In compliance?

Yes No

 

V.                         MAXIMUM FACILITY RATIO

 

Total Available Facilities:

$

Adjusted Tangible Net Worth (from above):

$

RATIO OF TOTAL AVAILABLE WAREHOUSE CREDIT/ADJUSTED TANGIBLE NET WORTH:

__:1

Maximum permitted

30:1

In compliance?

Yes No

 

VI.                   LIQUIDITY TO TOTAL ASSETS

 

Cash Equivalents:

$

Available Purchase Price under Agreement

$

 

Exhibit C-3

--------------------------------------------------------------------------------

 

Total Liquidity

$

Total Assets

$

LIQUIDITY AS A PERCENTAGE OF TOTAL ASSETS

___%

Amount of Liquidity Required

3% of Total Assets

In compliance?

Yes No

 

VII.             CURRENT RATIO

 

Current Assets

$

Current Liabilities

$

RATIO OF CURRENT ASSETS TO CURRENT LIABILITIES

__:1

Minimum required (through Termination Date)

1.05:1

 

 

In compliance?

Yes No

 

VIII.       NET INCOME (tested each fiscal quarter)/NET LOSS (tested each fiscal
quarter)

 

Net Income for most recently ended full fiscal quarter:

$

Minimum required:

$1.00

In compliance?

Yes No

Net Operating Loss for first fiscal quarter

$

Maximum permitted:

$1,000,000

In compliance?

Yes No

 

IX.                   PERMITTED DEBT

 

Debt incurred since date of Agreement or last Compliance Certificate (whichever
is later):

Counterparty

Amount

Permitted?

Under which clause of Paragraph 11(cc)?

 

 

Yes No

 

 

 

Yes No

 

 

 

Yes No

 

 

Exhibit C-4

--------------------------------------------------------------------------------

 

X.                         PRODUCTION

 

Volume

Current Month

Year-to-Date

Residential Mortgage Loans Funded

$

$

Commercial Loans Funded *

$

$

TOTAL VOLUME

$

$

* Commercial loans include 5 or more unit multi-family properties and mixed use
properties.

 

 

Volume

Current Month

Year-to-Date

Banked Loan Production

$

$

Brokered Loan Production

$

$

TOTAL VOLUME

$

$

 

By Channel/Source

Current Month

Year-to-Date

Retail as % of Total

%

%

TPO Loans as a % of Total

%

%

Correspondent as a % of Total**

%

%

TOTAL (Must = 100%)

%

%

*Correspondent loans are defined as those that are purchased as closed loans
from third parties.

 

By Category

Current Month

Year-to-Date

Government as % of Total

%

%

Conventional as % of Total

%

%

Jumbo as % of Total

%

%

Alt A as % of Total

%

%

Subprime as % of Total

%

%

Second Mortgages as %

%

%

Other (Describe)

%

%

Total (Must = 100%)

%

%

By Finance Type

Current Month

Year-to-Date

Purchase as % of Total

%

%

Refinance as a % of Total

%

%

TOTAL (Must = 100%)

%

%

 

Exhibit C-5

--------------------------------------------------------------------------------

 

Others

Current Month

Year-to-Date

Average FICO

%

%

Average LTV

%

%

Average CLTV

 

 

 

XI.                   FACILITIES (Please list all Available Facilities including
off balance sheet facilities)

 

Institution

Total (committed or
uncommitted, please
indicate “C” or “U”)

Outstanding

 

$                           

$

 

$

$

 

$

$

 

 

 

TOTALS

$

$

 

XII.             REPURCHASES / INDEMNIFICATIONS (R&I)

 

Repurchases

UPB

# of Loans

Actual or Estimated Loss

How were they recorded on the financials?

Beginning Open R&I’s

 

 

 

 

 

$

 

$

 

New R&I’s received this month

 

 

 

 

 

$

 

$

 

R&I’s rescinded this month

$

 

$

n/a

R&I’s settled this month

$

 

$

 

Ending Open R&I’s

$

 

$

 

* If you have a detailed schedule of loans subject to repurchases that includes
the investor requesting, reason for repurchases, origination date, loan
characteristics such as LTV, lien position, occupancy etc., and valuation method
if you have estimated your loss exposure, please attach it with this table.

 

Exhibit C-6

--------------------------------------------------------------------------------

 

XIII.       FORECLOSURES

 

 

Current Month

Year-to-Date

Foreclosure loan units

$

$

Foreclosure loan volumes

$

$

Expected loss on Foreclosures

$

$

TOTALS

$

$

 

XIV.        LOAN LOSS RESERVE

 

 

Current Month

Year-to-Date

Beginning loan loss reserve

$

$

Additional loss provision

$

$

Actual charge off

$

$

Ending Loan Loss Reserve

$

$

 

XV.              LOAN SERVICING

 

 

Current Month

Year-to-Date

60 days delinquency (Unit)

 

 

60 days delinquency volumes

$

$

Loan servicing report attached

 

 

 

XVI.        LITIGATION

 

 

Current Month

Year-to-Date

Pending litigation (Unit)

 

 

Expected losses on litigation

$

$

 

XVII.  THIRD PARTY REPORTS

 

All reports received from third parties (such as the SEC, Fannie Mae, Ginnie
Mae, Freddie Mac) subsequent to the last reporting period are attached hereto. 
These reports include the following (if none, write “None”): ___

 

XVIII. DEFAULTS OR EVENTS OF DEFAULT

 

Disclose nature and period of existence and action being taken in connection
therewith; if none, write “None”: ___

 

Exhibit C-7

--------------------------------------------------------------------------------

 

XIX.                OTHER REPORTS REQUIRED (Please attach if applicable)

 

a.                                     Buyer Warehouse Loans T& I Escrow
reconciliation

 

b.                                    Indemnification & Repurchase Report for
the prior year and current YTD.

 

c.                                     Hedge Reports (including:  position
summary report, MBS & whole loan trade detail, loan level detail report with
weighted average take out price)

 

Exhibit C-8

--------------------------------------------------------------------------------

 

EXHIBIT D

 

FORM OF SHIPPING INSTRUCTIONS

 

Shipping Instructions

 

These loans being shipped to a custodian? ____________________ Or to an
Investor?

_______________

 

 

Please ship the following notes to:

 

Investor name

 

Street address

 

City, State, Zip

 

Attn:

 

Endorse the note as follows:                       Endorsement Instructions

 

Loan Number

Borrower Name

Loan Amount

 

 

 

 

Attach additional pages as required

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Special Instructions:  ________________________________________

 

For any questions, please contact:     Name:  ___________________________

 

Phone:  ________________________

 

Fax Number:  _______________________________

 

Signature:  _______________________

 

Exhibit D-1

--------------------------------------------------------------------------------

 

EXHIBIT E

 

CONDITIONS PRECEDENT DOCUMENTS

 

 

1.                                    Master Repurchase Agreement

 

2.                                   Side Letter

 

3.                                    Electronic Tracking Agreement

 

4.                                    Certified organizational documents of
Seller

 

5.                                    UCC, tax lien and judgment searches, state
of each Seller’s organization, and tax lien and judgment searches, county where
each Seller’s chief executive office is located

 

6.                                    UCC-1 Financing Statements

 

7.                                    Opinions of Counsel

 

8.                                    Errors and omissions insurance policy or
mortgage impairment insurance policy or evidence of insurance in lieu of policy

 

9.                                    Blanket bond coverage policy or evidence
of insurance in lieu of policy endorsed to (i) provide that for any loss
affecting Buyer’s interest, Buyer will be named on the loss payable draft as its
interest may appear and (ii) provide Buyer access to coverage under the theft of
secondary market institution’s money or collateral clause of such insurance
policy

 

10.                            Subservicer Instruction Letter between each
Seller and any Subservicer

 

Exhibit E-1

--------------------------------------------------------------------------------

 

EXHIBIT F

 

REQUIRED OPINIONS OF COUNSEL WITH RESPECT TO EACH SELLER

 

1.                                    RMC has been legally incorporated under
the laws of the State of Ohio and RMCMC has been legally incorporated under the
laws of the State of California and each is validly existing and in good
standing under the laws of that State, and has the requisite entity power and
authority to execute and deliver each Transaction Document to which it is a
party and to perform its obligations thereunder.

 

2.                                    Each of the execution, delivery and
performance by Seller of the Transaction Documents to which it is a party has
been duly authorized by all requisite corporate action on the part of Seller.

 

3.                                    Each Transaction Document to which Seller
is a party has been duly executed and delivered by a duly authorized officer of
Seller.

 

4.                                    Each Transaction Document to which Seller
is a party constitutes the valid and binding obligation of Seller under the laws
of the State of New York, enforceable against Seller in accordance with its
respective terms.1

 

5.                                    The execution, delivery and performance by
Seller of its obligations under each of the Transaction Documents to which it is
a party and the consummation of the transactions contemplated thereby will not
result in (i) any breach or violation of its organizational documents, (ii) any
breach, violation or acceleration of or default under any indenture, loan or
credit agreement, lease, mortgage, security agreement or other material
agreement or instrument to which it is a party or by which it is bound,2 (iii)
any breach or violation of any order, writ, judgment, injunction or decree of
any court, agency or other governmental body, or (iv) any breach or violation of
any United States federal, State of Ohio, State of California or State of New
York statute or regulation that is normally applicable to transactions of the
type contemplated by the Agreements.

 

6.                                    There is no legal action, suit, proceeding
or investigation before any court, agency or other governmental body pending or,
to my knowledge, threatened against Seller which, either in one instance or in
the aggregate, (a) could reasonably be expected to have a material adverse
effect on its business, operations, properties or condition (financial or
otherwise) or (b) draws into question the validity of, seeks to prevent the
consummation of any of the transactions contemplated by or would impair
materially its ability to perform its obligations under any of the Transaction
Documents to which it is a party.

 

7.                                    The execution, delivery and performance of
Seller’s obligations under each of the Transaction Documents to which it is a
party and the consummation of the transactions contemplated thereby do not
require any consent, approval, authorization or order of, filing with

 

--------------------------------------------------------------------------------

1 To be given by outside counsel licensed to practice in the State of New York.

2 To be given by outside counsel.  An officer of Seller is to certify to outside
counsel and JPM that the attached list of agreements are all of the indentures,
leases, credit agreements, repos and other material agreements to which Seller
or its parent is subject or a party.

 

Exhibit F-1

--------------------------------------------------------------------------------

 

or notice to any United States federal, State of Ohio, State of California, or
State of New York court, agency or other governmental body under any United
States federal, State of Ohio, State of California, or State of New York statute
or regulation that is normally applicable to transactions of the type
contemplated by the Agreements, except such as may be required under the
securities laws of any State of the United States or such as have been obtained,
effected or given.

 

8.                                    Seller is not required to register as an
“investment company” under the Investment Company Act of 1940, as amended.

 

9.                                    The Repurchase Agreement creates, for the
benefit of Buyer, a valid security interest that will attach to all right, title
and interest of Seller in and to the Mortgage Assets and their proceeds3.

 

10.                            The Buyer’s security interest in each Mortgage
Note and its proceeds will be perfected upon delivery of such Mortgage Note to
Buyer in the State of Texas pursuant to and in accordance with the Transaction
Documents.4

 

11.                            The Buyer’s security interest in the Mortgage
Assets in which a security interest can be perfected by filing, and in their
proceeds, will be perfected upon filing of the applicable financing statement in
the filing office located in the State of Ohio (as to RMC) and the State of
California (as to RMCMC), each of which is the proper place to file against the
applicable Seller.5

 

--------------------------------------------------------------------------------

3 Creation opinion to be given by outside counsel competent to opine on New York
law.

4 Perfection opinions to be given by outside counsel.

5 Perfection opinions to be given by outside counsel.

 

Exhibit F-2

--------------------------------------------------------------------------------

 

EXHIBIT G

 

SUBSIDIARY INFORMATION

 

SUBSIDIARIES OF
SELLER

STATE
AUTHORIZED
TO DO
BUSINESS

ORG. TYPE

DATE

PERCENTAGE
OWNERSHIP

DBA’S

 

Associates Funding, Inc.

DE

Incorporation

08/12/94

100% by Ryland Mortgage Company

No

Associates Mortgage Funding Corporation

DE

Incorporation

06/23/89

100% by Ryland Mortgage Company

No

Cornerstone Title Company

AZ

Foreign

10/08/02

100% by Ryland Mortgage Company

Ryland Title Company

 

CO

Foreign

02/23/98

 

Ryland Title Company

 

DE

Foreign

03/28/03

 

Ryland Title Company

 

FL

Foreign

05/07/92

 

Ryland Title Company

 

GA

Foreign

07/17/01

 

No

 

IL

Foreign

08/11/95

 

Ryland Title Company

 

IN

Foreign

03/26/03

 

Ryland Title Company

 

MD

Incorporation

07/27/89

 

No

Qualified as “Ryland Title Company” (CornerstoneTitle Company was unavailable at
time of qualification)

MN

Foreign

07/25/00

 

No

 

NC

Foreign

08/30/01

 

Ryland Title Company

 

NV

Foreign

05/07/03

 

Ryland Title Company

 

TX

Foreign

05/18/93

 

Ryland Title Company

 

VA

Foreign

01/01/99

 

Ryland Title Company

Ryland Insurance Services

AZ

Foreign

03/12/96

100% by Ryland Mortgage Company

No

 

CA

Incorporation

09/13/95

 

No

 

CO

Foreign

06/07/96

 

No

 

Exhibit G-1

--------------------------------------------------------------------------------

 

SUBSIDIARIES OF
SELLER

STATE
AUTHORIZED
TO DO
BUSINESS

ORG. TYPE

DATE

PERCENTAGE
OWNERSHIP

DBA’S

 

DE

Foreign

04/23/03

 

No

 

FL

Foreign

04/21/97

 

No

 

GA

Foreign

10/06/97

 

No

 

IL

Foreign

12/31/97

 

No

 

IN

Foreign

05/06/97

 

No

Qualified as “Ryland Insurance Services, Inc.”

MD

Foreign

05/23/96

 

Ryland Insurance Services

Qualified as “Ryland Insurance Services Agency, Inc.”

MN

Foreign

06/30/97

 

No

Qualified as “Ryland Insurance Services D/B/A Ryland Insurance Services, Inc.”

NC

Foreign

04/22/97

 

No

 

NV

Foreign

05/16/03

 

No

 

OH

Foreign

06/11/97

 

No

 

SC

Foreign

04/01/97

 

No

 

TX

Foreign

02/04/97

 

No

 

VA

Foreign

05/23/96

 

No

 

 

 

 

 

 

 

 

 

 

 

 

 

SUBSIDIARIES OF SELLER - RMC MORTGAGE CORPORATION

 

 

Exhibit G-2

--------------------------------------------------------------------------------

 

EXHIBIT H

 

FORM OF SUBSERVICER INSTRUCTION LETTER

 

SUBSERVICER INSTRUCTION LETTER

 

________________, 200_

________________________, as Subservicer

________________________

________________________

Attention: ____________________

 

Re:                            Master Repurchase Agreement, dated as of
____________________, 2011 (“Repurchase Agreement”), by and between JPMorgan
Chase Bank, N.A., (“Buyer”) and Ryland Mortgage Company and RMC Mortgage
Corporation (each a “Seller”)

 

Ladies and Gentlemen:

 

As Subservicer (referenced herein as “You”) of those mortgage loans described on
Schedule 1 hereto, which may be amended or updated from time to time (the
“Mortgage Loans”) pursuant to that Subservicing Agreement, between You and the
undersigned Seller, as amended or modified, attached hereto as Exhibit A (the
“Subservicing Agreement”), you are hereby notified that the undersigned Seller
has sold to Buyer such Mortgage Loans pursuant to the above-referenced
Repurchase Agreement.

 

You agree to service the Mortgage Loans in accordance with the terms of the
Subservicing Agreement for the benefit of Buyer and, except as otherwise
provided herein, Buyer shall have all of the rights, but none of the duties or
obligations of any Seller under the Subservicing Agreement including, without
limitation, payment of any indemnification or reimbursement or payment of any
servicing fees or any other fees. No subservicing relationship shall be hereby
created between You and Buyer.

 

Upon your receipt of written notification by Buyer that a Default has occurred
under the Repurchase Agreement (the “Default Notice”), you, as Subservicer,
hereby agree to remit all payments or distributions made with respect to such
Mortgage Loans, net of the servicing fees payable to you with respect thereto,
immediately in accordance with Buyer’s wiring instructions provided below, or in
accordance with other instructions that may be delivered to you by Buyer:

 

[wire instructions]

 

Exhibit H-1

--------------------------------------------------------------------------------

 

You agree that, following your receipt of such Default Notice, under no
circumstances will you remit any such payments or distributions in accordance
with any instructions delivered to you by the undersigned Seller, except if
Buyer instructs you in writing otherwise.

 

You further agree that, upon receipt written notification by Buyer that an Event
of Default has occurred under the Repurchase Agreement (“Event of Default
Notice”), Buyer shall assume all of the rights and obligations of any Seller
under the Subservicing Agreement, except as otherwise provided herein.  Subject
to the terms of the Subservicing Agreement, You shall (x) follow the
instructions of Buyer with respect to the Mortgage Loans and deliver to a Buyer
any information with respect to the Mortgage Loans reasonably requested by such
Buyer, and (y) treat this letter agreement as a separate and distinct servicing
agreement between You and Buyer (incorporating the terms of the Subservicing
Agreement by reference), subject to no setoff or counterclaims arising in Your
favor (or the favor of any third party claiming through You) under any other
agreement or arrangement between You and any Seller or otherwise. 
Notwithstanding anything to the contrary herein or in the Subservicing
Agreement, in no event shall Buyer be liable for any fees, indemnities, costs,
reimbursements or expenses incurred by You prior to receipt of such Event of
Default Notice or otherwise owed to You in respect of the period of time prior
to receipt of such Event of Default Notice.

 

[NO FURTHER TEXT ON THIS PAGE]

 

Exhibit H-2

--------------------------------------------------------------------------------

 

Please acknowledge receipt of this instruction letter by signing in the
signature block below and forwarding an executed copy to Buyer promptly upon
receipt.  Any notices to Buyer should be delivered to the following address:
[                                         ], Attention: [               ],
Telephone: [                   ], Facsimile: [                   ].

 

 

Very truly yours,

 

 

 

[NAME OF APPLICABLE SELLER]

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

Acknowledged and Agreed as of this       day of                        ,
20     :

 

 

[SUBSERVICER]

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

Exhibit H-3

--------------------------------------------------------------------------------

 

EXHIBIT I

 

FIELDS FOR DAILY DATA TAPE

 

The daily data tape shall include the following fields, accurately completed for
each Purchased Mortgage Loan:

 

Seller’s Loan number

Mortgagor’s name

City, state and zip code of the Mortgaged Property

Outstanding Principal Balance as of such date

Approved Takeout Investor

Takeout Value

Market Value (based on Buyer’s determination)

Loan-to-Value Ratio

Interest rate

Original principal balance

Current scheduled monthly payment of principal and interest,

Origination date

First Purchase Date on which Mortgage Loan will be or was purchased under the
Agreement

Such other fields as Buyer requires from time to time in its sole discretion
with notice to Seller

 

Exhibit I-1

--------------------------------------------------------------------------------

 

EXHIBIT J

 

FORM OF BAILEE LETTER

 

[date]

 

[Investor name and address]

 

Ladies and Gentlemen:

 

 

1.   Papers Are Enclosed; Conditional Delivery

 

JPMorgan Chase Bank, N.A. (“JPM Chase”) hereby delivers with this letter to you,
as bailee, limited and conditional possession of the promissory notes (“Notes”)
and the other loan documents (collectively, the “Loan Papers”) relating to the
mortgage loans (the “Loans”) described on the attached Exhibit A.  JPM Chase is
the successor in ownership interest to Ryland Mortgage Company and RMC Mortgage
Corporation (whichever of them is named as payee or last endorsee on each Note
delivered to you herewith, the “Mortgage Company”) in and to the Loans pursuant
to that certain Master Repurchase Agreement between those affiliated companies,
as Sellers, and JPM Chase, as Buyer, as supplemented, amended or restated from
time to time (the “Repurchase Agreement”). The Loan Papers are delivered to you
at the request of the Mortgage Company for your inspection and determination of
whether to purchase the Loans under your agreement with the relevant Mortgage
Company (the “Purchase Agreement”), and for no other use or purpose.  Detailed
terms of this bailment are stated in Paragraph 6 below.  The Loan Papers are
also delivered conditionally:  if you are unwilling to accept the terms and
conditions of this bailment, as specified below, you must immediately return all
Loan Papers to JPM Chase.  If you do not return them within two business days
after receipt, you will have accepted the bailment terms and conditions.

 

 

2.  Examine Papers; How to Purchase Loans

 

Please examine the Loan Papers and decide whether you will purchase any or all
of the Loans.  To purchase one or more Loans, send, or cause Mortgage Company to
send, a list to JPM Chase indicating which Loans you are buying and remit the
Pay-off Price (defined in Paragraph 3 below) for each Loan to JPM Chase in
immediately available federal funds wired to :

 

JPMorgan Chase Bank, N.A.

ABA No. 021000021

712 Main Street

Houston, Texas 77002

For Credit Account No.                         

Attention:  Chase Mortgage Warehouse Finance

Phone:  214-492-4351

Further Credit — Ryland Mortgage Company and affiliates

 

Please return the Loan Papers for all Loans that you decide not to purchase to
JPM Chase addressed to:

 

Exhibit J-1

--------------------------------------------------------------------------------

 

JPMorgan Chase Bank, N.A.

Mortgage Warehouse Finance

Royal Ridge Operations Center 3929 W. John Carpenter Freeway

Mail Stop 1731

Irving, Texas 75063

Attn: Anthony Lassiter

Phone:  (214) 492-4393

 

 

3.  Pay-off Price

 

The “Pay-off Price” for each Loan is the greater of:

 

(x) the minimum payment required for the Mortgage Company’s repurchase of such
Loan so that the Mortgage Company can sell it to you (the “Release Price”), as
set forth in the “Release Price” column of Exhibit A; and

 

(y) the purchase price that you and the Mortgage Company have agreed you will
pay for such Loan (the “Agreed Purchase Price”).

 

If you pay JPM Chase only the Agreed Purchase Price for a Loan whose Release
Price exceeds the Agreed Purchase Price, you will thereupon become the owner of
that Loan, provided that JPM Chase retains a security interest in that Loan and
the related Loan Papers to secure payment to JPM Chase of the amount by which
the Release Price exceeds the Agreed Purchase Price (the “Required Deficiency
Payment”), which security interest will not be released unless and until either
you or the Mortgage Company pays JPM Chase the Required Deficiency Payment and
concurrently gives JPM Chase a written notice that both (i) identifies the Loan
with the payment and (ii) indicates that the amount so paid equals at least the
amount of the Required Deficiency Payment of that Loan.

 

 

4.  Loans Owned by JPM Chase, Repurchased and Transferred to You by Mortgage
Company

 

Pursuant to the Repurchase Agreement, the Mortgage Company has sold the Loans to
JPM Chase, and JPM Chase owns and holds the Loan Papers, the Loans they evidence
and all related security, collateral support and other rights.  Payment of the
Pay-off Price to JPM Chase will effect the relevant Mortgage Company’s
repurchase of the Loans from JPM Chase under the Repurchase Agreement and their
transfer by that Mortgage Company to you under the Purchase Agreement.

 

 

5.  UCC § 9-313(h) Perfection by Possession

 

Although the parties intend that all transactions under the Master Repurchase
Agreement be sales and purchases and not loans, if any one or more Transactions
are recharacterized as loans by a court of competent jurisdiction, the parties
have agreed that the Mortgage Company has pledged the Loans to JPM Chase as
security for such recharacterized transactions.  To invoke UCC § 9-313(h) to
maintain the perfection by possession of the Loan Papers of the security
interest in the Loans held by JPM Chase as secured party, we instruct you
hereby, concurrently with this delivery of the Loan Papers, (1) to hold
possession of the Loan

 

Exhibit J-2

--------------------------------------------------------------------------------

 

Papers for the benefit of JPM Chase as secured party, or (2) to redeliver the
Loan Papers to JPM Chase.

 

 

6.  The Mortgage Company’s, JPM Chase’s and Your Respective Interests in the
Loans and the Loan Papers — You Are Only a Bailee

 

We are delivering bare possession of the Loan Papers to you as bailee for your
inspection and decision whether you will (i) pay JPM Chase (for the relevant
Mortgage Company’s repurchase credit) for, and buy (from the Mortgage Company),
the related Loans or (ii) return to JPM Chase the Loan Papers for the Loans that
you do not purchase and pay for.  JPM Chase retains and reserves all of its
ownership rights in the Loans and the Loan Papers until you actually pay JPM
Chase for the Loans and thereby purchase them from the Mortgage Company in
accordance with this bailee letter.  You acquire no ownership or security
interest in them by our delivery of them to you.  No sale on credit is being
made, and no credit is being extended to you.  This bailee letter and our
delivery of the Loan Papers to you creates a “true bailment” under applicable
law, and your interest in the Loan Papers and their related Loans is and will be
limited to that of a bailee under such law, with no ability to pass a greater
interest to another, unless and until you purchase and wire payment of the
Pay-off Price (defined below) for the Loans you decide to purchase (if any) to
JPM Chase in strict accordance with Paragraph 2 and the other provisions of this
bailee letter.

 

 

7.  Proceeds not Released

 

No Release of Interest in Mortgages, Warehouse Lender Release of Security
Interest or other release that JPM Chase has executed or executes will be
effective to release JPM Chase’s interest in the proceeds of any Loan unless and
until the full Release Price for that Loan has actually been received by JPM
Chase.

 

 

8.  JPM Chase has Exclusive Authority to Give Instructions

 

With respect to the Loans, only JPM Chase has authority (A) to request or direct
you (i) where to make payment, (ii) where to return the Loan Papers for Loans
you decide not to purchase or (iii) to take any other action, or (B) to make any
agreement with you.  Unless JPM Chase hereafter gives you different written
instructions or advice, this bailee letter provides all instructions and advice
for the Loans and the Loan Papers.  You may not honor any notice, direction or
other communication from the Mortgage Company (or anyone else) concerning the
Loans or the Loan Papers unless it is specifically confirmed in writing by JPM
Chase.

 

 

9. No Other Payment or Delivery Before Payment to JPM Chase

 

You may not make payment for the Loans to anyone but JPM Chase unless you are
otherwise specifically instructed in writing by JPM Chase.  Until JPM Chase has
received payment of the full Pay-off Price for a Loan, you may not deliver any
of its Loan Papers to anyone other than JPM Chase without written authorization
from JPM Chase.  DO NOT SEND ANY PAYMENTS OR ANY LOAN PAPERS TO THE MORTGAGE
COMPANY.

 

 

10. Only If You Have Already paid the Pay-Off Price

 

If (but only if) you have already paid the Pay-off Price for a Loan to JPM
Chase, then the enclosed Loan Papers for, and

 

Exhibit J-3

--------------------------------------------------------------------------------

 

ownership of, that Loan are being delivered to you free of such security
interest or any trust, bailment or any other claim by JPM Chase.

 

 

11. 30-Day Period in which to Purchase

 

It is very important that you promptly return the Loan Papers to us for each
Loan that you do not intend to purchase so that we will know at all times which
specific Loans will remain subject to the Repurchase Agreement and which will
not.  Accordingly, you will have 30 days after the date of this letter to either
(i) return the enclosed Loan Papers for any Loan you elect not to purchase, or
(ii) to purchase all of the Loans that you do not return.

 

 

12. JPM Chase’s Absolute Right to Require Return of Loan Papers Not Sooner
Purchased

 

Notwithstanding any other provision of this bailee letter, the enclosed Loan
Papers are delivered to you on the express and controlling condition that,
unless JPM Chase has already received the Pay-Off Price for each of the Loans,
you will return any or all of them to JPM Chase promptly upon your receipt of
JPM Chase’s written direction to do so, regardless of whether or not you have
decided to purchase such Loans, excluding only those Loans (if any) for which
you have already paid us the Pay-Off Price.

 

 

13. You Agree to Keep the Loan Papers Safe

 

You are directed to keep all of the enclosed Loan Papers in a fire-resistant
vault and safe from loss, theft and other casualty and you will bear any losses,
costs or expenses the Mortgage Company and JPM Chase may incur as a result of
any such event.

 

 

14. This Letter Controls

 

If any other written instruction or advice you receive from us, the Mortgage
Company or anyone else in respect of the Loans is inconsistent with this bailee
letter, then this bailee letter shall control unless JPM Chase confirms in
writing that the other instruction or advice controls.

 

 

15. Please Confirm Receipt

 

Please immediately indicate your receipt of this bailee letter and the enclosed
Loan Papers, and your acceptance of and agreement to the bailment and the other
terms and conditions stated above, by dating and signing the enclosed copy of
this bailee letter and returning it to us (although your doing so will not be
necessary to the effectiveness of any of this bailee letter’s terms, provisions
or conditions).

 

 

Very truly yours,

 

 

 

JPMORGAN CHASE BANK, N.A.

 

 

Attached:

 

Exhibit A — schedule of Loans shipped

 

 

Exhibit J-4

--------------------------------------------------------------------------------

 

RECEIPT ACKNOWLEDGED AND BAILMENT, TERMS AND CONDITIONS ACCEPTED AND AGREED TO
ON                              , 201    

 

 

[INVESTOR’S NAME]

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Exhibit J-5

--------------------------------------------------------------------------------

 

EXHIBIT K

 

SELLER NAMES FROM TAX RETURNS

 

Ryland Mortgage Company

 

RMC Mortgage Corporation

 

Exhibit K-1

--------------------------------------------------------------------------------

 

EXHIBIT L

 

FORM OF TRUST RELEASE LETTER

 

TRUST RELEASE LETTER

 

TO: JPMORGAN CHASE BANK, N.A.

 

RE: [Seller]

 

DATE: [      ]

 

Reference is made to the Master Repurchase Agreement dated as of
                         , 2011 (as amended, restated, supplemented or otherwise
modified from time to time, the “Agreement”), between: (a) JPMorgan Chase Bank,
N.A. (“Buyer”) and (b) Ryland Mortgage Company and RMC Mortgage Corporation
(each a “Seller” and collectively, the “Sellers”).  Capitalized terms used
herein and not otherwise defined have the meanings given to those terms in the
Agreement.

 

Seller hereby requests that the following Mortgage Note be returned to Seller at
[address] for the reason(s) set forth below:

 

 

Loan ID number

 

Mortgagor last

names (1 name

sufficient if same

name)

 

 

Mortgage loan

amount

 

 

Allonge, Rider, or

CEMA docs to be

returned also?

 

 

Reason(s)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Seller agrees that Buyer continues to have the sole ownership interest in the
listed Mortgage Note and all other Mortgage Assets related to the Mortgage Note.

 

Seller shall return the corrected Mortgage Note to Buyer no later than the fifth
(5th) Business Day after the date of this Trust Release Letter.  At all times
the Mortgage Note listed above is in the possession of Seller pursuant to this
Trust Release Letter, Seller shall hold such Mortgage Note in trust for the
benefit of Buyer.  Seller hereby certifies that after Buyer delivers the
Mortgage Note described above to Seller, the aggregate original Outstanding
Principal Balance of all Mortgage Notes released to Seller pursuant to Trust
Release Letters as of the date of this Trust Release Letter does not exceed
$5,000,000.

 

Seller has caused the information set forth in the table below to be accurately
completed.

 

Exhibit L-1

--------------------------------------------------------------------------------

 

This Trust
Receipt prepared
by
(first & last
name)

 

 

First & last name
of contact person
for questions (if
different from
name to the left)

 

 

Contact
person’s phone
number

 

 

Contact
person’s fax
number

 

 

Contact person’s e-mail
address

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sincerely,

 

[SELLER]

 

 

 

 

 

By:

 

 

 

Name:

 

Title:

 

Exhibit L-2

--------------------------------------------------------------------------------

 

EXHIBIT M

 

PERMITTED DEBT

 

None.

 

 

Exhibit M-1

--------------------------------------------------------------------------------

 

SCHEDULE I

 

APPROVED TAKEOUT INVESTORS

 

CitiMortgage Inc. (Bond Unit)

Federal Home Loan Mortgage Corporation

Federal National Mortgage Association

Indiana Housing HFA

JPMorgan Chase

North Carolina Housing Finance Agency

PennyMac

PHH Mortgage Corporation

South Carolina Housing Finance Agency

Texas Dept. of Housing & Community Affairs

US Bank (Bond Unit)

Wells Fargo

 

Schedule I-1

--------------------------------------------------------------------------------

 

SCHEDULE II

 

SELLERS’ AUTHORIZED SIGNERS

 

Ryland Mortgage Company:

 

David A. Brown

President and Secretary

 

 

Martyn Watson

Vice President, Treasurer and Controller

 

RMC Mortgage Corporation:

 

Manuel Alejandro Rascon

President, Treasurer and Secretary

 

 

Timothy J. Geckle

Vice President

 

 

Martyn Watson

Assistant Treasurer

 

Schedule II-1

--------------------------------------------------------------------------------

 

SCHEDULE III

 

TERMS OF EACH SELLER’S OBLIGATIONS TO PAY
TRANSACTIONS BY ANOTHER OF THEM

 

Each Seller hereby agrees to the following terms with respect to Transactions
and with respect to the obligations and liabilities of each other Seller:

 

1.         Each Seller hereby (a) agrees to any modifications of any terms or
conditions of each other Seller’s obligations and liabilities to Buyer
(“Obligations”) and/or to any extensions or renewals of time of payment or
performance by any other Seller; (b) agrees that it shall not be necessary for
Buyer to resort to legal remedies against any other Seller, nor to take any
action against any other Person obligated (an “Obligor”) or on or against any
Mortgage Assets or any other security for payment or performance of any other
Seller’s Obligations before proceeding against such Seller; (c) agrees that no
release of any other Seller or other Obligor, or of any Mortgage Assets or other
security for any other Seller’s obligations and liabilities, whether by
operation of law or by any act of Buyer, with or without notice to such Seller,
shall release such Seller and (d) waives notice of demand, dishonor, notice of
dishonor, protest, and notice of protest and waives, to the extent permitted by
law, all benefit of valuation, appraisement and exemptions under the laws of the
United States, or any of the States of New York, Texas or any other state or
territory of the United States.

 

2.         The obligations of each Seller for every other Seller’s Obligations
shall be primary, absolute and unconditional, and shall remain in full force and
effect without regard to, and shall not be impaired or affected by:  (a) the
genuineness, validity, regularity or enforceability of, or any amendment or
change in, this Agreement or any other Transaction Document, or any change in or
extension of the manner, place or terms of payment of all or any portion of such
other Seller’s Obligations; (b) the taking or failure to take any action to
enforce this Agreement or any other Transaction Document, or the exercise or
failure to exercise any remedy, power or privilege contained therein or
available at law or otherwise, or the waiver by Buyer of any provisions of this
Agreement or any other Transaction Document; (c) any impairment, modification,
change, release or limitation in any manner of the liability of the other Seller
or its estate in bankruptcy, or of any remedy for the enforcement of such other
Seller’s liability, resulting from the operation of any present or future
provision of the bankruptcy laws (if applicable) or any other statute or
regulation, or the dissolution, bankruptcy, insolvency, or reorganization of
such other Seller; (d) the merger or consolidation of such other Seller or any
sale or transfer by such other Seller of all or part of its assets or property;
(e) any claim such Seller may have against such other Seller or any other
Obligor, including any claim of contribution; (f) the release, in whole or in
part, of such other Seller or any other Obligor; (g) the occurrence of any event
or circumstances which might otherwise constitute a surety or similar defense
available to, or a discharge of, any Seller, including failure of consideration,
fraud by or affecting any Person, usury, forgery, breach of warranty, failure to
satisfy any requirement of the statute of frauds, running of any statute or
limitation, accord and satisfaction and any defense based on remedies of any
type or (h) any other action or circumstance which (with or without notice to or
knowledge of such Seller) might in any manner or to any extent vary the risks of
such Seller or otherwise constitute a legal or equitable discharge or defense,
it being understood

 

Schedule III-1

--------------------------------------------------------------------------------

 

and agreed by each Seller that its obligations for every other Seller’s
Obligation shall not be discharged except by the full payment and performance of
such other Seller’s Obligation.

 

3.         Each Seller hereby waives every right to which it may be entitled by
virtue of any suretyship law.

 

4.         Buyer shall have the right to determine how, when and what
application of payments and credits, if any, whether derived from any Seller or
from any other source, shall be made on the Obligations and any other
obligations and liabilities owed by any Seller and/or any other Obligor to
Buyer.

 

5.         The obligations of each Seller hereunder shall continue to be
effective, or be automatically reinstated, as the case may be, if at any time
the performance or the payment, as the case may be, in whole or in part, of any
Seller’s Obligations is rescinded or must otherwise be restored or returned by
Buyer or any other Person (as a preference, fraudulent conveyance or otherwise)
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
any Seller or any other Person or upon or as a result of the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect
to any Seller or any other Person, or any substantial part of its property, or
otherwise, all as though such payments had not been made.  If an Event of
Default shall at any time have occurred and be continuing or shall exist and
declaration of default or acceleration under or with respect to any Seller’s
Obligations shall at such time be prevented by reason of the pendency against
any Seller or any other Person of a case or proceeding under any applicable
bankruptcy or insolvency law, each Seller agrees that its obligations for any
Seller’s Obligations shall be deemed to have been declared in default or
accelerated with the same effect as if such Obligations had been declared in
default and accelerated in accordance with their respective terms and each
Seller shall forthwith perform or pay, as the case may be, as required hereunder
in accordance with the terms hereunder without further notice or demand.

 

6.         No postponement or delay on the part of Buyer in the enforcement of
any right with respect to the Obligations of any Seller, including any other
Seller’s Obligations, shall constitute a waiver of such right and all rights of
Buyer hereunder shall be cumulative and not alternative and shall be in addition
to any other rights granted to Buyer in any other agreement or by law.

 

Schedule III-2

--------------------------------------------------------------------------------