Exhibit 10.1

 

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Renee R. Schultz

 

Vice President, Capital Markets

 

 

 

4000 Wisconsin Avenue, NW

 

Washington, DC 20016

 

202 752 1805

 

202 752 6890 (fax)

 

renee_r_schultz@fanniemae.com

 

December 15, 2011

 

PHH Mortgage Corporation

1 Mortgage Way

Mount Laurel, NJ 08054

 

Re:                             Extension of Committed Purchase Facility for
Early Funding

 

Ladies and Gentlemen:

 

This letter agreement (this “Letter Agreement”) amends and restates the
agreement between Fannie Mae and PHH Mortgage Corporation (“PHH”) regarding
Fannie Mae’s commitment to accept delivery and to purchase mortgage loans and
pools of mortgage loans from PHH pursuant to the Early Funding Agreements (as
defined in that certain Pricing Terms Letter between Fannie Mae and PHH, dated
as of the date hereof (the “Pricing Terms Letter”)), at any time during the term
of this Letter Agreement, with an aggregate unpaid principal balance, at any one
time and from time to time, of up to $1 billion.  This Letter Agreement
supersedes the Letter Agreement between Fannie Mae and PHH dated as of
December 16, 2010, related to the Committed Purchase Facility for Early Funding.

 

1.             Term of Agreement.  The terms set forth in this Letter Agreement
shall apply to all sales and deliveries of mortgage loans and pools of mortgage
loans from PHH to Fannie Mae pursuant to the Early Funding Agreements that are
made after the effective date of this Letter Agreement and prior to the one year
anniversary date of the date hereof (the “Scheduled Termination Date”), subject
to the early termination of this Letter Agreement as provided herein.

 

2.             Commitment.  (a) During the term of this Letter Agreement,
subject to the terms and conditions set forth herein, Fannie Mae shall accept
the sale and delivery and shall purchase mortgage loans and pools of mortgage
loans from PHH pursuant to the terms and conditions of the Early Funding
Agreements, provided that Fannie Mae shall not be committed to purchase mortgage
loans or pools of mortgage loans from PHH to the extent that, after giving
effect to the purchase thereof, the aggregate unpaid principal balance of
mortgage loans and pools of mortgage loans considered to be Pending (as defined
below) for all Early Funding Agreements would exceed $1 billion
($1,000,000,000.00).  Fannie Mae’s

 

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commitment to purchase loans from PHH pursuant to the terms of this Letter
Agreement shall be referred to herein as the “Commitment”.

 

(b)           For purposes of this Letter Agreement, mortgage loans and pools of
mortgage loans that have been purchased by Fannie Mae under the Early Funding
Agreements, but pursuant to the terms thereof the transaction has not been
completed (i.e., either (i) for a transaction under the ASAP Plus Agreements (as
defined in the Pricing Terms Letter), the mortgage loans have not been
repurchased by PHH and redelivered to Fannie Mae into a whole loan commitment,
or (ii) for a transaction under the ASAP Sale Agreements (as defined in the
Pricing Terms Letter), the mortgage-backed securities to be created from the
pool of mortgages purchased by Fannie Mae have not been delivered to the
identified forward trade counterparty) will be referred to as “Pending.”

 

(c)           During the term of this Letter Agreement, Fannie Mae’s purchases
of mortgage loans and pools of mortgage loans from PHH under the Early Funding
Agreements shall be at the pricing levels set forth in the Pricing Terms Letter.

 

(d)           For the avoidance of doubt, this Letter Agreement is intended to
create a binding commitment by Fannie Mae to purchase mortgage loans and pools
of mortgage loans from PHH pursuant to the terms of the Early Funding
Agreements, and as such, any provisions in the Early Agreements that relate to:

 

(i) an Early Funding Agreement not being construed as conferring the right to
PHH to deliver mortgage loans or pools of mortgage loans to Fannie Mae or an
obligation of Fannie Mae to accept such deliveries;

 

(ii) an Early Funding Agreement not being a commitment of funds to PHH; or

 

(iii) either party to an Early Funding Agreement reserving the right to cancel
an Early Funding Agreement at any time,

 

shall be superseded by this Letter Agreement, provided, however, that except as
set forth above, this Letter Agreement does not otherwise modify the terms and
provisions of the Early Funding Agreements, including, without limitation, the
procedures, and requirements of the initiation or completion of the delivery and
sale of mortgage loans and pools of mortgage loans pursuant to the Early Funding
Agreements or the ability of either party to declare an event of default under
the Early Funding Agreements and exercise any rights and remedies arising
therefrom.

 

3.             Commitment Fee.  (a)   PHH shall pay Fannie Mae a commitment fee
for providing the Commitment in the amount specified in the Pricing Terms Letter
(such fee, the “Commitment Fee”).

 

(b)           The Commitment Fee shall be paid in equal quarterly installments,
with payments due on the date hereof, March 1, 2012, June 1, 2012, and
September 1, 2012 (each such date, a “Payment Date”).  Each payment shall
represent the portion of the Commitment Fee for the

 

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period starting on such Payment Date and ending on the day immediately preceding
the next Payment Date (or the Scheduled Termination Date, in the case of the
last quarterly payment).  The period from one Payment Date to the day
immediately preceding the next Payment Date (or the Scheduled Termination Date)
will be referred to herein as a “Payment Period”.

 

(c)           Commitment Fees attributable to prior Payment Periods are not
refundable in the event of the early termination of this Letter Agreement. 
Commitment Fees attributable to the then-current Payment Period will be refunded
to PHH as set forth in Section 5 below. Commitment Fees shall be wired to Fannie
Mae (or in the case of a refund, to PHH) to the account specified in the Pricing
Terms Letter.

 

4.             Non-Usage Fee.  (a) PHH is required to pay a non-usage fee to
Fannie Mae in the event its Average Monthly Balance (defined below) falls below
the Minimum Average Monthly Balance (as defined in the Pricing Terms Letter) for
any calendar month during the term of this Letter Agreement.

 

(b)           The “Average Monthly Balance” shall be calculated monthly by
adding together the daily aggregate unpaid principal balance of all Pending
mortgage loans and pools of mortgage loans, with that sum divided by the number
of days in such month.  The Average Monthly Balance shall be calculated by
Fannie Mae using data from Fannie Mae’s internal systems for tracking early
funding transactions.  The data from these internal systems will be conclusive
and binding upon PHH and Fannie Mae, absent manifest error.

 

(c)           In the event the Average Monthly Balance for a month is below the
Minimum Average Monthly Balance, the Average Monthly Balance for such month
shall be subtracted from the Minimum Average Monthly Balance, and the difference
multiplied by the Annualized Non-Usage Rate (defined in the Pricing Terms
Letter) based on the actual number of days during such month, to determine the
“Non-Usage Fee.”  A Non-Usage Fee for a given month, if applicable, shall be
paid by PHH to Fannie Mae by the fifth business day of the following month,
provided that Fannie Mae has provided PHH at least three business days prior
notice of the amount of the Non-Usage Fee that is due and payable, together with
a reasonably detailed calculation of the Non-Usage Fee.  Any Non-Usage Fees paid
to Fannie Mae will not be refunded to PHH in the event of the early termination
of this Letter Agreement.

 

5.         Termination Events; Remedies.  (a)  The occurrence of any of the
following events shall constitute a “PHH Termination Event”:

 

(i)                                     the occurrence of any Event of Default
as set forth in an Early Funding Agreement, after the expiration of any
applicable cure period;

 

(ii)                                  the occurrence of a “Material Adverse
Change” with respect to PHH, which shall mean the occurrence of an event that
would cause a material and adverse change in the financial condition, business,
or operations of PHH and its parent or subsidiaries, taken as a whole, as a
result of any event that disproportionately impacts PHH and its parent or
subsidiaries

 

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relative to similarly-sized mortgage companies;

 

(iii)                               a downgrade of the credit rating of the
senior long-term unsecured debt of PHH or PHH Corporation: (x) below the level
of BB by Standard & Poor’s Ratings Service, or (y) below the level of Ba2 by
Moody’s Investor Service, Inc;

 

(iv)                              PHH’s “Lender Adjusted Net Worth”, as such
term is defined in Subpart A4-2-01 of the Fannie Mae Selling Guide, as it may be
amended from time to time (the “Guide”), decreasing below $600 million;

 

(v)                                 the failure of PHH to meet the financial
eligibility requirements set forth in Subpart A4-2-01 of the Guide;

 

(vi)                              the aggregate unpaid principal balance (“UPB”)
of all outstanding Fannie Mae repurchase and make-whole requests to PHH
(“Repurchase Requests”), as of the end of any calendar month, exceeding 15
percent of PHH’s “Lender Adjusted Net Worth”, as such term is defined in Subpart
A4-2-01 of the Guide; provided, however, that for purposes of calculating the
aggregate UPB of outstanding Repurchase Requests as of any given date, the
amount of the aggregate UPB of outstanding Repurchase Requests shall be reduced
by (1) the amount of “Posted Collateral” on such date attributable to
“Outstanding Repurchase Exposure” that has been posted by PHH pursuant to that
certain Pledge and Security Agreement, dated as of November 20, 2009, between
PHH and Fannie Mae, and (2) the UPB set forth in each Repurchase Request that is
attributable to repurchase or make whole requests for mortgage loans that have
been outstanding 30 days or less from the issue date of the applicable
Repurchase Request.  Note, the “Lender Adjusted Net Worth” calculated in this
Section 5(vi) shall be based upon the financial information reported on PHH’s
most recent quarterly Mortgage Bankers Financial Reporting Form;

 

(vii)                           the failure of PHH to pay a Commitment Fee or
Non-Usage fee to Fannie Mae in accordance with the terms of this Letter
Agreement within three business days following notice to PHH of such failure;
and

 

(viii)                      the occurrence of any legislative or regulatory
action that causes this Letter Agreement or the transactions contemplated hereby
to be contrary to applicable law.

 

(b)           The occurrence of any of the following events shall constitute a
“Fannie Mae Termination Event”:

 

(i)                                     the failure of Fannie Mae to acquire
mortgage loans or pools of mortgage loans from PHH in accordance with the terms
of the Commitment; and

 

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(ii)                                the occurrence of any legislative or
regulatory action that causes this Letter Agreement or the transactions
contemplated hereby to be contrary to applicable law.

 

(c)                                  Upon the occurrence of a PHH Termination
Event, Fannie Mae may either: (x) waive the PHH Termination Event and continue
with the Letter Agreement in full force and effect, or (y) at its option,
terminate this Letter Agreement upon written notice to PHH.  Upon the
termination of this Letter Agreement by Fannie Mae pursuant to a PHH Termination
Event, Fannie Mae shall refund any pro-rated Commitment Fees paid by PHH to
Fannie Mae that are attributable to the time period after the effective date of
the termination, less any Non-Usage Fees owed by PHH as of the effective date of
such termination.  PHH shall not be liable for any direct, indirect, incidental,
special, consequential, exemplary or punitive damages of Fannie Mae in
connection with the termination of this Letter Agreement.

 

(d)                                 Upon the occurrence of a Fannie Mae
Termination Event, PHH may either: (x) waive the Fannie Mae Termination Event
and continue with the Letter Agreement in full force and effect, or (y) at its
option, terminate this Letter Agreement upon written notice to Fannie Mae.  Upon
the termination of this Letter Agreement by PHH pursuant to a Fannie Mae
Termination Event, Fannie Mae shall refund any pro-rated Commitment Fees paid by
PHH to Fannie Mae that are attributable to the time period after the effective
date of the termination, less any Non-Usage Fees owed by PHH as of the effective
date of such termination.  Fannie Mae shall not be liable for any direct,
indirect, incidental, special, consequential, exemplary or punitive damages of
PHH in connection with the termination of this Letter Agreement.

 

(e)                                  The early termination of this Letter
Agreement will not impact the status of Pending transactions under the Early
Funding Agreements; provided, however, that for the avoidance of doubt, the
termination of other contracts between PHH and Fannie Mae (e.g., the Early
Funding Agreements, the Master Agreement) may impact the status of Pending
transactions under the Early Funding Agreements.

 

6.                           Notices.  Any notice or request permitted or
required pursuant to this Letter Agreement must be in writing and sent to the
addresses set forth below, or such other address as a party hereto may from time
to time designate, via a means that ensures overnight delivery or by intra-day
messenger, with a copy of such written notice sent via email to the address or
addresses identified below:

 

Fannie Mae:

Ms. Renee Schultz, Vice President

 

 

Fannie Mae

 

 

4000 Wisconsin Avenue, NW

 

 

Washington, DC 20016

 

 

renee_r_schultz@fanniemae.com

 

 

early_funding@fanniemae.com

 

 

Telephone: 1-866-944-3863

 

 

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PHH:

Attn: Mark Johnson

 

 

PHH Mortgage Corporation

 

 

1 Mortgage Way

 

 

Mount Laurel, NJ 08054

 

 

mark.johnson@phhmail.com

 

 

 

 

 

with a copy to:

 

 

 

 

 

PHH Mortgage Corporation

 

 

Attn: General Counsel

 

 

1 Mortgage Way

 

 

Mount Laurel, NJ 08054

 

 

legalnotice@phhmail.com

 

 

7.               No Assignment.  Neither this Letter Agreement nor any rights or
obligations hereunder may be assigned by Fannie Mae or PHH without the prior
written consent of the other.  A change of control of PHH shall constitute an
assignment of this Letter Agreement.

 

8.               No Publicity.  Except for disclosures required by applicable
law, including any filing with the U.S. Securities Exchange Commission made upon
the advice of counsel, no public announcement concerning the terms of this
Letter Agreement shall be made by Fannie Mae or PHH unless such announcement has
been previously agreed upon in writing by both parties.  Neither party shall, in
the course of performance of this Letter Agreement or thereafter, use the other
party’s name in any advertising or promotional materials without the prior
written consent of the other party, which consent shall not be unreasonably
withheld.

 

9.               Counterparts.  This Letter Agreement may be signed in
counterparts, each of which shall be deemed to be an original and both of which,
when taken together, shall constitute one and the same instrument.

 

10.         Integration.  This Letter Agreement, together with the Pricing Terms
Letter, supersedes all prior or contemporaneous agreements and understandings
(whether written or oral) between PHH and Fannie Mae with respect to the subject
matter hereof and thereof, including the Letter Agreement between Fannie Mae and
PHH dated as of December 16, 2010, related to the Committed Purchase Facility
for Early Funding.

 

11.         Governing Law; Amendments to this Agreement.  The terms of this
Letter Agreement shall be governed by the laws of the District of Columbia,
without regard to its conflicts of laws rules.  Both parties hereby irrevocably
consent to the jurisdiction of the courts in the District of Columbia.  No
amendment to this Letter Agreement shall be effective unless it is in writing
and signed by both Fannie Mae and PHH.

 

12.         No Modification of Agreements.  (a) This Letter Agreement sets forth
the terms of Fannie Mae’s Commitment to purchase mortgage loans and pools of
mortgage loans from PHH pursuant to the Early Funding Agreements.  This Letter
Agreement is not intended

 

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to modify to the terms and provisions of the Early Funding Agreements, other
than as set forth in Section 2(d) of this Letter Agreement.

 

(b)                                 Each of Fannie Mae and PHH reserves their
respective rights and remedies under any other agreement in place between the
parties.

 

13.         No Fiduciary Relationship.  Each party acknowledges and agrees that
no fiduciary, advisory, or agency relationship exists between the parties, or 
is intended to be created between the parties as a result of this Letter
Agreement or any of the transactions contemplated hereby.

 

14.         No Third Party Beneficiaries.  Each party agrees that this Letter
Agreement is intended to be solely for the benefit for the parties hereto and is
not intended to and does not confer any benefits upon, or create any rights in
favor of, any other person other than the parties hereto.

 

15.         Waivers.  No waiver of any right, power, or privilege hereunder by a
party shall preclude any other or further exercise thereof or the exercise of
any other right, power, or privilege hereunder by such party, and no exercise of
any remedy hereunder by a party shall constitute a waiver of such party’s right
to exercise any other remedy hereunder.

 

Please countersign the two (2) enclosed counterparts of this letter to evidence
your agreement with the terms hereof and return one (1) to my attention at the
above-listed address.

 

Thank you.

 

 

 

Yours truly,

 

 

 

 

 

FANNIE MAE

 

 

 

 

 

 

 

 

By:

/s/ Renee R. Schultz

 

 

 

Renee R. Schultz

 

 

 

Vice President, Capital Markets

 

 

 

 

 

 

ACCEPTED AND AGREED:

 

 

 

 

 

PHH MORTGAGE CORPORATION

 

 

 

 

 

By:

/s/ Mark E. Johnson

 

 

 

Name: Mark E. Johnson

 

 

 

Title:   Senior Vice President & Treasurer

 

 

 

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