Exhibit 10.2

MASTER REPURCHASE AGREEMENT

Dated as of February 28, 2008

Between:

CITIGROUP GLOBAL MARKETS REALTY CORP., as Buyer,

and

PHH MORTGAGE CORPORATION, as Seller

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TABLE OF CONTENTS
 
1.
APPLICABILITY
1
2.
DEFINITIONS AND ACCOUNTING MATTERS
1
3.
THE TRANSACTIONS
18
4.
PAYMENTS; COMPUTATION
21
5.
TAXES; TAX TREATMENT
21
6.
MARGIN MAINTENANCE
22
7.
INCOME PAYMENTS
22
8.
SECURITY INTEREST; BUYER’S APPOINTMENT AS ATTORNEY-IN-FACT
23
9.
CONDITIONS PRECEDENT
25
10.
RELEASE OF PURCHASED LOANS
29
11.
RELIANCE
30
12.
REPRESENTATIONS AND WARRANTIES
30
13.
COVENANTS OF SELLER AND GUARANTOR
33
14.
REPURCHASE DATE PAYMENTS
42
15.
REPURCHASE OF PURCHASED LOANS
42
16.
SUBSTITUTION
42
17.
[RESERVED]
44
18.
EVENTS OF DEFAULT
43
19.
REMEDIES
46
20.
DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE
48
21.
NOTICES AND OTHER COMMUNICATIONS
48
22.
USE OF EMPLOYEE PLAN ASSETS
48
23.
INDEMNIFICATION
48
24.
WAIVER OF REDEMPTION AND DEFICIENCY RIGHTS
49
25.
EXPENSES; REIMBURSEMENT
49
26.
FURTHER ASSURANCES
50
27.
TERMINATION
50
28.
SEVERABILITY
50
29.
BINDING EFFECT; GOVERNING LAW
50
30.
AMENDMENTS
51
31.
SUCCESSORS AND ASSIGNS
51
32.
SURVIVAL
51
33.
CAPTIONS
51
34.
COUNTERPARTS
51
35.
SUBMISSION TO JURISDICTION; WAIVERS
51
36.
WAIVER OF JURY TRIAL
52
37.
ACKNOWLEDGEMENTS
52
38.
HYPOTHECATION OR PLEDGE OF PURCHASED ITEMS
52
39.
ASSIGNMENTS; PARTICIPATIONS
52
40.
SINGLE AGREEMENT
53
41.
INTENT
54
42.
CONFIDENTIALITY
54
43.
SERVICING
54
44.
PERIODIC DUE DILIGENCE REVIEW
56
45.
SET-OFF
57
46.
ENTIRE AGREEMENT
57

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SCHEDULES
 
SCHEDULE 1                                Representations and Warranties re:
Loans
 
SCHEDULE 2                                Filing Jurisdictions and Offices
 
SCHEDULE 3                                Relevant States
 
SCHEDULE 4                                Subsidiaries
 
SCHEDULE 5                                Approved Originator List
 
SCHEDULE 6                                Litigation
 
EXHIBITS
 
EXHIBIT A                                Form of Certification
 
EXHIBIT B                                Form of Custodial Agreement
 
EXHIBIT C                                Form of Opinion of Counsel to Seller
 
EXHIBIT D                                Form of Notice of Transaction Notice
 
EXHIBIT E                                Underwriting Guidelines
 
EXHIBIT F                                Required Fields for Servicing
Transmission
 
EXHIBIT G                                Required Fields for Loan Schedule
 
EXHIBIT H                                Form of Confidentiality Agreement
 
EXHIBIT I                                Form of Instruction Letter
 
EXHIBIT J                                Form of Master Netting Agreement
 
EXHIBIT K                                Form of Security Release Certification
 
 
 
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MASTER REPURCHASE AGREEMENT, dated as of February 28, 2008, between PHH Mortgage
Corporation, a New Jersey Corporation as seller (“Seller”) and Citigroup Global
Markets Realty Corp., a New York corporation (“Buyer”, which term shall include
any “Principal” as defined and provided for in Annex I), or as agent pursuant
hereto (“Agent”),
 
1.  
APPLICABILITY

 
Buyer shall, from time to time, upon the terms and conditions set forth herein,
agree to enter into transactions in which Seller transfers to Buyer Eligible
Loans against the transfer of funds by Buyer, with a simultaneous agreement by
Buyer to transfer to Seller Purchased Loans at a date certain, against the
transfer of funds by Seller.  Each such transaction shall be referred to herein
as a “Transaction”, and, unless otherwise agreed in writing, shall be governed
by this Agreement.
 
2.  
DEFINITIONS AND ACCOUNTING MATTERS 

 
(a) Defined Terms. As used herein, the following terms have the following
meanings (all terms defined in this Section 2 or in other provisions of this
Agreement in the singular to have the same meanings when used in the plural and
vice versa):
 
“Accepted Servicing Practices” shall mean with respect to any Loan, those
accepted and prudent mortgage servicing practices (including collection
procedures) of prudent mortgage lending institutions which service mortgage
loans of the same type as the Loans in the jurisdiction where the related
Mortgaged Property is located, and which are in accordance with Fannie Mae
servicing practices and procedures for MBS pool mortgages, as defined in the
Fannie Mae servicing guides including future updates, and in a manner at least
equal in quality to the servicing Seller or Seller’s designee provides to
mortgage loans which they own in their own portfolio.
 
“Account Agreement” shall mean with respect to any Additional Collateral Loan,
the agreement between the related mortgagor and the related Additional
Collateral Servicer pursuant to which such mortgagor granted a security interest
in the related Securities Account.
 
“Account Control Agreement” shall mean the collection account control agreement
to be entered into in connection with this Agreement among Buyer, Seller and The
Bank of New York, in form and substance acceptable to Buyer to be entered into
with respect to the Collection Account, the FNMA Loan Purchase Account and the
Citigroup Sub-Account.
 
“Additional Collateral” shall mean with respect to any Additional Collateral
Loan, collateral that consists of either (i) marketable securities owned by the
borrower and deposited in a Securities Account held by an Additional Collateral
Servicer, subject to a security interest in favor of Seller pursuant to an
Additional Collateral Transfer Agreement or (ii) with respect to a loan to a
borrower that is subject to a guaranty, (a) marketable securities owned by the
guarantor and deposited in an account held by an Additional Collateral Servicer,
subject to a first priority security interest in favor of Seller pursuant to an
Additional Collateral Transfer Agreement or (b) a home equity line of credit to
fund such guaranty that is secured by a lien on residential real estate owned by
such guarantor subject to a security interest in favor of Seller pursuant to an
Additional Collateral Transfer Agreement; provided, however, that the amount
available to be drawn under the home equity line of credit supporting such
guaranty must be at least equal to the Original Additional Collateral
Requirement for such Additional Collateral Loan.
 
“Additional Collateral Loan” shall mean a Loan (i) that is secured by additional
collateral in the form of a security interest in a Securities Account and
identified as such in the Mortgage File required to be provided at the closing
thereof, (ii) as to which the related Additional Collateral has a value, as of
the date of origination of such Loan, at least equal to the related Original
Additional Collateral Requirement, and (iii) that is subject to the terms of
this Agreement from time to time
 
 
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“Additional Collateral Servicer” shall mean with respect to any Additional
Collateral Loan, the Broker or entity responsible for administering and
servicing the Additional Collateral with respect to such Additional Collateral
Loan, approved by Buyer and listed on Schedule 5 hereto.
 
“Additional Collateral Servicing Agreement” shall mean with respect to any
Additional Collateral Loan, the agreement between the related Additional
Collateral Servicer and the Seller, including any exhibits thereto, pursuant to
which such Additional Collateral Servicer shall service and administer the
related Additional Collateral.
 
“Additional Collateral Transfer Agreement” shall mean with respect to each
Additional Collateral Loan, the agreement between the Additional Collateral
Servicer and the Seller constitutes an assignment of the Additional Collateral
Servicer’s rights to Seller, pursuant to which a first priority security
interest in the Additional Collateral and control over the related Securities
Account is granted to Seller with respect to such Additional Collateral Loan, in
form and substance acceptable to Buyer in its sole discretion and, which may
incorporate any related Account Agreement.
 
 “Additional Purchased Loans” shall have the meaning specified in Section 6(a)
hereof.
 
“Adjustable Rate Loan” shall mean a Loan which provides for the adjustment of
the Mortgage Interest Rate payable in respect thereto.
 
“Adjustment Date” shall mean with respect to each Adjustable Rate Loan, the date
set forth in the related Note on which the Mortgage Interest Rate on the Loan is
adjusted in accordance with the terms of the Note.
 
“Affiliate” shall mean, with respect to any Person, any other Person which,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person.  For purposes of this definition, “control” (together with
the correlative meanings of “controlled by” and “under common control with”)
means possession, directly or indirectly, of the power (a) to vote 10% or more
of the securities (on a fully diluted basis) having ordinary voting power for
the directors or managing general partners (or their equivalent) of such Person,
or (b) to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by contract, or
otherwise.
 
“Agencies” shall mean collectively Fannie Mae, Freddie Mac and Ginnie Mae.
 
“Agency Eligible Loan” shall mean a Loan that is originated in compliance with
the Agency Guidelines and is eligible for sale to securitization by Fannie Mae,
Freddie Mac or Ginnie Mae.
 
“Agency Guidelines” shall mean the Ginnie Mae Guidelines, the Fannie Mae
Guidelines and the Freddie Mac Guidelines, in each case as such guidelines have
been or may be amended, supplemented or otherwise modified from time to time (i)
by Ginnie Mae, Fannie Mae or Freddie Mac, as applicable, in the ordinary course
of business and, with respect to material amendments, supplements or other
modifications, as to which Buyer shall not have reasonably objected within ten
(10) days of receiving notice of such or (ii) by Ginnie Mae, Fannie Mae or
Freddie Mac, as applicable, at the request of Seller and as to which (x) Seller
has given notice to Buyer of any such material amendment, supplement or other
modification and (y) Buyer shall not have reasonably objected.
 
“Agent” shall have the meaning set forth in the preamble to this Agreement.
 
 
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“Agreement” shall mean this Master Repurchase Agreement (including all exhibits,
schedules and other addenda hereto or thereto), as supplemented by the Pricing
Side Letter, as it may be amended, further supplemented or otherwise modified
from time to time.
 
“ALTA” shall mean the American Land Title Association.
 
“Alt-A Credit Loan” means a Loan originated in accordance with the Underwriting
Guidelines for Alt-A product.
 
“Applicable Margin” shall have the meaning set forth in the Pricing Side Letter.
 
“Appraised Value” shall mean the value set forth in an appraisal made in
connection with the origination of the related Loan as the value of the
Mortgaged Property (or the related Cooperative Unit in the case of a Cooperative
Loan).
 
“Approved Originator” means each of the mortgage loan originating institutions
approved by listed on Schedule 5 hereto.
 
 “Approved Title Insurance Company” shall mean a title insurance company that
has not been disapproved in writing by Buyer.
 
“Assignment of Mortgage” shall mean, with respect to any Mortgage, an assignment
of the Mortgage, notice of transfer or equivalent instrument in recordable form,
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect the assignment of the Mortgage to Buyer.
 
 “Bankruptcy Code” shall mean the United States Bankruptcy Code of 1978, as
amended from time to time.
 
“Best’s” shall mean Best’s Key Rating Guide, as the same shall be amended from
time to time.
 
 “Broker” shall mean with respect to each Additional Collateral Loan, an entity
acting as broker under the related Account Agreement, which is acceptable to the
Buyer in its sole discretion.
 
“Business Day” shall mean any day other than (i) a Saturday or Sunday, (ii) a
day on which the New York Stock Exchange, the Federal Reserve Bank of New York,
are closed, banking and savings and loan institutions in the State of New York,
the City of New York or the city or, with respect to any obligations owing to or
from the Custodian, the state in which the Custodian’s offices are located are
closed, or (iii) a day on which trading in securities on the New York Stock
Exchange or any other major securities exchange in the United States is not
conducted.
 
“Capital Lease Obligations” shall mean, for any Person, all obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.
 
“Cash Equivalents” shall mean (a) securities with maturities of 90 days or less
from the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of 90 days or less from the date of
acquisition and overnight bank deposits of any commercial bank having capital
and surplus in excess of $500,000,000, (c) repurchase obligations of any
commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than seven days with respect to securities issued or
fully guaranteed or insured by the United States Government, (d) commercial
paper of a domestic issuer rated at least A-1 or the equivalent thereof by
Standard and Poor’s Ratings Group (“S&P”) or P-1 or the equivalent thereof by
Moody’s Investors Service, Inc. (“Moody’s”) and in either case maturing within
90 days after the day of acquisition, (e) securities with maturities of 90 days
or less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody’s, (f) securities with maturities of 90
days or less from the date of acquisition backed by standby letters of credit
issued by any commercial bank satisfying the requirements of clause (b) of this
definition or, (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.
 
 
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“Change of Control” shall mean (i) the acquisition by any Person or group
(within the meaning of the Securities Exchange Act of 1934, as amended, and the
rules of the Securities and Exchange Commission thereunder as in effect on the
Effective Date), directly or indirectly, beneficially or of record, of ownership
or control of in excess of 50% of the voting common stock of the Seller on a
fully diluted basis at any time or (ii) if at any time, individuals who, at the
Effective Date, constituted the Board of Directors of the Seller (together with
any new directors whose election by such Board of Directors or whose nomination
for election by the shareholders of the Seller, as the case may be, was approved
by a vote of the majority of the directors then still in office who were either
directors at the Effective Date or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Seller then in office.
 
“Chesapeake Facilities” shall mean the liquidity facility described in that
certain Base Indenture, dated as of March 7, 2006, between Chesapeake Funding
LLC (now known as Chesapeake Finance Holdings LLC), as Issuer, and JPMorgan
Chase Bank, N.A., as Indenture Trustee, as supplemented by that certain Series
2006-1 Indenture Supplement dated as of March 7, 2006 and that certain Series
2006-2 Indenture Supplement dated as of March 7, 2006, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof.
 
“Citigroup Sub-Account” shall have the meaning set forth in Section 13 (jj)
hereto.
 
“Closing Date” shall mean the date of this Agreement hereinabove referenced.
 
“Collection Account” shall mean the following account established by Seller in
accordance with Section 13(ii) for the benefit of Buyer, “Citigroup Global
Markets Realty Corp., Inc. - P&I account - Account # ________”.
 
“Combined Loan-to-Value Ratio” or “CLTV” shall mean:
 
(i)            with respect to any Loan that was originated as a purchase-money
loan, the ratio expressed as a percentage of the following:
 
(a)           if the related Mortgage File includes an appraisal, (x) the
outstanding principal balance of such Loan as of origination plus the
outstanding principal balance of any other loan that is secured by a lien on the
related Mortgaged Property determined as of that date such ratio is being
calculated, divided by (y) the lesser of (1) the Appraised Value of the related
Mortgaged Property, (2) the purchase price of the related Mortgaged Property
paid by Seller, and (3) any updated valuation of such Mortgaged Property
performed by or on the behalf of Buyer; or
 
 
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(b)           if the related Mortgage File does not include an appraisal, (x)
the outstanding principal balance of such Loan as of origination plus the
outstanding principal balance of any other loan that is secured by a lien on the
related Mortgaged Property determined as of that date such ratio is being
calculated, divided by (y) the lesser of (1) the purchase price of the related
Mortgaged Property paid by Seller, and (2) any updated valuation of such
Mortgaged Property performed by or on the behalf of Buyer.
 
(ii)           with respect to any Loan that was originated as a refinance loan,
or is a Landscape Loan, the ratio expressed as a percentage of the following:
 
(a)           if the related Mortgage File includes an appraisal, (x) the
outstanding principal balance of such Loan as of origination plus the
outstanding principal balance of any other loan that is secured by a lien on the
related Mortgaged Property determined as of that date such ratio is being
calculated, divided by the Appraised Value of the related Mortgaged Property, or
 
(b)           if the related Mortgage File does not include an appraisal, (x)
the outstanding principal balance of such Loan as of origination plus the
outstanding principal balance of any other loan that is secured by a lien on the
related Mortgaged Property determined as of that date such ratio is being
calculated, divided by the estimated value (as determined by Seller in
accordance with Seller’s Underwriting Guidelines or applicable Agency
Guidelines) of the Mortgaged Property.
 
“Commitment Fee” shall have the meaning assigned to it in the Pricing Side
Letter.
 
“Commonly Controlled Entity” shall mean an entity, whether or not incorporated,
which is under common control with Seller within the meaning of Section 4001 of
ERISA or is part of a group which includes Seller and which is treated as a
single employer under Section 414 of the Code.
 
“Confirmation” shall have the meaning assigned thereto in Section 3(a) hereof.
 
“Conforming Mortgage Loan” shall mean a Loan which is eligible for sale to
Fannie Mae or Freddie Mac and conforms to Agency Guidelines.
 
“Consolidated Subsidiaries” shall mean all Subsidiaries of the Seller that are
required to be consolidated with the Borrower for financial reporting purposes
in accordance with GAAP.
 
“Contractual Obligation” shall mean as to any Person, any material provision of
any agreement, instrument or other undertaking to which such Person is a party
or by which it or any of its property is bound or any material provision of any
security issued by such Person.
 
“Cooperative Corporation” shall mean 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” shall mean a Loan that is secured by a First 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.
 
 
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“Cooperative Project” shall mean, with respect to any Cooperative Loan, all real
property and improvements thereto and rights therein and thereto owned by a
Cooperative Corporation including without  limitation the land, separate
dwelling units and all common elements.
 
“Cooperative Shares” shall mean, 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” shall mean, with respect to a Cooperative Loan, a specific
unit in a Cooperative Project.
 
“Credit Score” shall mean the credit score of the Mortgagor provided by Fair,
Isaac & Company, Inc. or such other organization providing credit scores at the
time of the origination of a Loan.  If two credit scores are obtained, the
Credit Score shall be the lower of the two credit scores.  If three credit
scores are obtained, the Credit Score shall be the middle of the three credit
scores.
 
“Custodial Agreement” shall mean the Tri-Party Custody Agreement, to be entered
into in connection with this Agreement, among Seller, Buyer and Custodian as the
same shall be modified and supplemented and in effect from time to time.
 
“Custodian” shall mean The Bank of New York Trust Company, N.A., or its
successors and permitted assigns, or any successor custodian appointed by the
Buyer and Seller to act as custodian under this Agreement.
 
“Custodian Loan Transmission” shall have the meaning assigned thereto in the
Custodial Agreement.
 
“Default” shall mean an Event of Default or any event, that, with the giving of
notice or the passage of time or both, would become an Event of Default.
 
“Dollars” or “$” shall mean lawful money of the United States of America.
 
“Dry Loan” shall mean a first or second lien Loan which is underwritten in
accordance with the Underwriting Guidelines and as to which the related Mortgage
File has been delivered to the Custodian in accordance with the Custodial
Agreement.
 
“Due Date” shall mean the day of the month on which the Monthly Payment is due
on a Loan, exclusive of any days of grace.
 
“Due Diligence Review” shall mean the performance by Buyer of any or all of the
reviews permitted under Section 44 hereof with respect to any or all of the
Loans or Seller or related parties, as desired by Buyer from time to time.
 
“Effective Date” shall mean the date upon which the conditions precedent set
forth in Section 9(a) have been satisfied.
 
“Effective Loan-to-Value Ratio” or “Effective LTV” means, with respect to any
Additional Collateral Loan, a fraction, expressed as a percentage, the numerator
of which is the original outstanding principal amount of the related Additional
Collateral Loan, less the Original Additional Collateral Requirement, if any,
and the denominator of which is the Appraised Value of the related Mortgaged
Property at such time, or if the Loan was originated as a purchase-money loan,
the purchase price of the Mortgaged Property paid by Seller if such purchase
price is less than such Appraised Value.
 
 
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“Electronic Tracking Agreement” shall mean the electronic tracking agreement
among Buyer, Seller, MERSCORP, Inc. and MERS, in form and substance acceptable
to Buyer to be entered into in the event that any of the Loans become MERS
Loans; provided that if no Loans are or will be MERS Loans, all references
herein to the Electronic Tracking Agreement shall be disregarded.
 
“Electronic Transmission” shall mean the delivery of information in an
electronic format acceptable to the applicable recipient thereof.  An Electronic
Transmission shall be considered written notice for all purposes hereof (except
when a request or notice by its terms requires execution).
 
“Eligible Loan” shall have the meaning assigned thereto in the Pricing Side
Letter.
 
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
 
“ERISA Affiliate” shall mean any corporation or trade or business that is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which Seller is a member and (ii) solely for purposes of potential
liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code
and the lien created under Section 302(f) of ERISA and Section 412(n) of the
Code, described in Section 414(m) or (o) of the Code of which Seller is a
member.
 
“Escrow Payments” shall mean, with respect to any Loan, the amounts constituting
ground rents, taxes, assessments, water charges, sewer rents, municipal charges,
mortgage insurance premiums, fire and hazard insurance premiums, condominium
charges, and any other payments required to be escrowed by the Mortgagor with
the Mortgagee pursuant to the terms of any Note or Mortgage or any other
document.
 
“Event of Default” shall have the meaning provided in Section 18 hereof.
 
“Event of Termination” shall have the meaning set forth in Section 17 herein.
 
“Event of Termination Rate” shall have the meaning assigned thereto in the
Pricing Side Letter.
 
“Exception” shall have the meaning assigned thereto in the Custodial Agreement.
 
“Exception Report” shall mean the exception report prepared by the Custodian
pursuant to the Custodial Agreement.
 
“Fannie Mae” shall mean Fannie Mae, or any successor thereto.
 
“FHA Loan” shall mean an Eligible Loan that is the subject of an FHA Mortgage
Insurance Contract.

“FHA Mortgage Insurance” shall mean mortgage insurance authorized under Sections
203(b), 213, 221(d)(2), 222, and 235 of the Act and provided by the FHA.

“FHA Mortgage Insurance Contract” shall mean the contractual obligation of the
FHA respecting the insurance of an Eligible Loan.
 
 
 
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“FHA Regulations” shall mean regulations promulgated by HUD under the Federal
Housing Administration Act, codified in 24 Code of Federal Regulations, and
other HUD issuances relating to FHA Loans, including the related handbooks,
circulars, notices and mortgagee letters.

“First Lien” shall mean with respect to each Mortgaged Property, the lien of the
mortgage, deed of trust or other instrument securing a mortgage note which
creates a first lien on the Mortgaged Property.

“Freddie Mac” shall mean Freddie Mac, or any successor thereto.
 
“GAAP” shall mean generally accepted accounting principles in effect from time
to time in the United States of America.
 
“Governmental Authority” shall mean with respect to any Person, any nation or
government, any state or other political subdivision, agency or instrumentality
thereof, any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any court or
arbitrator having jurisdiction over such Person, any of its Subsidiaries or any
of its properties.
 
“Gross Margin” shall mean with respect to each Adjustable Rate Loan, the fixed
percentage amount set forth in the related Note and the Loan Schedule that is
added to the Index on each Adjustment Date in accordance with the terms of the
related Note to determine the new Mortgage Interest Rate for such Loan.
 
“Guarantee” shall mean, as to any Person, any obligation of such Person directly
or indirectly guaranteeing any Indebtedness of any other Person or in any manner
providing for the payment of any Indebtedness of any other Person or otherwise
protecting the holder of such Indebtedness against loss (whether by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, or to take-or-pay or otherwise), provided that the term
“Guarantee” shall not include (i) endorsements for collection or deposit in the
ordinary course of business, or (ii) obligations to make servicing advances for
delinquent taxes and insurance, or other obligations in respect of a Mortgaged
Property, to the extent required by Buyer. The amount of any Guarantee of a
Person shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith. The terms
“Guarantee” and “Guaranteed” used as verbs shall have correlative meanings.
 
“Guarantor” shall mean PHH Corporation and any successor thereto.
 
“Guaranty” shall mean the Guaranty Agreement of the Guarantor in favor of Buyer
to be entered into in connection with this Agreement, as the same may be
amended, modified or supplemented from time to time.
 
“Income” shall mean, with respect to any Purchased Loan at any time, any
principal and/or interest thereon and all dividends, sale proceeds (including,
without limitation, any proceeds from the securitization of such Purchased Loan
or other disposition thereof) and other collections and distributions thereon
(including, without limitation, any proceeds received in respect of mortgage
insurance), but not including any commitment fees, origination fees and/or
servicing fees accrued in respect of periods on or after the initial Purchase
Date with respect to such Purchased Loan.  For the avoidance of doubt, the term
“Income” shall not include Escrow Payments.
 
“Indebtedness” shall mean (i) all indebtedness, obligations and other
liabilities of the Seller and its Subsidiaries which are, at the date as of
which Indebtedness is to be determined, includable as liabilities in a
consolidated balance sheet of the Seller and its Subsidiaries, other than (w)
accounts payable, accrued expenses and derivatives transactions entered into in
the ordinary course of business pursuant to hedging programs, (x) advances from
clients obtained in the ordinary course of the relocation management services
business of the Seller and its Subsidiaries, (y) current and deferred income
taxes and other similar liabilities and (z) minority interest, plus (ii) without
duplicating any items included in Indebtedness pursuant to the foregoing clause
(i) the maximum aggregate amount of all liabilities of the Seller or any of its
Subsidiaries under any guaranty, indemnity or similar undertaking given or
assumed of, or in respect of, the indebtedness, obligations or other
liabilities, assets, revenues, income or dividends of any Person other than the
Seller or one of its Subsidiaries and (iii) all other obligations or liabilities
of the Seller or any of its Subsidiaries in relation to the discharge of the
obligations of any Person other than the Seller or one of its Subsidiaries.
 
 
 
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“Index” shall mean with respect to each Adjustable Rate Loan, the index
identified on the related Loan Schedule and set forth in the related Note for
the purpose of calculating the interest rate thereon.
 
“Instruction Letter” shall mean a letter agreement between Seller and each
Subservicer substantially in the form of Exhibit I attached hereto.
 
“Insurance Proceeds” shall mean with respect to each Loan, proceeds of insurance
policies insuring the Loan or the related Mortgaged Property.
 
“Interest Only Loan” means a Loan which, by its terms, requires the related
Mortgagor to make monthly payments of only accrued interest for a certain period
of time following origination.  After such interest-only period, the loan terms
provide that the Mortgagor’s monthly payment will be recalculated to cover both
interest and principal so that such Loan will amortize fully on or prior to its
final payment date.
 
 “Investment Company Act” shall mean the Investment Company Act of 1940, as
amended, including all rules and regulations promulgated thereunder.
 
“Jumbo A Credit Loan” means a Loan originated in accordance with the
Underwriting Guidelines for Jumbo A product.
 
“Landscape Loan” shall mean a Conforming Loan that substantially conforms to the
Underwriting Guidelines, except (i) maintenance of a PMI Policy may not be
required, (ii) the mortgage loan may not be an FHA Loan or VA Loan and (iii)
there may not be an appraisal of the related Mortgage Property.
 
“LIBOR” means the rate determined daily by Buyer on the basis of the offered
rate for one-month U.S. dollar deposits, as such rate appears on Reuters Screen
LIBOR01 Page as of 11:00 a.m. (London time) on such date (rounded up to the
nearest whole multiple of 1/16%); provided that if such rate does not appear on
Reuters Screen LIBOR01 Page, the rate for such date will be the rate determined
by reference to such other comparable publicly available service publishing such
rates as may be selected by Buyer in its sole discretion and communicated to
Seller.  Notwithstanding anything to the contrary herein, Buyer shall have the
sole discretion to re-set LIBOR on a daily basis.
 
“Lien” shall mean any mortgage, lien, pledge, charge, security interest or
similar encumbrance.
 
 “Loan” shall mean a first or second lien, fixed rate or adjustable rate, wet or
dry funded residential mortgage loan which shall include, Cooperative Loans,
Interest Only Loans, Jumbo A Credit Loans, Landscape Loans or Additional
Collateral Loans (including all related Servicing Rights with respect thereto)
which the Custodian has been instructed to hold for Buyer pursuant to the
Custodial Agreement, and which Loan includes, without limitation, (i) a Note,
the related Mortgage and all other Loan Documents (including but not limited to
Additional Collateral Agreements and Surety Bonds in connection with the
Additional Collateral Loans) and (ii) all right, title and interest of Seller in
and to the Mortgaged Property covered by such Mortgage.
 
 
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“Loan Documents” shall mean, with respect to a Loan, the documents comprising
the Mortgage File for such Loan.
 
“Loan Schedule” shall mean a hard copy or electronic format incorporating the
fields identified on Exhibit G, any other information required by Buyer and any
other additional information to be provided pursuant to the Custodial Agreement.
 
“Loan-to-Value Ratio” or “LTV” shall mean
 
(i)           with respect to any Loan that was originated as a purchase-money
loan, the ratio expressed as a percentage of the following:
 
(a)           if the related Mortgage File includes an appraisal, (x) the
outstanding principal balance of such Loan as of origination, divided by (y) the
lesser of (1) the Appraised Value of the related Mortgaged Property, (2) the
purchase price of the related Mortgaged Property paid by Seller, and (3) any
updated valuation of such Mortgaged Property performed by or on the behalf of
Buyer; or
 
(b)           if the related Mortgage File does not include an appraisal, (x)
the outstanding principal balance of such Loan as of origination, divided by (y)
the lesser of (1) the purchase price of the related Mortgaged Property paid by
Seller, and (2) any updated valuation of such Mortgaged Property performed by or
on the behalf of Buyer.
 
(ii)           with respect to any Loan that was originated as a refinance loan,
or is a Landscape Loan, the ratio expressed as a percentage of the following:
 
(a)           if the related Mortgage File includes an appraisal, (x) the
outstanding principal balance of such Loan as of origination, divided by the
Appraised Value of the related Mortgaged Property, or
 
(b)           if the related Mortgage File does not include an appraisal, (x)
the outstanding principal balance of such Loan as of origination, divided by the
estimated value (as determined by Seller in accordance with Seller’s
Underwriting Guidelines or applicable Agency Guidelines) of the Mortgaged
Property.
 
“Margin Amount” means, with respect to any Transaction, as of any date of
determination, the amount obtained by application of the Margin Percentage to
the Repurchase Price (reduced by the amount of any accrued and unpaid Price
Differential) for such Transaction as of such date.
 
“Margin Call” shall have the meaning assigned thereto in Section 6(a) hereof.
 
“Margin Deficit” shall have the meaning assigned thereto in Section 6(a) hereof.
 
“Margin Percentage” shall have the meaning assigned thereto in the Pricing Side
Letter.
 
 
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“Market Value” shall mean the value, determined in good faith by Buyer in its
sole reasonable discretion, of the Loans (including the related Servicing
Rights) if sold in their entirety to a single third-party purchaser under
circumstances where Seller is in default under this Agreement.  Buyer’s
determination of Market Value shall be conclusive upon the parties, absent
manifest error on the part of Buyer.  Buyer shall have the right to mark to
market the Loans on a daily basis, which Market Value with respect to one or
more of the Loans may be determined to be zero. Seller acknowledges that Buyer’s
determination of Market Value is for the limited purpose of determining the
value of Purchased Loans which are subject to Transactions hereunder without the
ability to perform customary purchaser’s due diligence and is not necessarily
equivalent to a determination of the fair market value of the Loans achieved by
obtaining competing bids in an orderly market in which the originator/servicer
is not in default under a revolving debt facility and the bidders have adequate
opportunity to perform customary loan and servicing due diligence.  The Market
Value shall be deemed to be zero with respect to each Loan that is not an
Eligible Loan.
 
“Master Netting Agreement” shall mean the letter agreement among Buyer, Seller,
Guarantor and certain Affiliates and Subsidiaries of Buyer and/or Seller and/or
Guarantor, in the form attached hereto as Exhibit J.
 
 “Material Adverse Effect” shall mean a material adverse effect or change in (a)
the property, business, operations, condition (financial or otherwise) or
performance of Seller or Guarantor, or changes therein that would materially and
adversely impact the prospects of Seller or Guarantor, (b) the ability of the
Seller or Guarantor to perform its obligations under any of the Program
Documents to which it is a party, (c) the validity or enforceability of any of
the Program Documents, (d) the rights and remedies of Buyer under any of the
Program Documents, (e) the timely repurchase of the Purchased Loans or payment
of other amounts payable in connection therewith, (f) the Purchased Items in the
aggregate or (g) any Loans in the aggregate which, as of any date of
determination, are under consideration for purchase by Buyer hereunder.
 
“Maximum Aggregate Purchase Price” shall mean $500,000,000.
 
“Maximum Mortgage Interest Rate” shall mean with respect to each Adjustable Rate
Loan, a rate that is set forth on the related Loan Schedule and in the related
Note and is the maximum interest rate to which the Mortgage Interest Rate on
such Loan may be increased on any Adjustment Date.
 
“MERS” shall mean Mortgage Electronic Registration Systems, Inc., a Delaware
corporation, or any successor in interest thereto.
 
“MERS Identification Number” shall mean the eighteen digit number permanently
assigned to each MERS Loan.
 
“MERS Loan” shall mean any Loan as to which the related Mortgage or Assignment
of Mortgage has been recorded in the name of MERS, as agent for the holder from
time to time of the Note, and which is identified as a MERS Loan on the related
Schedule.
 
“Monthly Payment” shall mean the scheduled monthly payment of principal and
interest on a Loan as adjusted in accordance with changes in the Mortgage
Interest Rate pursuant to the provisions of the Note for an Adjustable Rate
Loan.
 
“Mortgage” shall mean with respect to a Loan, the mortgage, deed of trust or
other instrument, which creates a First Lien or Second Lien (as indicated on the
Loan Schedule) on either (i) with respect to a Loan other than a Cooperative
Loan, the fee simple or leasehold estate in such real property or (ii) with
respect to a Cooperative Loan, the Proprietary Lease and related Cooperative
Shares, which in either case secures the Note.
 
 
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“Mortgage File” shall have the meaning assigned thereto in the Custodial
Agreement.
 
“Mortgage Interest Rate” means the annual rate of interest borne on a Note,
which shall be adjusted from time to time with respect to Adjustable Rate Loans.
 
“Mortgaged Property” shall mean the real property (including all improvements,
buildings, fixtures, building equipment and personal property thereon and all
additions, alterations and replacements made at any time with respect to the
foregoing) and all other collateral securing repayment of the debt evidenced by
a Note.
 
“Mortgagee” shall mean the record holder of a Note secured by a Mortgage.
 
“Mortgagor” shall mean the obligor or obligors on a Note, including any person
who has assumed or guaranteed the obligations of the obligor thereunder.
 
“Multiemployer Plan” shall mean a multiemployer plan defined as such in Section
3(37) of ERISA to which contributions have been or are required to be made by
Seller or any ERISA Affiliate and that is covered by Title IV of ERISA.
 
“Negative Amortization” shall mean with respect to a Negative Amortization Loan,
that portion of interest accrued at the Mortgage Interest Rate in any month
which exceeds the Monthly Payment on the related loan for such month and which,
pursuant to the terms of the Note, is added to the principal balance of the
loan.
 
“Negative Amortization Loan” shall mean each Loan that may be subject to
Negative Amortization.
 
 “Note” shall mean, with respect to any Loan, the related promissory note
together with all riders thereto and amendments thereof or other evidence of
indebtedness of the related Mortgagor.
 
“Obligations” shall mean (a) all of Seller’s obligation to pay the Repurchase
Price on the Repurchase Date and other obligations and liabilities of Seller or
Guarantor to Buyer, its Affiliates, the Custodian or any other Person arising
under, or in connection with, the Program Documents or directly related to the
Purchased Loans, whether now existing or hereafter arising; (b) any and all sums
paid by Buyer or on behalf of Buyer pursuant to the Program Documents in order
to preserve any Purchased Loan or its interest therein; (c) in the event of any
proceeding for the collection or enforcement of any of Seller’s indebtedness,
obligations or liabilities referred to in clause (a), the reasonable expenses of
retaking, holding, collecting, preparing for sale, selling or otherwise
disposing of or realizing on any Purchased Loan, or of any exercise by Buyer or
any Affiliate of Buyer of its rights under the Program Documents, including
without limitation, reasonable attorneys’ fees and disbursements and court
costs; and (d) all of Seller’s indemnity obligations to Buyer pursuant to the
Program Documents.
 
“Original Additional Collateral Requirement” means, with respect to any
Additional Collateral Loan, an amount equal to the value of the Additional
Collateral required at the time of the origination of such Additional Collateral
Loan in order to achieve an Effective LTV equal to a maximum of 70%.
 
“Participants” shall have the meaning assigned thereto in Section 39 hereof.
 
 
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“Payment Adjustment Date”  With respect to each Negative Amortization Loan, the
date on which Monthly Payments shall be adjusted.
 
“PBGC” shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
 
“Permitted Exceptions” shall mean the following exceptions to lien priority: (i)
the lien of current real property taxes and assessments not yet due and payable;
(ii) covenants, conditions and restrictions, rights of way, easements and other
matters of the public record as of the date of recording acceptable to mortgage
lending institutions generally and specifically referred to in the lender’s
title insurance policy delivered to the originator of the Loan and (A) referred
to or otherwise considered in the appraisal (if any) made for the originator of
the Loan or (B) which do not adversely affect the appraised value of the
Mortgaged Property set forth in such appraisal; and (iii) other matters to which
like properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Mortgage or the use,
enjoyment, value or marketability of the related Mortgaged Property; and (iv) in
the case of a Second Lien Loan, a First Lien on the Mortgaged Property.
 
“Person” shall mean any individual, corporation, company, voluntary association,
partnership, joint venture, limited liability company, trust, unincorporated
association or government (or any agency, instrumentality or political
subdivision thereof).
 
“Plan” shall mean an employee benefit or other plan established or maintained by
either Seller or any ERISA Affiliate and that is covered by Title IV of ERISA,
other than a Multiemployer Plan.
 
“PMI Policy” or “Primary Insurance Policy” shall mean a policy of primary
mortgage guaranty insurance issued by a Qualified Insurer.
 
“Post-Default Rate” shall mean, in respect of the Repurchase Price for any
Transaction or any other amount under this Agreement, or any other Program
Document that is not paid when due to Buyer (whether at stated maturity, by
acceleration or mandatory prepayment or otherwise), a rate per annum during the
period from and including the due date to but excluding the date on which such
amount is paid in full equal to 4% per annum, plus (a)(i) the applicable Pricing
Rate, or (ii) if no Pricing Rate is otherwise applicable, LIBOR plus (b) the
Applicable Margin.
 
“Price Differential” shall mean, with respect to each Transaction as of any date
of determination, the aggregate amount obtained by daily application of the
Pricing Rate (or during the continuation of an Event of Default, by daily
application of the Post-Default Rate) for such Transaction to the Purchase Price
for such Transaction on a 360-day-per-year basis for the actual number of days
elapsed during the period commencing on (and including) the Purchase Date and
ending on (but excluding) the date of determination (reduced by any amount of
such Price Differential in respect of such period previously paid by Seller to
Buyer with respect to such Transaction).
 
“Pricing Rate” shall mean the per annum percentage rate for determination of the
Price Differential as set forth in the Pricing Side Letter.
 
“Pricing Side Letter” shall mean the pricing side letter to be entered into in
connection with this Agreement between Seller and Buyer, as the same may be
amended, supplemented or modified from time to time.
 
"Prime Loan" shall mean a Loan originated in accordance with the Underwriting
Guidelines for prime product.
 
 
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“Principal” shall have the meaning assigned thereto in Annex I.
 
“Program Documents” shall mean this Agreement, the Custodial Agreement, any
Servicing Agreement, the Master Netting Agreement, the Pricing Side Letter, any
Instruction Letter, the Account Control Agreement, the Electronic Tracking
Agreement and any other agreement entered into by Seller, on the one hand, and
Buyer and/or any of its Affiliates or Subsidiaries (or Custodian on its behalf)
on the other, in connection herewith or therewith.
 
“Property” shall mean any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
 
“Proprietary Lease” shall mean the lease on a Cooperative Unit evidencing the
possessory interest of the owner of the Cooperative Shares in such Cooperative
Unit.
 
“Purchase Date” shall mean, with respect to each Transaction, the date on which
Purchased Loans are sold by Seller to Buyer hereunder.
 
“Purchase Price” shall have the meaning assigned thereto in the Pricing Side
Letter.
 
“Purchased Items” shall have the meaning assigned thereto in Section 8 hereof.
 
“Purchased Loans” shall mean the following assets sold by Seller to Buyer in a
Transaction: the Loans, together with the related Records and Servicing Rights,
such other property, rights, titles or interest as are specified on a related
Transaction Notice, and all instruments, chattel paper, and general intangibles
comprising or relating to all of the foregoing.  The term “Purchased Loans” with
respect to any Transaction at any time shall also include Additional Purchased
Loans delivered pursuant to Section 6(a) hereof and Substitute Loans delivered
pursuant to Section 16 hereof.
 
“Qualified Insurer” shall mean an insurance company approved as an insurer by
Fannie Mae and Freddie Mac.
 
“Qualified Originator” shall mean (a) Seller, (b) any Approved Originator and
(c) any other originator of Loans; provided, that Buyer shall have the right to
reject any such originator (in its sole discretion) by delivering written notice
to Seller fifteen (15) days prior to ceasing to accept Loans originated by such
person.
 
“Reacquired Loans” shall have the meaning assigned thereto in Section 16.
 
 “Records” means all instruments, agreements and other books, records, and
reports and data generated by other media for the storage of information
maintained by Seller or any other person or entity with respect to a Purchased
Loan.  Records shall include, without limitation, the Notes, any Mortgages, the
Mortgage Files, the Servicing File, and any other instruments necessary to
document or service a Loan that is a Purchased Loan, including, without
limitation, the complete payment and modification history of each Loan that is a
Purchased Loan.
 
“Reportable Event” shall mean any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. § 2615.
 
“Repurchase Date” shall mean the date occurring on (i) the 15th day of each
month following the related Purchase Date (or if such date is not a Business
Day, the following Business Day), (ii) any other Business Day set forth in the
related Transaction Notice and/or the related Confirmation, (iii) the Takeout
Repurchase Date or (iv) the date determined by application of Section 17(a) or
19, as applicable.
 
 
 
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“Repurchase Price” shall mean the price at which Purchased Loans are to be
transferred from Buyer to Seller upon termination of a Transaction, which will
be determined in each case (including Transactions terminable upon demand) as
the sum of the outstanding Purchase Price for such Purchased Loans and the Price
Differential as of the date of such determination.
 
“Request and Receipt” shall have the meaning assigned to such term in the
Custodial Agreement.
 
“Required Documents” shall have the meaning set forth in the Custodial
Agreement.
 
“Required Surety Payment” means, with respect to any defaulted Additional
Collateral Loan for which a claim is payable under the related Surety Bond under
the procedures referred to herein, the lesser of (i) the principal portion of
the realized loss with respect to such Loan as determined by the Servicer and
(ii) the excess, if any, of (a) the amount of Additional Collateral required at
origination with respect to such Loan (but for this purpose, not more than 30%
of the original principal balance of the related Additional Collateral Loan)
over (b) the net proceeds realized by the Additional Collateral Servicer from
the related Additional Collateral.
 
“Requirement of Law” shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
 
“Renewal Fee” shall have the meaning assigned thereto in the Pricing Side
Letter.
 
“Rescission”  shall mean the right of a Mortgagor to rescind the related Note
and related documents pursuant to applicable law.
 
“Responsible Officer” shall mean, as to any Person, the chief executive officer
or, with respect to financial matters, the chief financial officer of such
Person; provided, that in the event any such officer is unavailable at any time
he or she is required to take any action hereunder, Responsible Officer shall
mean any officer authorized to act on such officer’s behalf as demonstrated by a
certificate of corporate resolution.
 
“Second Lien” shall mean with respect to each Mortgaged Property, the lien of
the mortgage, deed of trust or other instrument securing a mortgage note which
creates a second lien on the Mortgaged Property.
 
“Second Lien Loan” shall mean an Eligible Loan secured by the lien on the
Mortgaged Property, subject only to one prior lien on such Mortgaged Property
securing financing obtained by the related Mortgagor and to Permitted
Exceptions.
 
“Securities Account” means, with respect to any Additional Collateral Loan, the
account, together with the financial assets held therein, that are the subject
of the related Account Agreement.
 
 “Security Release Certification” shall mean a security release certification in
substantially the form set forth in Exhibit K hereto.
 
“Servicer” shall mean Seller in its capacity as servicer or master servicer of
the Loans.
 
 
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“Servicing Agreement” shall have the meaning provided in Section 43(c) hereof.
 
“Servicing File” shall mean with respect to each Loan, the file retained by
Seller (in its capacity as Servicer) consisting of all documents that a prudent
originator and servicer would have, including copies of the Loan Documents, all
documents necessary to document and service the Loans and any and all documents
required to be delivered pursuant to any of the Program Documents.
 
“Servicing Records” shall have the meaning assigned thereto in Section 43(b)
hereof.
 
“Servicing Rights” shall mean contractual, possessory or other rights of Seller
or any other Person, whether arising under the Servicing Agreement, the
Custodial Agreement or otherwise, including the rights: (i) to administer or
service Purchased Loans, (ii) to possess related Servicing Records or Records
(iii) to receive servicing fees and reimbursement of any servicing advances and
(iv) to direct Escrow Payments.
 
“Servicing Transmission” shall mean a computer-readable magnetic or other
electronic format acceptable to the parties containing the information
identified on Exhibit F.
 
 “Single Employer Plan” shall mean any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
 
“Subservicer” shall have the meaning provided in Section 43(c) hereof.
 
“Subsidiary” shall mean, with respect to any Person, any corporation,
association, joint venture, partnership or other business entity (whether now
existing or hereafter organized) of which at least a majority of the voting
stock or other ownership interests having ordinary voting power for the election
of directors (or the equivalent) is, at the time of which any determination is
being made, owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such
Person.  Unless otherwise qualified, all references to a “Subsidiary” or to
“Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Seller.
 
 “Substitute Loans” has the meaning assigned thereto in Section 16.
 
“Surety Bond” means, with respect to each Additional Collateral Loan, the surety
bond issued by the related Surety Bond Issuer covering such Additional
Collateral Loan.
 
“Surety Bond Issuer” means, with respect to each Additional Collateral Loan, the
surety bond issuer for the related Surety Bond covering such Additional
Collateral Loan, as identified in the Mortgage File.
 
“Takeout Repurchase Date” shall mean the date on which a Loan is purchased from
Seller by Fannie Mae, Freddie Mac or Ginnie Mae pursuant to a takeout
arrangement with Seller.
 
“Termination Date” shall mean February 26, 2009, or such earlier date on which
this Agreement shall terminate in accordance with the provisions hereof or by
operation of law.
 
 “Transaction” has the meaning assigned thereto in Section 1.
 
“Transaction Notice” shall mean a written request by Seller in the form of
Exhibit D hereto, to enter into a Transaction, in a form to be mutually agreed
upon among Seller and Buyer, which is delivered to Buyer.
 
 
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“Transmittal Letter” shall have the meaning assigned to such term in the
Custodial Agreement.
 
“Trust Receipt” shall have the meaning provided in the Custodial Agreement.
 
“Underwriting Guidelines” shall mean the underwriting guidelines of Seller
attached as Exhibit E hereto in effect as of the date of this Agreement, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with terms of this Agreement, and which have been approved in writing
by Buyer.
 
“Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect on
the date hereof in the State of New York; provided that if by reason of
mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any Purchased Items is governed by
the Uniform Commercial Code as in effect in a jurisdiction other than New York,
“Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
 
“USC” shall mean the United State Code, as amended.
 
“VA” shall mean the U.S. Department of Veterans Affairs, an agency of the United
States of America, or any successor thereto including the Secretary of Veterans
Affairs.
 
“VA Approved Lender” shall mean those lenders which are approved by the VA to
act as a lender in connection with the origination of VA Loans.
 
“VA Guaranty Proceeds” shall mean the proceeds of any payment of a VA Loan
Guaranty Certificate.
 
“VA Loan” shall mean an Eligible Mortgage Loan which is the subject of a VA Loan
Guaranty Certificate as evidenced by a VA Loan Guaranty Certificate, or an
Eligible Mortgage Loan which is a vendee loan sold by the VA.
 
“VA Loan Guaranty Certificate” shall mean the obligation of the United States to
pay a specific percentage of an Eligible Loan (subject to a maximum amount) upon
default of the Mortgagor pursuant to the Servicemen’s Readjustment Act, as
amended.
 
“VA Regulations” shall mean regulations promulgated by the U.S. Department of
Veterans Affairs pursuant to the Servicemen’s Readjustment Act, as amended,
codified in 38 Code of Federal Regulations, and other VA issuances relating to
VA Loans, including related handbooks, circulars and notices.
 
“Wet Loan” means a wet-funded First Lien or Second Lien Mortgage Loan which is
underwritten in accordance with the Underwriting Guidelines and does not contain
all the required Loan Documents in the related Mortgage File, which in order to
be deemed to an Eligible Loan, the related Rescission period has elapsed.
 
(b) Accounting Terms and Determinations.  Except as otherwise expressly provided
herein, all accounting terms used herein shall be interpreted, and all financial
statements and certificates and reports as to financial matters required to be
delivered to Buyer hereunder shall be prepared, in accordance with GAAP.
 
(c) Interpretation.  The following rules of this subsection (c) apply unless the
context requires otherwise.  A gender includes all genders.  Where a word or
phrase is defined, its other grammatical forms have a corresponding meaning.  A
reference to a subsection, Section, Annex or Exhibit is, unless otherwise
specified, a reference to a Section of, or annex or exhibit to, this
Agreement.  A reference to a party to this Agreement or another agreement or
document includes the party’s successors and permitted substitutes or assigns. A
reference to an agreement or document (including any Program Document) is to the
agreement or document as amended, modified, novated, supplemented or replaced,
except to the extent prohibited thereby or by any Program Document and in effect
from time to time in accordance with the terms thereof.  A reference to
legislation or to a provision of legislation includes 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 transmission and any means of reproducing words in a tangible and
permanently visible form.  A reference to conduct includes, without limitation,
an omission, statement or undertaking, whether or not in writing.  The words
“hereof”, “herein”, “hereunder” and similar words refer to this Agreement as a
whole and not to any particular provision of this Agreement.  The term
“including” is not limiting and means “including without limitation”.  In the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including”, the words “to” and “until” each mean
“to but excluding”, and the word “through” means “to and including”.
 
 
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Except where otherwise provided in this Agreement, any determination, consent,
approval, statement or certificate made or confirmed in writing with notice to
Seller by Buyer or an authorized officer of Buyer provided for in this Agreement
is conclusive and binds the parties in the absence of manifest error. A
reference to an agreement includes a security interest, guarantee, agreement or
legally enforceable arrangement whether or not in writing related to such
agreement.
 
A reference to a document includes an agreement (as so defined) in writing or a
certificate, notice, instrument or document, or any information recorded in
computer disk form.  Where Seller is required to provide any document to Buyer
under the terms of this Agreement, the relevant document shall be provided in
writing or printed form unless Buyer requests otherwise.  At the request of
Buyer, the document shall be provided in computer disk form or both printed and
computer disk form.
 
This Agreement is the result of negotiations among, and has been reviewed by
counsel to, Buyer and Seller, and is the product of all parties.  In the
interpretation of this Agreement, no rule of construction shall apply to
disadvantage one party on the ground that such party proposed or was involved in
the preparation of any particular provision of this Agreement or this Agreement
itself.  Except where otherwise expressly stated, Buyer may give or withhold, or
give conditionally, approvals and consents and may form opinions and make
determinations at its absolute discretion.  Any requirement of good faith,
discretion or judgment by 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, a servicer of the Purchased Loans, any
other Person or the Purchased Loans themselves.
 
3.  
THE TRANSACTIONS

 
(a) Subject to the terms and conditions of the Program Documents, Buyer shall,
from time to time enter into Transactions with an aggregate Purchase Price for
all Purchased Loans acquired by Buyer not to exceed the Maximum Aggregate
Purchase Price.  Unless otherwise agreed, Seller shall request that Buyer enter
into a Transaction by delivering (i) a Transaction Notice (which shall clearly
indicate those Loans that are intended to be Wet or Dry Loans) substantially in
the form of Exhibit D hereto (a “Transaction Notice”), appropriately completed,
and a Loan Schedule to Buyer and the Custodian, and (ii) the Mortgage File to
the Custodian for each Loan (other than Wet Loans) proposed to be included in
such Transaction, which Transaction Notice and Loan Schedule must be received no
later than 5:00 p.m. (New York City time) one (1) Business Day prior to the
requested Purchase Date. Such Transaction Notice shall include a Loan Schedule
in respect of the Eligible Loans that Seller proposes to include in the related
Transaction. Each Transaction Notice shall specify the proposed Purchase Date,
Purchase Price, Pricing Rate and Repurchase Date.  In the event that the parties
hereto desire to enter into a Transaction on terms other than as set forth in
this Agreement and the Transaction Notice, Buyer shall deliver to Seller, in
electronic or other format, a “Confirmation” specifying such terms prior to
entering into such Transaction, including, without limitation, the Purchase
Date, the Purchase Price, the Pricing Rate therefor and the Repurchase Date.  By
entering in to a Transaction with Buyer, Seller consents to the terms set forth
in any related Confirmation.  Any such Transaction Notice and the related
Confirmation, if any, together with this Agreement, shall constitute conclusive
evidence of the terms agreed to between Buyer and Seller with respect to the
Transaction to which the Transaction Notice and Confirmation, if any,
relates.  In the event of any conflict between this Agreement and a
Confirmation, the terms of the Confirmation shall control with respect to the
related Transaction.
 
 
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(b) Reserved.
 
(c) Upon Seller’s request to enter into a Transaction pursuant to Section 3(a),
Buyer shall, assuming all conditions precedent set forth in this Section 3 and
in Section 9(a) have been met, and provided no Default shall have occurred and
be continuing, not later than 2:00 p.m. (New York City time) on the requested
Purchase Date purchase the Eligible Loans included in the related Transaction
Notice by  transferring, via wire transfer (pursuant to wire transfer
instructions provided by Seller on or prior to such Purchase Date), the Purchase
Price.
 
(d) Anything herein to the contrary notwithstanding, if, on or prior to the
determination of LIBOR:
 
(i) Buyer determines, which determination shall be conclusive, that quotations
of interest rates for the relevant deposits referred to in the definition of
“LIBOR” in Section 2 are not being provided in the relevant amounts or for the
relevant maturities for purposes of determining rates of interest for
Transactions as provided herein; or
 
(ii) Buyer determines, which determination shall be conclusive, that the
Applicable Margin plus the relevant rate of interest referred to in the
definition of “LIBOR” in Section 2 upon the basis of which the rate of interest
for Transactions is to be determined is not likely adequately to cover the cost
to Buyer of purchasing and holding Loans hereunder; or
 
(iii) it becomes unlawful for Buyer to enter into Transactions with a Pricing
Rate based on LIBOR;
 
then Buyer shall give Seller prompt notice thereof and, so long as such
condition remains in effect, Buyer shall be under no obligation to purchase
Loans hereunder, and Seller shall, at its option, either repurchase such Loans
or pay a Pricing Rate at a rate per annum as determined by Buyer taking into
account the increased cost to Buyer of purchasing and holding the Loans.
 
(e) Seller shall repurchase Purchased Loans from Buyer on each related
Repurchase Date.  Each obligation to repurchase exists without regard to any
prior or intervening liquidation or foreclosure with respect to any Purchased
Loan.  Seller is obligated to obtain the Purchased Loans from Buyer or its
designee (including the Custodian) at Seller’s expense on (or after) the related
Repurchase Date.
 
(f) Provided that the applicable conditions in Sections 9(a) and (b) have been
satisfied, a Purchased Loan that is repurchased by Seller on the Repurchase Date
shall become subject to a new Transaction  (a “Rolled Transaction”).  Buyer
shall purchase the related Eligible Loans pursuant to the procedures set forth
in Section 3(c).  For each Rolled Transaction, unless otherwise agreed, (y) the
accrued and unpaid Price Differential shall be settled in cash on each related
Repurchase Date, and (z) the Pricing Rate shall be as set forth in the Pricing
Side Letter.
 
 
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(g) If Seller intends to repurchase any Loans on any day which is not a
Repurchase Date, Seller shall give one (1) Business Day prior written notice
thereof to Buyer.  If such notice is given, the Repurchase Price specified in
such notice shall be due and payable on the date specified therein, together
with the Price Differential to such date on the amount prepaid.  Such early
repurchases shall be in an aggregate principal amount of at least $100,000.
 
(h) [Reserved].
 
(i) If any Requirement of Law (other than with respect to any amendment made to
Buyer’s certificate of incorporation and by-laws or other organizational or
governing documents) or any change in the interpretation or application thereof
or compliance by Buyer with any request or directive (whether or not having the
force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
 
(i) shall subject Buyer to any tax of any kind whatsoever with respect to this
Agreement or any Loans purchased pursuant to it (excluding net income taxes) or
change the basis of taxation of payments to Buyer in respect thereof;
 
(ii) shall impose, modify or hold applicable any reserve, special deposit,
compulsory advance or similar requirement against assets held by deposits or
other liabilities in or for the account of Transactions or extensions of credit
by, or any other acquisition of funds by any office of Buyer which is not
otherwise included in the determination of LIBOR hereunder;
 
(iii) shall impose on Buyer any other condition;
 
and the result of any of the foregoing is to increase the cost to Buyer, by an
amount which Buyer deems to be material, of effecting or maintaining purchases
hereunder, or to reduce any amount receivable hereunder in respect thereof,
then, in any such case, Seller shall promptly pay Buyer such additional amount
or amounts as will compensate Buyer for such increased cost or reduced amount
receivable thereafter incurred.
 
If Buyer shall have determined that the adoption of or any change in
any  Requirement of Law (other than with respect to any amendment made to
Buyer’s certificate of incorporation and by-laws or other organizational or
governing documents) regarding capital adequacy or in the interpretation or
application thereof or compliance by Buyer or any corporation controlling Buyer
with any request or directive regarding capital adequacy (whether or not having
the force of law) from any Governmental Authority made subsequent to the date
hereof shall have the effect of reducing the rate of return on Buyer’s or such
corporation’s capital as a consequence of its obligations hereunder to a level
below that which Buyer or such corporation but for such adoption, change or
compliance (taking into consideration Buyer’s or such corporation’s policies
with respect to capital adequacy) by an amount deemed by Buyer to be material,
then from time to time, Seller shall promptly pay to Buyer such additional
amount or amounts as will thereafter compensate Buyer for such reduction.
 
If Buyer becomes entitled to claim any additional amounts pursuant to this
subsection, it shall promptly notify Seller of the event by reason of which it
has become so entitled.  A certificate as to any additional amounts payable
pursuant to this subsection submitted by Buyer to Seller shall be conclusive in
the absence of manifest error.
 
 
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4.  
PAYMENTS; COMPUTATION

 
(a) Payments.  Except to the extent otherwise provided herein, all payments to
be made by Seller under this Agreement shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to Buyer at the
following account maintained by Buyer at JP Morgan Chase Bank Account Number
066612187, For the A/C of Citigroup Global Markets Realty Corp., ABA# 021000021,
Reference: PHH Mortgage Corporation, not later than 2:00 p.m., New York City
time, on the date on which such payment shall become due (each such payment made
after such time on such due date to be deemed to have been made on the next
succeeding Business Day). Seller acknowledges that it has no rights of
withdrawal from the foregoing account.
 
(b) Computations.  The Pricing Differential shall be computed on the basis of a
360-day year for the actual days elapsed (including the first day but excluding
the last day) occurring in the period for which payable.
 
5.  
TAXES; TAX TREATMENT

 
(a) All payments made by Seller under this Agreement shall be made free and
clear of, and without deduction or withholding for or on account of, any present
or future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities (including penalties, interest and additions to tax) with respect
thereto imposed by any Governmental Authority, excluding income taxes, 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 law or
regulation to deduct or withhold any Taxes from or in respect of any amount
payable hereunder, it shall: (a) make such deduction or withholding; (b) pay the
amount so deducted or withheld to the appropriate Governmental Authority not
later than the date when due; (c) deliver to 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 applicable law any current or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies (including,
without limitation, mortgage recording taxes, transfer taxes and similar fees)
imposed by the United States or any taxing authority thereof or therein that
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement (“Other Taxes”).
 
(c) Seller agrees to indemnify 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
Section 5, and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, provided that Buyer shall have
provided Seller with evidence, reasonably satisfactory to Seller, of payment of
Taxes or Other Taxes, as the case may be.
 
(d) Any Buyer that is not incorporated 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 Buyer.  Each Foreign Buyer will resubmit the appropriate form on the
earliest of (A) the third anniversary of the prior submission or (B) on or
before the expiration of thirty (30) days after there is a “change in
circumstances” with respect to such 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 Section 5(d) (unless such failure is due to a change
in treaty, law, or regulation 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 Section 5(c) 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.
 
 
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(e) Without prejudice to the survival or any other agreement of Seller
hereunder, the agreements and obligations of Seller contained in this Section 5
shall survive the termination of this Agreement.  Nothing contained in this
Section 5 shall require Buyer to make available any of its tax returns or other
information that it deems to be confidential or proprietary.
 
(f) Each party to this Agreement acknowledges that it is its intent solely for
purposes of U.S. federal, state and local income and franchise taxes to treat
each Transaction as indebtedness of Seller that is secured by the Purchased
Loans and that the Purchased 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.
 
6.  
MARGIN MAINTENANCE

 
(a) If at any time either the aggregate Market Value or the aggregate unpaid
principal balance of all Purchased Loans subject to Transactions is less than
the aggregate Margin Amount for all such Transactions (either such event, a
“Margin Deficit”), then Buyer may, by notice to Seller, require Seller in such
Transactions to transfer to Buyer cash or, at Buyer’s option (and provided
Seller has additional Eligible Loans), additional Eligible Loans (“Additional
Purchased Loans”) within one (1) Business Day after such notice by Buyer, so
that the cash, together with the aggregate Market Value or unpaid principal
balance, as applicable, of the Purchased Loans, including any such Additional
Purchased Loans, will thereupon equal or exceed such aggregate Margin Amount
(such requirement, a “Margin Call”); provided that if Seller transfers cash,
Buyer shall deposit such cash into a non-interest bearing account until the next
succeeding Repurchase Date.
 
(b) Notice required pursuant to Section 6(a) may be given by any means provided
in Section 21 hereof.  Any notice given on a Business Day shall be met, and the
related Margin Call satisfied, no later than 5:00 p.m. (New York City time) on
the following Business Day.  The failure of Buyer, on any one or more occasions,
to exercise its rights under this Section 6, shall not change or alter the terms
and conditions to which this Agreement is subject or limit the right of Buyer to
do so at a later date.  Seller and Buyer each agree that a failure or delay by
Buyer to exercise its rights hereunder shall not limit or waive Buyer’s rights
under this Agreement or otherwise existing by law or in any way create
additional rights for Seller.
 
7.  
INCOME PAYMENTS

 
Where a particular term of a Transaction extends over the date on which Income
is paid in respect of any Purchased Loan subject to that Transaction, such
Income shall be the property of Buyer. Notwithstanding the foregoing, and
provided no Default or Event of Default has occurred and is continuing, Buyer
agrees that Seller shall be entitled to receive an amount equal to all Income
collected in respect of the Purchased Loans, whether by Buyer, any Custodian or
any servicer or any other Person, which is not otherwise received by Seller, to
the full extent it would be so entitled if the Purchased Loans had not been sold
to Buyer; provided that any Income received by Seller while the related
Transaction is outstanding shall be held by Seller solely in trust for Buyer
pending the repurchase or payment of the Price Differential pursuant to Section
3(f) hereof, as applicable, on the related Repurchase Date; provided further
that following the occurrence of a Default or an Event of Default, Seller shall
remit all such Income in the Collection Account in accordance with Section
13(hh) hereof.  Provided no Default has occurred, Buyer shall, as the parties
may agree with respect to any Transaction (or, in the absence of any such
agreement, as Buyer shall reasonably determine in its sole discretion), on the
Repurchase Date following the date any Income is received by Buyer (or a
servicer on its behalf) either (i) transfer (or permit the servicer to transfer)
to Seller such Income with respect to any Purchased Loans subject to such
Transaction, or (ii) if a Margin Deficit then exists, apply the Income payment
to reduce the amount, if any, to be transferred to Buyer by Seller upon
termination of such Transaction.  Buyer shall not be obligated to take any
action pursuant to the preceding sentences (A) to the extent that such action
would result in the creation of a Margin Deficit, unless prior thereto or
simultaneously therewith Seller transfers to Buyer cash or Additional Purchased
Loans sufficient to eliminate such Margin Deficit, or (B) if an Event of Default
with respect to Seller has occurred and is then continuing at the time such
Income is paid.
 
 
 
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8.  
SECURITY INTEREST; BUYER’S APPOINTMENT AS ATTORNEY-IN-FACT

 
(a) Seller and Buyer intend that the Transactions hereunder be sales to Buyer of
the Purchased Loans and not loans from Buyer to Seller secured by the Purchased
Loans.  However, in order to preserve Buyer’s rights under this Agreement in the
event that a court or other forum recharacterizes the Transactions hereunder as
other than sales, and as security for Seller’s performance of all of its
Obligations, Seller hereby grants Buyer a fully perfected first priority
security interest in all of Seller’s rights, title and interest in and to the
following property, whether now existing or hereafter acquired: (i) all
Purchased Loans (including the related Servicing Rights thereto) identified on a
Transaction Notice  delivered by Seller to Buyer and the Custodian from time to
time, (ii) any other collateral pledged or otherwise relating to such Purchased
Loans (including but not limited to Account Agreements, Additional Collateral
Transfer Agreements and Surety Bonds in connection with the Additional
Collateral Loans), together with all files, material documents, instruments,
surveys (if available), certificates, correspondence, appraisals, computer
records, computer storage media, Loan accounting records and other books and
records relating thereto, (iii) all rights of Seller to receive from any third
party or to take delivery of any Records or other documents which constitute a
part of the Mortgage File or Servicing File, (iv) the Collection Account and all
Income relating to such Purchased Loans, (v) all mortgage guaranties and
insurance (issued by governmental agencies or otherwise) and any mortgage
insurance certificate or other document evidencing such mortgage guaranties or
insurance relating to any Purchased Loans and all claims and payments thereunder
and all rights of Seller to receive from any third party or to take delivery of
any of the foregoing, (vi) all interests in real property collateralizing any
Purchased Loans, (vii) all other insurance policies and insurance proceeds
relating to any Purchased Loans or the related Mortgaged Property and all rights
of Seller to receive from any third party or to take delivery of any of the
foregoing, (viii) any purchase agreements or other agreements, contracts or
take-out commitments relating to or constituting any or all of the foregoing and
all rights to receive documentation relating thereto, (ix) all “accounts”,
“chattel paper”, “commercial tort claims”, “deposit accounts”, “documents,”
“equipment”, “general intangibles”, “goods”, “instruments”, “inventory”,
“investment property”, “letter of credit rights”, and “securities’ accounts” as
each of those terms is defined in the Uniform Commercial Code and all cash and
Cash Equivalents and all products and proceeds relating to or constituting any
or all of the foregoing, and (x) any and all replacements, substitutions,
distributions on or proceeds of any or all of the foregoing (collectively the
“Purchased Items”).  Seller acknowledges and agrees that its rights with respect
to the Purchased Items (including without limitation, any security interest
Seller may have in the Purchased Loans and any other collateral granted by
Seller to Buyer pursuant to any other agreement) are and shall continue to be at
all times junior and subordinate to the rights of Buyer hereunder.
 
 
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(b) At any time and from time to time, upon the written request of Buyer, and at
the sole expense of Seller, Seller will promptly and duly execute and deliver,
or will promptly cause to be executed and delivered, such further instruments
and documents and take such further action as Buyer may reasonably request for
the purpose of obtaining or preserving the full benefits of this Agreement and
of the rights and powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the Uniform Commercial
Code in effect in any jurisdiction with respect to the Purchased Items and the
liens created hereby.  Seller also hereby authorizes Buyer to file any such
financing or continuation statement to the extent permitted by applicable law. A
carbon, photographic or other reproduction of this Agreement shall be sufficient
as a financing statement for filing in any jurisdiction.  This Agreement shall
constitute a security agreement under applicable law.
 
(c) Seller shall not (i) change the location of its chief executive office/chief
place of business from that specified in Section 12(l) hereof, (ii) change its
name, identity or corporate structure (or the equivalent) or change the location
where it maintains its records with respect to the Purchased Items, or (iii)
reincorporate or reorganize under the laws of another jurisdiction unless it
shall have given Buyer at least 30 days prior written notice thereof and shall
have delivered to Buyer all Uniform Commercial Code financing statements and
amendments thereto as Buyer shall request and taken all other actions deemed
reasonably necessary by Buyer to continue its perfected status in the Purchased
Items with the same or better priority.
 
(d) Seller hereby irrevocably constitutes and appoints Buyer and any officer or
agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of Seller and in the name of Seller or in its own name, from time to time
in Buyer’s discretion, for the purpose of carrying out the terms of this
Agreement, including without limitation, protecting, preserving and realizing
upon the Purchased Items, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement, including without limitation, to
protect, preserve and realize upon the Purchased Items, to file such financing
statement or statements relating to the Purchased Items as Buyer at its option
may deem appropriate, and, without limiting the generality of the foregoing,
Seller hereby gives Buyer the power and right, on behalf of Seller, without
assent by, but with notice to, Seller, if an Event of Default shall have
occurred and be continuing, to do the following:
 
(i) in the name of Seller, or in its own name, or otherwise, to take possession
of and endorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due with respect to any Purchased Items
and to file any claim or to take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by Buyer for the purpose of
collecting any and all such moneys due with respect to any Purchased Items
whenever payable;
 
(ii) to pay or discharge taxes and Liens levied or placed on or threatened
against the Purchased Items;
 
(iii)  (A) to direct any party liable for any payment under any Purchased Items
to make payment of any and all moneys due or to become due thereunder directly
to Buyer or as Buyer shall direct; (B) to ask or demand for, collect, receive
payment of and receipt for, any and all moneys, claims and other amounts due or
to become due at any time in respect of or arising out of any Purchased Items;
(C) to sign and endorse any invoices, assignments, verifications, notices and
other documents in connection with any Purchased Items; (D) to commence and
prosecute any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Purchased Items or any proceeds thereof
and to enforce any other right in respect of any Purchased Items; (E) to defend
any suit, action or proceeding brought against Seller with respect to any
Purchased Items; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith, to give
such discharges or releases as Buyer may deem appropriate; and (G) generally, to
sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any Purchased Items as fully and completely as though Buyer were the
absolute owner thereof for all purposes, and to do, at Buyer’s option and
Seller’s expense, at any time, and from time to time, all acts and things which
Buyer deems necessary to protect, preserve or realize upon the Purchased Items
and Buyer’s Liens thereon and to effect the intent of this Agreement, all as
fully and effectively as Seller might do.
 
 
 
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Seller hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof.  This power of attorney is a power coupled with an
interest and shall be irrevocable.
 
Seller also authorizes Buyer, if an Event of Default shall have occurred, from
time to time, to execute, in connection with any sale provided for in Section 19
hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Purchased Items.
 
(e) The powers conferred on Buyer hereunder are solely to protect Buyer’s
interests in the Purchased Items and shall not impose any duty upon it to
exercise any such powers.  Buyer shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers, and neither it nor
any of its officers, directors, employees or agents shall be responsible to
Seller for any act or failure to act hereunder, except for its or their own
gross negligence or willful misconduct.
 
(f) If Seller fails to perform or comply with any of its agreements contained in
the Program Documents and Buyer may itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the reasonable out-of-pocket
expenses of Buyer incurred in connection with such performance or compliance,
together with interest thereon at a rate per annum equal to the Post-Default
Rate, shall be payable by Seller to Buyer on demand and shall constitute
Obligations.
 
(g) Buyer’s duty with respect to the custody, safekeeping and physical
preservation of the Purchased Items in its possession, under Section 9-207 of
the Uniform Commercial Code or otherwise, shall be to deal with it in the same
manner as Buyer deals with similar property for its own account. Neither Buyer
nor any of its directors, officers or employees shall be liable for failure to
demand, collect or realize upon all or any part of the Purchased Items or for
any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Purchased Items upon the request of Seller or otherwise.
 
(h) All authorizations and agencies herein contained with respect to the
Purchased Items are irrevocable and powers coupled with an interest.
 
9.  
CONDITIONS PRECEDENT

 
(a) As conditions precedent to the initial Purchase Date, Buyer shall have
received on or before such date the following, in form and substance
satisfactory to Buyer and duly executed by each party thereto (as applicable):
 
 
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(i) Program Documents. The Program Documents duly executed and delivered by
Seller and Guarantor thereto and being in full force and effect, free of any
modification, breach or waiver.
 
(ii) Organizational Documents.  A good standing certificate and certified copies
of the charter and by-laws (or equivalent documents) for each of Seller and
Guarantor, in each case dated as of a recent date, but in no event more than ten
(10) days prior to the date of such initial Transaction and of all corporate or
other authority for Seller with respect to the execution, delivery and
performance of the Program Documents and each other document to be delivered by
Seller from time to time in connection herewith (and Buyer may conclusively rely
on such certificate until it receives notice in writing from Seller to the
contrary).
 
(iii) Incumbency Certificate.  An incumbency certificate of the secretary of
each of Seller and Guarantor certifying the names, true signatures and titles of
its respective representatives duly authorized to request Transactions hereunder
and to execute the Program Documents and the other documents to be delivered
thereunder;
 
(iv) Legal Opinion.  A legal opinion of counsel to Seller and Guarantor,
substantially in the form attached hereto as Exhibit C.
 
(v) Filings, Registrations, Recordings. (i) Any documents (including, without
limitation, financing statements) required to be filed, registered or recorded
in order to create, in favor of Buyer, a perfected, first-priority security
interest in the Purchased Items, subject to no Liens other than those created
hereunder, shall have been properly prepared and executed for filing (including
the applicable county(ies) if Buyer determines such filings are necessary in its
reasonable discretion), registration or recording in each office in each
jurisdiction in which such filings, registrations and recordations are required
to perfect such first-priority security interest; and (ii) UCC lien searches,
dated as of a recent date, in no event more than 14 days prior to the date of
such initial Transaction, in such jurisdictions as shall be applicable to Seller
and the Purchased Items, the results of which shall be satisfactory to Buyer.
 
(vi) Fees and Expenses. Buyer shall have received payment or reimbursement of
all fees and expenses required to be paid by Seller on or prior to the initial
Purchase Date (including, but not limited to, the Commitment Fee, payable
pursuant to Section 2 of the Pricing Side Letter, and all attorneys’ fees and
due diligence expenses and costs), which fees and expenses may be netted out of
any purchase proceeds paid by Buyer hereunder.
 
(vii) Financial Statements. Buyer shall have received the financial statements
referenced in Section 12(b).
 
(viii) Underwriting Guidelines. Buyer and Seller shall have agreed upon Seller’s
current Underwriting Guidelines for Loans and Buyer shall have received a copy
thereof certified by a Responsible officer of Seller.
 
(ix) Consents, Licenses, Approvals, etc. Buyer shall have received copies
certified by Seller of all consents, licenses and approvals, if any, required in
connection with the execution, delivery and performance by Seller of, and the
validity and enforceability of, the Loan Documents, which consents, licenses and
approvals shall be in full force and effect.
 
 
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(x) Insurance. Buyer shall have received evidence in form and substance
satisfactory to Buyer showing compliance by Seller as of such initial Purchase
Date with Section 13(v) hereof.
 
(xi) Account.  Evidence of the establishment of the Collection Account, the FNMA
Loan Purchase Account and the Citigroup Sub-Account.
 
(xii) Due Diligence.  Buyer shall have completed its corporate due diligence of
Seller and Guarantor, and such due diligence review shall be satisfactory to
Buyer in its sole discretion.
 
(xiii) Other Documents. Buyer shall have received such other documents as Buyer
or its counsel may reasonably request.
 
(b) The obligation of Buyer to enter into each Transaction pursuant to this
Agreement (including the initial Transaction and each rolled Transaction) is
subject to the following further conditions precedent, both immediately prior to
any Transaction and also after giving effect thereto and to the intended use
thereof:
 
(i) No Default, Event of Default or Event of Termination shall have occurred and
be continuing.
 
(ii) No Material Adverse Effect shall have occurred and be continuing.
 
(iii) Both immediately prior to entering into such Transaction and also after
giving effect thereto and to the intended use of the proceeds thereof, the
representations and warranties made by Seller in Section 12 and Schedule 1
hereof, and in each of the other Program Documents, shall be true and complete
on and as of the Purchase Date in all material respects (in the case of the
representations and warranties in Section 12(w), 12(x) and Schedule 1, solely
with respect to Loans which have not been repurchased by Seller) with the same
force and effect as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date). At the request of Buyer, Buyer shall
have received an officer’s certificate signed by a Responsible Officer of Seller
certifying as to the truth and accuracy of the above, which certificate shall
specifically include a statement that Seller is in compliance with all
governmental licenses and authorizations and is qualified to do business and in
good standing in all required jurisdictions.
 
(iv) The then aggregate outstanding Purchase Price for all Purchased Loans, when
added to the Purchase Price for the requested Transaction, shall not exceed the
Maximum Aggregate Purchase Price.
 
(v) [Reserved].
 
(vi) [Reserved].
 
(vii) Buyer shall have made a determination in its sole reasonable discretion
that each Loan or any pool of Loans is (a) eligible for sale in the secondary
market taking into consideration the characteristics of such Loan or the
aggregate characteristics of such pool of Loans, (b) eligible to be included in
a standard securitization and (c) is eligible for purchase under the terms of
this Agreement.
 
 
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(viii) Buyer or its designee shall have received on or before the day of a
Transaction with respect to any Purchased Loans (unless otherwise specified in
this Agreement) the following, in form and substance satisfactory to Buyer and
(if applicable) duly executed:
 
(1)  
The Transaction Notice and Loan Schedule with respect to such Purchased Loans
delivered pursuant to Section 3(a);

 
(2)  
The Trust Receipt with respect to such Purchased Loans (except with respect to
Wet Loans), with the Loan Schedule attached; and

 
(3)  
Such certificates, customary opinions of counsel or other documents as Buyer may
reasonably request, provided that such opinions of counsel shall not be required
routinely in connection with each Transaction but shall only be required from
time to time as deemed necessary by Buyer in its commercially reasonable
judgment.

 
(ix) Reserved.
 
(x) With respect to any Loan that was funded in the name of or acquired by a
Qualified Originator which is an Affiliate of Seller, Buyer may, in its sole
discretion, require Seller to provide evidence sufficient to satisfy Buyer that
such Loan was acquired in a legal sale, including without limitation, an
opinion, in form and substance and from an attorney, in both cases, acceptable
to Buyer in its sole discretion, that such Loan was acquired in a legal sale.
 
(xi) None of the following shall have occurred and/or be continuing:
 
(a)           an event or events resulting in the inability of Buyer to finance
its purchases of assets with traditional counterparties at rates which would
have been reasonable prior to the occurrence of such event or events; or
 
(b)           any other event beyond the control of Buyer which Buyer reasonably
determines may result in Buyer’s inability to perform its obligations under this
Agreement including, without limitation, acts of God, strikes, lockouts, riots,
acts of war or terrorism, epidemics, nationalization, expropriation, currency
restrictions, fire, communication line failures, computer viruses, power
failures, earthquakes, or other disasters of a similar nature to the foregoing.
 
(xii) Such Loans shall conform to Seller’s Underwriting Guidelines and Seller
shall have delivered to Buyer a copy of all material updates or amendments
thereto that have not theretofore been delivered to Buyer.
 
(xiii) Reserved.
 
(xiv) If there is a Subservicer with respect to any Loans that will be subject
to such Transaction, Buyer shall have received, no later than 10:00 a.m. three
(3) days prior to the requested Purchase Date, an Instruction Letter, executed
by Seller, with the related Servicing Agreement attached thereto, which such
Servicing Agreement shall be in form and substance acceptable to Buyer.
 
 
 
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(xv) With respect to any Additional Collateral Loan that will be subject to such
Transaction, Seller shall have assigned to Buyer all of its rights, title and
interest in, to and under the related Additional Collateral Transfer Agreement
and if applicable, the Account Agreement.
 
(xvi) In no event shall Buyer be required to enter into (A) more than one
Transaction in any one Business Day, nor (B) any Transaction whose Purchase
Price would be less than $1,000,000.
 
(xvii) Buyer shall have determined that all actions reasonably necessary or, in
the opinion of Buyer, desirable to maintain Buyer’s perfected interest in the
Purchased Loans and other Purchased Items have been taken, including, without
limitation, duly filed Uniform Commercial Code financing statements on Form
UCC-1.
 
(xviii) Seller shall have paid to Buyer the Renewal Fee, if applicable, in
accordance with Section 2 of the Pricing Side Letter, and all other fees and
expenses then owed to Buyer, including, but not limited to, attorneys fees’, any
due diligence expenses and costs, in accordance with this Agreement and any
other Program Document.
 
(xix) Buyer or its designee shall have received any other documents reasonably
requested by Buyer.
 
(xx) There is no Margin Deficit at the time immediately prior to entering into a
new Transaction.
 
(xxi) With respect to each Purchased Loan that is subject to a security interest
(including any precautionary security interest) immediately prior to the
Purchase Date, Buyer shall have received a Security Release Certification for
such Purchased Loan that is duly executed by the related secured party and
Seller.  Such secured party shall have filed Uniform Commercial Code termination
statements in respect of any Uniform Commercial Code filings made in respect of
such Loan, and each such release and Uniform Commercial Code termination
statement has been delivered to Buyer prior to each Transaction and to the
Custodian as part of the Mortgage File.
 
10.  
RELEASE OF PURCHASED LOANS

 
Upon timely payment in full of the Repurchase Price and all other Obligations
(if any) then owing with respect to a Purchased Loan, unless a Default or Event
of Default shall have occurred and be continuing, then (a) Buyer shall be deemed
to have terminated any security interest that Buyer may have in such Purchased
Loan and any Purchased Items solely related to such Purchased Loan and (b) with
respect to such Purchased Loan, Buyer shall direct Custodian to release such
Purchased Loan and any Purchased Items solely related to such Purchased Loan to
Seller unless such release and termination would give rise to or perpetuate a
Margin Deficit.  Except as set forth in Section 16, Seller shall give at least
one (1) Business Days prior written notice to Buyer if such repurchase shall
occur on any date other than the Repurchase Date in Section 2(a).
 
If such release and termination gives rise to or perpetuates a Margin Deficit,
Buyer shall notify Seller of the amount thereof and Seller shall thereupon
satisfy the Margin Call in the manner specified in Section 6.
 
 
 
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11.  
RELIANCE

 
With respect to any Transaction, Buyer may conclusively rely upon, and shall
incur no liability to 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 Seller’s behalf.
 
12.  
REPRESENTATIONS AND WARRANTIES

 
The Seller hereby represents and warrants to Buyer that throughout the term of
this Agreement:
 
(a) Existence.  The Seller (a) is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation, (b) has
all requisite corporate or other power, and has all governmental licenses,
authorizations, consents and approvals, necessary to own its assets and carry on
its business as now being or as proposed to be conducted, except where the lack
of such licenses, authorizations, consents and approvals would not be reasonably
likely to have a Material Adverse Effect, (c) is qualified to do business and is
in good standing in all other jurisdictions in which the nature of the business
conducted by it makes such qualification necessary, except where failure so to
qualify would not be reasonably likely (either individually or in the aggregate)
to have a Material Adverse Effect, and (d) is in compliance in all material
respects with all Requirements of Law.
 
(b) Financial Condition of Seller.  Seller has heretofore furnished to Buyer a
copy of (1) consolidated balance sheet for the fiscal year ended as of December
31, 2006 and the related consolidated statements of income and retained earnings
and of cash flows for the fiscal year then ended, setting forth in each case in
comparative form the figures for the previous year, with the opinion thereon of
a nationally recognized public accounting firm and (2) unaudited consolidated
balance sheet for the quarterly fiscal period(s) ended March 31, 2007, June 30,
2007 and September 30, 2007 and the related unaudited consolidated statements of
income and retained earnings and Seller’s cash flows for such quarterly fiscal
period(s), setting forth in each case in comparative form the figures for the
previous year.  All such financial statements are complete and correct in all
material respects and fairly present the consolidated financial condition of
Seller and its Consolidated Subsidiaries and the consolidated results of its
operations for the relevant time period, all in accordance with GAAP applied on
a consistent basis.  Since December 31, 2006 there has been no development or
event nor any prospective development or event which has had or should
reasonably be expected to have a Material Adverse Effect.
 
(c) Litigation.  There are no actions, suits, arbitrations, investigations or
proceedings pending or, to its knowledge, threatened against the Seller or any
of its respective Subsidiaries or Affiliates or affecting any of the property
thereof before any Governmental Authority other than as disclosed on Schedule 6
hereto, (i) as to which individually or in the aggregate there is a reasonable
likelihood of an adverse decision which would be reasonably likely to have a
Material Adverse Effect or (ii) which questions the validity or enforceability
of any of the Program Documents or any action to be taken in connection with the
transactions contemplated thereby and there is a reasonable likelihood of a
Material Adverse Effect or adverse decision.
 
(d) No Breach.  Neither (a) the execution and delivery of the Program Documents,
or (b) the consummation of the transactions therein contemplated in compliance
with the terms and provisions thereof will conflict with or result in a breach
of the charter or by-laws of the Seller, or any applicable law, rule or
regulation, or any order, writ, injunction or decree of any Governmental
Authority, or other material agreement or instrument to which the Seller, or any
of its Subsidiaries, is a party or by which any of them or any of their property
is bound or to which any of them or their property is subject, or constitute a
default under any such material agreement or instrument, or (except for the
Liens created pursuant to this Agreement) result in the creation or imposition
of any Lien upon any property of the Seller or any of its Subsidiaries, pursuant
to the terms of any such agreement or instrument.
 
 
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(e) Action.  The Seller has all necessary corporate or other power, authority
and legal right to execute, deliver and perform its obligations under each of
the Program Documents to which it is a party; the execution, delivery and
performance by the Seller of each of the Program Documents to which it is a
party has been duly authorized by all necessary corporate or other action on its
part; and each Program Document to which the Seller is a party, has been duly
and validly executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
 
(f) Approvals.  No authorizations, approvals or consents of, and no filings or
registrations with, any Governmental Authority, or any other Person, are
necessary for the execution, delivery or performance by the Seller of the
Program Documents to which it is a party or for the legality, validity or
enforceability thereof, except for filings and recordings in respect of the
Liens created pursuant to this Agreement.
 
(g) Taxes.  The Seller and its Subsidiaries have filed all Federal income tax
returns and all other material tax returns that are required to be filed by them
and have paid all taxes due pursuant to such returns or pursuant to any
assessment received by any of them, except for (i) any such taxes, if any, that
are being appropriately contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves have been
provided or (ii) any such taxes for which an extension has been obtained in
compliance with applicable law. The charges, accruals and reserves on the books
of each of the Seller and its Subsidiaries in respect of taxes and other
governmental charges are, in the opinion of Seller, adequate. Any taxes, fees
and other governmental charges payable by the Seller in connection with a
Transaction and the execution and delivery of the Program Documents have been
paid.
 
(h) Investment Company Act.  None of the Seller or any of its Subsidiaries is an
“investment company”, or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940, as amended. Seller is
not subject to any Federal or state statute or regulation which limits its
ability to incur indebtedness.
 
(i) No Legal Bar.  The execution, delivery and performance of this Agreement,
the other Program Documents, the sales hereunder and the use of the proceeds
thereof will not violate any Requirement of Law or Contractual Obligation of
Seller or of any of its Subsidiaries and will not result in, or require, the
creation or imposition of any Lien (other than the Liens created hereunder) on
any of its or their respective properties or revenues pursuant to any such
Requirement of Law or Contractual Obligation.
 
(j) Compliance with Law.  No practice, procedure or policy employed or proposed
to be employed by the Seller in the conduct of its business violates any law,
regulation, judgment, agreement, regulatory consent, order or decree applicable
to it which, if enforced, would result in either a Material Adverse Effect with
respect to Seller.
 
(k) No Default.  None of the Seller, or any of its Subsidiaries is in default
under or with respect to any of its Contractual Obligations in any respect which
should reasonably be expected to have a Material Adverse Effect. No Default or
Event of Default has occurred and is continuing.
 
(l) Chief Executive Office; Chief Operating Office.  Seller’s chief executive
office and chief operating office on the Effective Date are located at 3000
Leadenhall Road, Mount Laurel, New Jersey 08054.
 
 
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(m) Location of Books and Records.  The location where the Seller keeps its
books and records including all computer tapes and records relating to the
Purchased Items is at its respective chief executive office or chief operating
office or the offices of the Custodian.
 
(n) True and Complete Disclosure.  The information, reports, financial
statements, exhibits and schedules furnished in writing by or on behalf of the
Seller or any of its Subsidiaries to Buyer in connection with the negotiation,
preparation or delivery or performance of this Agreement and the other Program
Documents or included herein or therein or delivered pursuant hereto or thereto
or in connection herewith or therewith, 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. 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 Program 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.
 
(o) Additional Repurchase or Warehouse Facility.  Seller currently has, with a
nationally recognized and established counterparty or counterparties (other than
Buyer), at least one loan repurchase or warehouse facility that (i) provides
funding on a committed basis, (ii) is secured by mortgage loans originated or
acquired by the Seller which are substantially similar with respect to Credit
Score, underwriting and product type to the Eligible Loans and (iii) is in an
aggregate amount totaling at least $750,000,000.
 
(p) ERISA. Each Plan to which the Seller or its Subsidiaries make direct
contributions, and, to the knowledge of Seller, each other Plan and each
Multiemployer Plan, is in compliance in all material respects with, and has been
administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law. No event or
condition has occurred and is continuing as to which each the Seller would be
under an obligation to furnish a report to Buyer under Section 13(a)(v) hereof.
 
(q) Licenses.  Buyer will not be required as a result of purchasing the Loans to
be licensed, registered or approved or to obtain permits or otherwise qualify
(i) to do business in any state in which it currently so required or (ii) under
any state or other jurisdiction’s consumer lending, fair debt collection or
other applicable state or other jurisdiction’s statute or regulation.
 
(r) Filing Jurisdictions; Relevant States.  Schedule 2 sets forth all of the
jurisdictions and filing offices in which a financing statement should be filed
in order for Buyer to perfect its security interest in the Purchased Items.
Schedule 3 sets forth all of the states or other jurisdictions in which Seller
originates Loans in its own name or through brokers on the date of this
Agreement.
 
(s) True Sales.  Any and all interest of a Qualified Originator in, to and under
any Mortgage funded in the name of or acquired by such Qualified Originator or
seller which is an Affiliate of Seller has been sold, transferred, conveyed and
assigned to Seller pursuant to a legal sale and such Qualified Originator
retains no interest in such Loan, and if so requested by Buyer, such sale is
covered by an opinion of counsel to that effect in form and substance acceptable
to Buyer.
 
(t) No Burdensome Restrictions.  No Requirement of Law or Contractual Obligation
of the Seller or any of its Subsidiaries has a Material Adverse Effect.
 
(u) Subsidiaries.  The current organizational structure of Seller and its
Subsidiaries is set forth on Schedule 4 to this Agreement.
 
 
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(v) Origination and Acquisition of Loans.  The Loans were originated or acquired
by Seller, and the origination and collection practices used by Seller or
Qualified Originator, as applicable, with respect to the Loans have been, in all
material respects legal, proper, prudent and customary in the residential
mortgage loan origination and servicing business, and in accordance with the
Underwriting Guidelines. With respect to Loans acquired by Seller, all such
Loans are in conformity with the Underwriting Guidelines.  Each of the Loans
complies with the representations and warranties listed in Schedule 1 hereto.
 
(w) No Adverse Selection.  Seller used no selection procedures that identified
the Loans as being less desirable or valuable than other comparable Loans owned
by Seller.
 
(x) Solvent; Fraudulent Conveyance.  As of the date hereof and immediately after
giving effect to each Transaction, the fair value of the assets of the Seller is
greater than the fair value of the liabilities (including, without limitation,
contingent liabilities if and to the extent required to be recorded as a
liability on the financial statements of the Seller in accordance with GAAP) of
the Seller and the Seller is and will be solvent, is and will be able 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.
The  Seller does not intend to incur, or believe that it has incurred, debts
beyond its ability to pay such debts as they mature. The Seller is not
contemplating the commencement of insolvency, bankruptcy, liquidation or
consolidation proceedings or the appointment of a receiver, liquidator,
conservator, trustee or similar official in respect of Seller or any of its
assets.  Seller is not transferring any Loans with any intent to hinder, delay
or defraud any of its creditors.
 
(y) No Broker.  Other than with respect to Additional Collateral Loans, Seller
has not dealt with any broker, investment banker, agent, or other person, except
for Buyer, who may be entitled to any commission or compensation in connection
with the sale of Purchased Loans pursuant to this Agreement; provided, that if
Seller has dealt with any broker, investment banker, agent, or other person,
except for Buyer, who may be entitled to any commission or compensation in
connection with the sale of Purchased Loans pursuant to this Agreement, such
commission or compensation shall have been paid in full by Seller.
 
(z) MERS.  Seller is a member of MERS in good standing.
 
13.  
COVENANTS OF SELLER

 
The Seller hereby covenants and agrees with Buyer that during the term of this
Agreement:
 
(a) Financial Statements and Other Information; Financial Covenants.
 
The Seller shall deliver to Buyer:
 
(i) As soon as available and in any event within 45 days after the end of each
of the first three quarterly fiscal periods of each fiscal year of Seller, a
certification in the form of Exhibit A together with the consolidated balance
sheets of Seller and its Consolidated Subsidiaries as at the end of such period
and the related unaudited consolidated statements of income and retained
earnings and of cash flows for Seller and its Consolidated Subsidiaries for such
period and the portion of the fiscal year through the end of such period,
setting forth in each case in comparative form the figures for the previous
year, accompanied by a certificate of a Responsible Officer of Seller, which
certificate shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of Seller
and its Consolidated Subsidiaries in accordance with GAAP, consistently applied,
as at the end of, and for, such period (subject to normal year-end audit
adjustments);
 
 
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(ii) As soon as available and in any event within 100 days after the end of each
fiscal year of Seller, the consolidated balance sheets of Seller and its
Consolidated Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income and retained earnings and of cash flows for
Seller and its Consolidated Subsidiaries for such year, setting forth in each
case in comparative form the figures for the previous year, accompanied by an
opinion thereon of independent certified public accountants of recognized
national standing, which opinion shall not be qualified as to scope of audit or
going concern and shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of Seller
and its Consolidated Subsidiaries at the end of, and for, such fiscal year in
accordance with GAAP;
 
(iii) From time to time such other information regarding the financial
condition, operations, or business of the Seller, as Buyer may reasonably
request; and
 
(iv) As soon as reasonably possible, and in any event within thirty (30) days
after a Responsible Officer knows, or with respect to any Plan or Multiemployer
Plan to which each of the Seller, or any of its Subsidiaries makes direct
contributions, has reason to believe, that any of the events or conditions
specified below with respect to any Plan or Multiemployer Plan has occurred or
exists, a statement signed by a senior financial officer of the Seller, setting
forth details respecting such event or condition and the action, if any, that
Seller or its ERISA Affiliate proposes to take with respect thereto (and a copy
of any report or notice required to be filed with or given to PBGC by Seller, or
an ERISA Affiliate with respect to such event or condition):
 
(a) any reportable event, as defined in Section 4043(b) of ERISA and the
regulations issued thereunder, with respect to a Plan, as to which PBGC has not
by regulation or otherwise waived the requirement of Section 4043(a) of ERISA
that it be notified within thirty (30) days of the occurrence of such event
(provided that a failure to meet the minimum funding standard of Section 412 of
the Code or Section 302 of ERISA, including, without limitation, the failure to
make on or before its due date a required installment under Section 412(m) of
the Code or Section 302(e) of ERISA, shall be a reportable event regardless of
the issuance of any waivers in accordance with Section 412(d) of the Code); and
any request for a waiver under Section 412(d) of the Code for any Plan;
 
(b) the distribution under Section 4041(c) of ERISA of a notice of intent to
terminate any Plan or any action taken by it or its ERISA Affiliate to terminate
any Plan;
 
(c) the institution by PBGC of proceedings under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by it or any of its ERISA Affiliates of a notice from a Multiemployer
Plan that such action has been taken by PBGC with respect to such Multiemployer
Plan;
 
(d) the complete or partial withdrawal from a Multiemployer Plan by it or any of
its ERISA Affiliates that results in liability under Section 4201 or 4204 of
ERISA (including the obligation to satisfy secondary liability as a result of a
purchaser default) or the receipt by it or any of its ERISA Affiliates of notice
from a Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA;
 
 
 
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(e) the institution of a proceeding by a fiduciary of any Multiemployer Plan
against it or any of its ERISA Affiliates to enforce Section 515 of ERISA, which
proceeding is not dismissed within 30 days; and
 
(f) the adoption of an amendment to any Plan that, pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA, would result in the loss of
tax-exempt status of the trust of which such Plan is a part if it or its ERISA
Affiliate fails to timely provide security to such Plan in accordance with the
provisions of said Sections.
 
The Seller shall include in its certification (in the form of Exhibit A pursuant
to paragraph (i) above), that Seller, during such fiscal period or year has
observed or performed all of its covenants and other agreements, and satisfied
every material condition, contained in this Agreement and the other Program
Documents to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate (and, if any Default or Event of Default
has occurred and is continuing, describing the same in reasonable detail and
describing the action Seller, has taken or proposes to take with respect
thereto).
 
(b) Litigation.  The Seller will promptly, and in any event within five (5)
Business Days after service of process on any of the following, give to Buyer
notice of all legal or arbitrable proceedings affecting it or any of its
Subsidiaries (to the extent that such proceedings were not disclosed on Schedule
6 hereto) that reasonably questions or challenges the validity or enforceability
of any of the Program Documents or as to which an adverse determination would
result in a Material Adverse Effect.
 
(c) Existence, Etc.  The Seller and its Subsidiaries will:
 
(i) preserve and maintain its legal existence and all of its material rights,
privileges, licenses and franchises;
 
(ii) comply with the requirements of all applicable laws, rules, regulations and
orders of Governmental Authorities (including, without limitation, truth in
lending, real estate settlement procedures and all environmental laws) if
failure to comply with such requirements would be reasonably likely (either
individually or in the aggregate) to have a Material Adverse Effect;
 
(iii) keep adequate records and books of account, in which complete entries will
be made in accordance with GAAP consistently applied;
 
(iv) not move its chief executive office or chief operating office from the
respective addresses referred to in Section 12(l) unless it shall have provided
Buyer 30 days prior written notice of such change;
 
(v) pay and discharge all taxes, assessments and governmental charges or levies
imposed on it or on its income or profits or on any of its Property prior to the
date on which penalties attach thereto, except for any such tax, assessment,
charge or levy (1) the payment of which is being contested in good faith and by
proper proceedings and against which adequate reserves are being maintained or
(2) the non-payment (other than taxes in connection with Purchased Loans) of
which  would not reasonably be likely to have a Material Adverse Effect; and
 
 
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(vi) permit representatives of Buyer, during normal business hours upon three
(3) Business Days’ prior written notice at a mutually desirable time or at any
time during the continuance of an Event of Default, to examine, copy and make
extracts from its books and records, to inspect any of its Properties, and to
discuss its business and affairs with its officers, all to the extent reasonably
requested by Buyer.
 
(d) Prohibition of Fundamental Changes.   Seller shall not at any time, directly
or indirectly, (i) enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation, winding up or dissolution) or sell all or substantially all of its
assets without Buyer’s prior consent, unless such sale of assets is in
connection with a whole loan sale or securitization or similar transactions made
in the ordinary course of business; or (ii) form or enter into any partnership,
joint venture, syndicate or other combination which would have a Material
Adverse Effect with respect to it.
 
(e) Margin Deficit. If at any time there exists a Margin Deficit, Seller shall
cure the same in accordance with Section 6 hereof.
 
(f) Notices. The Seller shall give notice to Buyer promptly in writing of any of
the following:
 
(i) Upon it becoming aware of, and in any event within one (1) Business Day
after the occurrence of any Default, Event of Default, Event of Termination or
any event of default or default under any Program Document or other material
agreement of Seller;
 
(ii) upon, and in any event within five (5) Business Days after, service of
process on it Seller or any of its Subsidiaries, or any agent thereof for
service of process, in respect of any legal or arbitrable proceedings affecting
it Seller or any of its Subsidiaries that (a) questions or challenges the
validity or enforceability of any of the Program Documents, (b) could prevent it
from complying with any material provisions of any of the Program Documents to
which it is a party or (c) is required to be disclosed by Seller in its public
filings pursuant to the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Securities and Exchange Commission as in effect
from time to time thereunder;
 
(iii) upon Seller becoming aware of any Material Adverse Effect and any event or
change in circumstances which should reasonably be expected to have a Material
Adverse Effect;
 
(iv) upon Seller becoming aware during the normal course of its business that
the Mortgaged Property in respect of any Loan or Loans with an aggregate unpaid
principal balance of at least $1,000,000 has been damaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty, or
otherwise damaged so as to materially and adversely affect the value of such
Loan;
 
(v) upon the entry of a judgment or decree against Seller or any of its
Subsidiaries in an amount in excess of $3,000,000;
 
(vi) any material change in the insurance coverage required of Seller or any
other Person pursuant to any Program Document, with copy of evidence of same
attached;
 
 
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(vii) any material dispute, licensing issue, litigation, investigation,
proceeding or suspension between it or any of its Subsidiaries, on the one hand,
and any Governmental Authority or any other Person; and
 
(viii) any material change in its accounting policies or financial reporting
practices or those of any of its Consolidated Subsidiaries except changes
required in conformity with new or revised GAAP.
 
Each notice pursuant to this Section 13(f) (other than (vi) above) shall be
accompanied by a statement of a Responsible Officer of Seller, setting forth
details of the occurrence referred to therein and stating what action it has
taken or proposes to take with respect thereto.
 
(g) Servicing.  Except as provided in Section 43, Seller shall not permit any
Person other than Seller to service Purchased Loans without the prior written
consent of Buyer, which consent shall not be unreasonably withheld.
 
(h) Underwriting Guidelines.  Seller shall not permit any material modifications
to be made to the Underwriting Guidelines that may result in a Material Adverse
Effect on the Purchased Items taken as a whole.  Seller agrees to promptly
deliver to Buyer copies of the Underwriting Guidelines and provide periodic
updates, as otherwise reasonably requested by Buyer.
 
(i) Lines of Business.  Seller shall not make any material change in the nature
of its business as conducted on the date hereof.
 
(j)  Transactions with Affiliates.  Seller will not enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate unless such transaction is
(i) otherwise permitted under this Agreement, (ii) in the ordinary course of
Seller’s business and (iii) upon fair and reasonable terms no less favorable to
Seller than it would obtain in a comparable arm’s length transaction with a
Person which is not an Affiliate.
 
(k) Defense of Title.  Seller warrants and will defend the right, title and
interest of Buyer in and to all Purchased Items against all adverse claims and
demands of all Persons whomsoever.
 
(l) Preservation of Purchased Items.  Seller shall do all things necessary to
preserve the Purchased Items so that such Purchased Items remain subject to a
first priority perfected security interest hereunder. Without limiting the
foregoing, Seller will comply with all applicable laws, rules and regulations of
any Governmental Authority applicable to Seller or relating to the Purchased
Items and cause the Purchased Items to comply with all applicable laws, rules
and regulations of any such Governmental Authority.  Seller will not allow any
default to occur for which Seller is responsible under any Purchased Items or
any Program Documents and Seller shall fully perform or cause to be performed
when due all of its obligations under any Purchased Items or the Program
Documents.
 
(m) No Assignment.  Seller shall not sell, assign, transfer or otherwise dispose
of, or grant any option with respect to, or pledge, hypothecate or grant a
security interest in or lien on or otherwise encumber (except pursuant to the
Program Documents), any of the Purchased Loans or any interest therein, provided
that this Section 13(m) shall not prevent any contribution, assignment, transfer
or conveyance of Purchased Loans in accordance with the Program Documents.
 
(n) 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 Subsidiary to Transfer substantially all of its assets to
any Person, unless such Transfer is in the ordinary course of business of the
Seller or any of its Subsidiaries.
 
 
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(o) [Reserved].
 
(p) [Reserved].
 
(q) [Reserved].
 
(r) [Reserved].
 
(s) Servicing Transmission.  Seller shall provide to Buyer on a monthly basis no
later than 11:00 a.m. New York City time two (2) Business Days prior to each
Repurchase Date (or such other day requested by Buyer) (i) the Servicing
Transmission, on a loan-by-loan basis and in the aggregate, with respect to the
Loans serviced hereunder by Seller which were funded prior to the first day of
the current month, summarizing Seller’s delinquency and loss experience with
respect to Loans serviced by Seller and loan prepayment history, and (ii) any
other information reasonably requested by Buyer with respect to the Loans.
 
(t) 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 Loans, any related rights or any of the Program Documents,
provided that Seller may amend or modify a Loan if such amendment or
modification does not affect the amount or timing of any payment of principal or
interest, extend its scheduled maturity date, modify its interest rate, or
constitute a cancellation or discharge of its outstanding principal balance and
does not materially and adversely affect the security afforded by the real
property, furnishings, fixtures, or equipment securing the Loan.
 
(u) Maintenance of Property; Insurance.  The Seller shall keep all property
useful and necessary in its business in good working order and condition. The
Seller shall maintain errors and omissions insurance, mortgage impairment
insurance and blanket fidelity bond coverage as required by Fannie Mae and shall
not reduce such coverage without the written consent of Buyer, and shall also
maintain such other insurance with financially sound and reputable insurance
companies, and with respect to property and risks of a character usually
maintained by entities engaged in the same or similar business similarly
situated, against loss, damage and liability of the kinds and in the amounts
customarily maintained by such entities; provided further that the Seller may
amend or modify a Loan in the ordinary course of business to correct errors in
accordance with Accepted Servicing Practices and will provide Buyer with prompt
written notification of such amendments or modifications.
 
(v) Further Identification of Purchased Items.  Seller will furnish to Buyer
from time to time statements and schedules further identifying and describing
the Purchased Items and such other reports in connection with the Purchased
Items as Buyer may reasonably request, all in reasonable detail.
 
(w) Loan Determined to be Defective.  Upon discovery by Seller or Buyer of any
breach of any representation or warranty listed on Schedule 1 hereto applicable
to any Loan, the party discovering such breach shall promptly give notice of
such discovery to the other.
 
(x) Reserved.
 
 
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(y) Certificate of a Responsible Officer of Seller.  At the end of each calendar
month Seller shall deliver to Buyer a certificate of its Responsible Officer
certifying that it is in compliance with the covenants set forth in Exhibit A
hereto.
 
(z) Additional Repurchase or Warehouse Facility.  Seller shall maintain
throughout the term of this Agreement, with a nationally recognized and
established counterparty or counterparties (other than Buyer), at least one loan
repurchase or warehouse facility that (i) provides funding on a committed basis,
(ii) is secured by mortgage loans originated or acquired by the Seller which are
substantially similar with respect to Credit Score, underwriting and product
type to the Eligible Loans and (iii) is in an aggregate amount totaling at least
$750,000,000.
 
(aa) Reserved.
 
(bb) Maintenance of Papers, Records and Files.  Seller shall acquire, and Seller
shall build, maintain and have available, a complete file in accordance with
lending industry custom and practice for each Purchased Loan.  Seller will
maintain all such Records not in the possession of a Custodian in good and
complete condition in accordance with industry practices and preserve them
against loss or destruction.
 
(i) Seller shall collect and maintain or cause to be collected and maintained
all Records relating to the Purchased Loans in accordance with industry custom
and practice, including those maintained pursuant to the preceding subsection,
and all such Records shall be in the Custodian’s possession unless Buyer
otherwise approves.  Seller will not cause or authorize any such papers, records
or files that are an original or an only copy to leave the Custodian’s
possession, except for individual items removed in connection with servicing a
specific Loan, in which event Seller will obtain or cause to be obtained a
receipt from the Custodian for any such paper, record or file.
 
(ii) For so long as Buyer has an interest in or lien on any Purchased Loan,
Seller will hold or cause to be held all related Records in trust for
Buyer.  Seller shall notify, or cause to be notified, every other party holding
any such Records of the interests and liens granted hereby.
 
(iii) Upon reasonable advance notice from any Custodian or Buyer, Seller shall
(x) make any and all such Records available to the Custodian or Buyer to examine
any such Records, either by its own officers or employees, or by agents or
contractors, or both, and make copies of all or any portion thereof, (y) permit
Buyer or its authorized agents to discuss the affairs, finances and accounts of
Seller with its respective chief operating officer and chief financial officer
and to discuss the affairs, finances and accounts of Seller with its independent
certified public accountants.
 
(cc) Maintenance of Licenses.  Seller shall (i) maintain all licenses, permits
or other approvals necessary for Seller to conduct its business and to perform
its obligations under the Program Documents, (ii) remain in good standing under
the laws of each state in which it conducts business or any Mortgaged Property
is located, and (iii) shall conduct its business strictly in accordance with
applicable law.
 
(dd) Taxes, Etc.  The Seller shall pay and discharge or cause to be paid and
discharged, when due, all taxes, assessments and governmental charges or levies
imposed upon it or upon its income and profits or upon any of its property,
real, personal or mixed (including without limitation, the Purchased Loans) or
upon any part thereof, as well as any other lawful claims which, if unpaid,
might become a Lien upon such properties or any part thereof, except for any
such taxes, assessments and governmental charges, levies or claims as are
appropriately contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves are provided.  The Seller
shall file on a timely basis all federal, and material state and local tax and
information returns, reports and any other information statements or schedules
required to be filed by or in respect of it.
 
 
 
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(ee) Reserved.
 
(ff) Change of Fiscal Year.  The Seller will not at any time, directly or
indirectly, except upon ninety (90) days’ prior written notice to Buyer, change
the date on which its fiscal year begins from its current fiscal year beginning
date.
 
(gg) Delivery of Servicing Rights and Servicing Records.  Seller hereby agrees
that Buyer is purchasing the Servicing Rights related to each Purchased Loan
simultaneously with the purchase of such Loans and that the value of such
Servicing Rights is factored into the Purchase Price for such Loan.  Seller
shall deliver such Servicing Rights to Buyer on the related Purchase Date.  With
respect to the Servicing Records and the physical servicing of the Purchased
Loans, Seller shall deliver such Servicing Records to the designee of Buyer,
within (45) days of each related Purchase Date, unless otherwise stated in
writing by Buyer; provided that on each Repurchase Date on which the Purchased
Loans becomes subject to a new Transaction, such delivery requirement is deemed
restated for such new Transaction (and the immediately preceding delivery
requirement is deemed to be rescinded) in the absence of directions to the
contrary from Buyer, and a new 45-day period is deemed to commence as of such
Repurchase Date.  Seller’s transfer of the Servicing Rights and Servicing
Records under this Section shall be in accordance with customary standards in
the industry and such transfer shall include the transfer of the gross amount of
escrows held for the related mortgagors (without reduction for outstanding
advances or “negative escrows”).
 
(hh) Establishment of Collection Account.  Prior to the initial Purchase Date,
Seller shall establish the Collection Account for the sole and exclusive benefit
of Buyer.  Following the occurrence of a Default or an Event of Default, Seller
shall and shall cause the Subservicer to segregate all Income collected on
account of the Purchased Loans, and shall deposit such to the Collection Account
(or otherwise in accordance with Buyers instructions) within three (3) Business
Days of receipt thereof.  No amounts deposited into such account shall be
removed without Buyer’s prior written consent.  Seller shall follow the
instructions of Buyer with respect to the Purchased Loans and deliver to Buyer
any information with respect to the Purchased Loans reasonably requested by
Buyer.  Seller shall deposit or credit to the Collection Account all items to be
deposited or credited thereto irrespective of any right of setoff or
counterclaim arising in favor of it (or any third party claiming through it)
under any other agreement or arrangement.
 
(ii) Establishment of FNMA Loan Purchase Account.  Prior to the initial Purchase
Date, Seller shall establish the FNMA Loan Purchase Account for the sole and
exclusive benefit of Buyer and the other lenders having an interest therein.  On
or prior to a Repurchase Date for a Landscape Loan that is subject to a
Transaction hereunder, Seller shall direct Fannie Mae to deposit directly to the
FNMA Loan Purchase Account the Purchase Price, and all other amounts to be paid
by Fannie Mae in connection with such purchase.  Seller shall segregate all
amounts on deposit in the FNMA Loan Purchase Account and shall hold such amounts
in trust for the benefit of Buyer and the other lenders having an interest
therein.  Seller shall not amend, supplement or otherwise modify in any respect
the payment and deposit direction relating to Buyer’s interest in the FNMA Loan
Purchase Account, Landscape Loans subject to Transactions under this Agreement
from time to time or the Citigroup Sub-Account without Buyer’s prior written
consent.  Seller shall deposit or credit to the FNMA Loan Purchase Account all
items to be deposited or credited thereto irrespective of any right of setoff or
counterclaim arising in favor of it (or any third party claiming through it)
under any other agreement or arrangement.
 
 
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(jj) Establishment of Citigroup Sub-Account.  Prior to the initial Purchase
Date, Seller shall establish the Citigroup Sub-Account for the sole and
exclusive benefit of Buyer.  On or prior to a Repurchase Date for a Landscape
Loan that is subject to a Transaction hereunder, Seller shall direct FNMA
Account Bank to deposit directly to the Citigroup Sub-Account the purchase
price, and all other amounts on deposit in the FNMA Loan Purchase Account that
relate to Fannie Mae’s purchase from Seller of such Landscape Loan.  In the
event that such amounts are less than the Repurchase Price for such Landscape
Loan, Seller shall, on or prior to the related Repurchase Date, deposit the
difference in such Citigroup Sub-Account and all such amounts shall be disbursed
to the Buyer on the related Purchase Date in accordance with Buyer’s written
instructions. Prior to the occurrence and continuance of a Default, Event of
Termination or an Event of Default, Seller shall direct FNMA Account Bank with
respect to the disposition of funds on deposit in the Citigroup Sub-Account
irrespective of whether such funds relate to Landscape Loans then subject to
Transactions under this Agreement.  Upon the occurrence and continuance of a
Default, Event of Termination or an Event of Default, all amounts on deposit in
the Citigroup Sub-Account shall be subject to Buyer’s exclusive control and
Seller’s authority to direct the disposition of such funds shall immediately
cease.  Seller shall deposit or credit to the Citigroup Sub-Account all items to
be deposited or credited thereto irrespective of any right of setoff or
counterclaim arising in favor of it (or any third party claiming through it)
under any other agreement or arrangement.  Seller shall segregate all amounts on
deposit in the Citigroup Sub-Account and shall hold such amounts in trust for
the benefit of Buyer, in accordance with Buyer’s written instructions.  Seller
shall not amend, supplement or otherwise modify in any respect the foregoing
procedures without Buyer’s prior written consent.
 
(kk) MERS.  Seller will comply in all material respects with the rules and
procedures of MERS in connection with the servicing of the MERS Loans for as
long as such Purchased Loans are registered with MERS.
 
(ll) Servicer Rating.  Seller shall maintain a minimum rating as Servicer of
loans of Below Average with respect to Standard & Poor’s and RPS2- with respect
to Fitch (each a “Minimum Servicer Rating”).
 
(mm) Rescission.  If any Wet Loan that is a Purchased Loan shall be subject to a
Rescission, Seller shall provide prompt notice of such Rescission to Buyer and
shall promptly return the related Purchase Price to Buyer, but in no event later
than one (1) Business Day, in immediately available funds.
 
(nn) Additional Collateral Loans.  The Seller covenants that within two (2)
Business Days after the Purchase Date for any purchase of Additional Collateral
Loans, the Seller will deliver to each Surety Bond Issuer any instrument
required to be delivered under the related Surety Bond, executed by the
necessary parties, and that all other requirements for transferring coverage
under the related Surety Bonds in respect of such Additional Collateral Loans to
the Buyer shall be complied with. The Seller shall indemnify the Buyer and hold
it harmless against any and all claims, losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and any other costs, fees and expenses that are related to or arise from the
non-payment of Required Surety Payments with respect to the Additional
Collateral Loans purchased by Buyer from the Seller under this Agreement.  The
indemnification obligation referred to in this paragraph (nn) shall expire upon
Buyer receiving all Required Surety Payments.
 
(oo) True and Complete Disclosure.   All written information furnished after the
date hereof by or on behalf of each of the Seller or any of its Subsidiaries to
Buyer in connection with this Agreement and the other Program Documents and the
transactions contemplated hereby and thereby will be true, complete and accurate
in every material respect, or (in the case of projections) based on reasonable
estimates, on the date as of which such information is stated or certified.
 
 
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14.  
REPURCHASE DATE PAYMENTS

 
On each Repurchase Date, with respect to Purchased Loans that are transferred
from Buyer to Seller upon termination of a Transaction, Seller shall remit or
shall cause to be remitted to Buyer the Repurchase Price together with any other
Obligations then due and payable.
 
15.  
REPURCHASE OF PURCHASED LOANS

 
Upon discovery by Seller of a breach of any of the representations and
warranties set forth on Schedule 1 to this Agreement, Seller shall give prompt
written notice thereof to Buyer.  Upon any such discovery by Buyer, Buyer will
notify Seller.  It is understood and agreed that the representations and
warranties set forth in Schedule 1 with respect to the Purchased Loans shall
survive delivery of the respective Mortgage Files to the Custodian and shall
inure to the benefit of Buyer.  The fact that Buyer has conducted or has failed
to conduct any partial or complete due diligence investigation in connection
with its purchase of any Purchased Loan shall not affect Buyer’s right to demand
repurchase as provided under this Agreement.  Seller shall, within two (2)
Business Days of the earlier of Seller’s discovery or Seller receiving notice
with respect to any Purchased Loan of (i) any breach of a representation or
warranty contained in Schedule 1, or (ii) any failure to deliver any of the
items required to be delivered as part of the Mortgage File within the time
period required for delivery pursuant to the Custodial Agreement, promptly cure
such breach or delivery failure in all material respects.  If within two (2)
Business Days after the earlier of Seller’s discovery of such breach or delivery
failure or Seller receiving notice thereof that such breach or delivery failure
has not been remedied by Seller, Seller shall promptly upon receipt of written
instructions from Buyer, at Buyer’s option, either (i) repurchase such Purchased
Loan at a purchase price equal to the Repurchase Price with respect to such
Purchased Loan by wire transfer to the account designated by Buyer, or (ii)
transfer comparable Substitute Loans to Buyer, as provided in Section 16 hereof.
 
16.  
SUBSTITUTION

 
Seller may, subject to agreement with and acceptance by Buyer upon one (1)
Business Day’s notice, substitute other assets which are substantially the same
as the Purchased Loans (the “Substitute Loans”) for any Purchased Loans.  Such
substitution shall be made by transfer to Buyer of such Substitute Loans and
transfer to Seller of such Purchased Loans (the “Reacquired Loans”) along with
the other information to be provided with respect to the applicable Substitute
Loan as described in the form of Transaction Notice.  Upon substitution, the
Substitute Loans shall be deemed to be Purchased Loans, the Reacquired Loans
shall no longer be deemed Purchased Loans, Buyer shall be deemed to have
terminated any security interest that Buyer may have had in the Reacquired Loans
and any Purchased Items solely related to such Reacquired Loans to Seller unless
such termination and release would give rise to or perpetuate a Margin
Deficit.  Concurrently with any termination and release described in this
Section 16, Buyer shall execute and deliver to Seller upon request and Buyer
hereby authorizes Seller to file and record such documents as Seller may
reasonably deem necessary or advisable in order to evidence such termination and
release.
 
17.  
EVENT OF TERMINATION

 
(a)           Each of the following events shall constitute an Event of
Termination (an “Event of Termination”):
 
(i) Seller’s membership in MERS is terminated for any reason and such membership
shall not be reinstated or duly executed Assignments in blank shall not be
delivered by Seller to Custodian for each MERS Loan subject to a Transaction in
each case within five (5) Business Days of such termination;
 
 
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(ii) Buyer shall reasonably request, specifying the reasons for such request,
reasonable information, and/or written responses to such requests, regarding the
financial well being of Seller or Guarantor and such reasonable information
and/or responses shall not have been provided within three (3) Business Days of
such request;
 
 (b)           Upon the occurrence of an Event of Termination, Buyer shall have
the right to terminate this Agreement and all Transactions hereunder by
delivering written notice of termination to Seller (a “Notice of Termination”),
in which event (i) Buyer’s obligation to enter into new Transactions hereunder
shall immediately terminate, (ii) the aggregate outstanding Repurchase Price for
all Transactions hereunder and all other Obligations shall be due and payable on
the date that is sixty (60) days following delivery of such Notice of
Termination to Seller (such date, the “Early Termination Date”); provided that
the Pricing Rate shall be equal to the Event of Termination Rate from and after
the date on which the Event of Termination shall have occurred, and (iii) the
Repurchase Date for all Transactions then outstanding hereunder shall be deemed
to be the Early Termination Date.

 
18.  
EVENTS OF DEFAULT

 
Each of the following events shall constitute an Event of Default (an “Event of
Default”) hereunder:
 
(a) Seller fails to transfer the Purchased Loans to Buyer on the applicable
Purchase Date (provided Buyer has tendered the related Purchase Price);
 
(b) Seller either fails to repurchase the Purchased Loans on the applicable
Repurchase Date or fails to perform its obligations under Section 6 or the
Guarantor fails to comply with any of its obligations under the Guaranty;
 
(c) Seller shall default in the payment of any other amount payable by it
hereunder, other than as provided in Section 18(b) or under any other Program
Document after notification by Buyer of such default, and such default shall
have continued unremedied for two (2) Business Days; or
 
(d) any representation, warranty, covenant or certification made or deemed made
herein or in any other Program Document by Seller or any certificate furnished
to Buyer pursuant to the provisions thereof, shall prove to have been false or
misleading in any material respect as of the time made or furnished (other than
the representations and warranties set forth in Schedule 1 which shall be
considered solely for the purpose of determining the Market Value of the Loans;
unless (i) Seller shall have made any such representations and warranties with
knowledge that they were materially false or misleading at the time made or (ii)
any such representations and warranties have been determined by Buyer in its
sole reasonable discretion to be materially false or misleading on a regular
basis); or
 
(e) Seller shall fail to comply with the requirements of Section 13(c)(i),
Section 13(d), Section 13(f)(i) or (iii), Sections 13(k) through 13(r) or
Section 13(v) hereof; or Seller shall otherwise fail to observe or perform any
other agreement contained in this Agreement or any other Program Document and
such failure to observe or perform shall continue unremedied for a period of
five (5) Business Days; or
 
 
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(f) any final, judgment or judgments or order or orders for the payment of money
in excess of $3,000,000 in the aggregate (to the extent that it is, in the
reasonable determination of Buyer, uninsured and provided that any insurance or
other credit posted in connection with an appeal shall not be deemed insurance
for these purposes) shall be rendered against Seller or any of its Affiliates by
one or more courts, administrative tribunals or other bodies having jurisdiction
over them and the same shall not be discharged (or provisions shall not be made
for such discharge), satisfied, or bonded, or a stay of execution thereof shall
not be procured, within sixty (60) days from the date of entry thereof and
Seller or any of its Affiliates as applicable, shall not, within said period of
sixty (60) days, appeal therefrom and cause the execution thereof to be stayed
during such appeal;
 
(g) Seller shall admit in writing its inability to, or intention not to, perform
any of its Obligations;
 
(h) Seller or any of its Affiliates or Subsidiaries files a voluntary petition
in bankruptcy, seeks relief under any provision of any bankruptcy,
reorganization, moratorium, delinquency, arrangement, insolvency, readjustment
of debt, dissolution or liquidation law of any jurisdiction whether now or
subsequently in effect; or consents to the filing of any petition against it
under any such law; or consents to the appointment of or taking possession by a
custodian, receiver, conservator, trustee, liquidator, sequestrator or similar
official for Seller or any of its Affiliates or Subsidiaries, or of all or any
part of Seller’s or it Affiliates’ or Subsidiaries’ Property; or makes an
assignment for the benefit of  Seller  or its Affiliates’ or Subsidiaries’
creditors;
 
(i) A custodian, receiver, conservator, liquidator, trustee, sequestrator or
similar official for Seller or any of its Affiliates or Subsidiaries, or of any
of Seller’s or its Affiliate’s or Subsidiaries’ Property (as a debtor or
creditor protection procedure), is appointed or takes possession of such
Property; or Seller or any of its Affiliates or Subsidiaries generally fails to
pay Seller’s or its Affiliates’ or Subsidiaries’ debts as they become due; or
Seller or any of its Affiliates or Subsidiaries is adjudicated bankrupt or
insolvent; or an order for relief is entered under the Bankruptcy Code, or any
successor or similar applicable statute, or any administrative insolvency
scheme, against Seller or any of its Affiliates or Subsidiaries; or any of
Seller’s or any of its Affiliates’ or Subsidiaries Property is sequestered by
court or administrative order; or a petition is filed against Seller or any of
its Affiliates or Subsidiaries under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution, moratorium,
delinquency or liquidation law of any jurisdiction, whether now or subsequently
in effect;
 
(j) Any Governmental Authority or any person, agency or entity acting or
purporting to act under governmental authority shall have taken any action to
condemn, seize or appropriate, or to assume custody or control of, all or any
substantial part of the Property of Seller or any of its Affiliates or
Subsidiaries, or shall have taken any action to displace the management of
Seller or any of its Affiliates or Subsidiaries to curtail its authority in the
conduct of the business of any Seller or any of its Affiliates or Subsidiaries,
or takes any action in the nature of enforcement to remove, limit or restrict
the approval of Seller or any of its Affiliates or Subsidiaries as an issuer,
buyer or a seller/servicer of Loans or securities backed thereby
 
(k) Any Program Document shall for whatever reason (including an event of
default thereunder) be terminated, this Agreement shall for any reason cease to
create a valid, first priority security interest or ownership interest upon
transfer in any of the Purchased Loans or Purchased Items purported to be
covered hereby or any of Seller’s material obligations (including Seller’s
Obligations hereunder) shall cease to be in full force and effect, or the
enforceability thereof shall be contested by Seller;
 
 
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(l) Any Material Adverse Effect shall have occurred with respect to Seller, as
determined by Buyer in its sole discretion;
 
(m) (i) any Person shall engage in any “prohibited transaction” (as defined in
Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any
material “accumulated funding deficiency” (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of Buyer or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is,
in the reasonable opinion of Buyer, likely to result in the termination of such
Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) Seller or any Commonly
Controlled Entity shall, or in the reasonable opinion of Buyer is likely to,
incur any liability in connection with a withdrawal from, or the insolvency or
reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could reasonably be expected to have a Material Adverse
Effect;
 
(n) A Change of Control of  Seller shall have occurred without the prior consent
of Buyer;
 
(o) Seller shall grant, or suffer to exist, any Lien on any Purchased Items
except the Liens contemplated hereby; or the Liens contemplated hereby shall
cease to be first priority perfected Liens on the Purchased Items in favor of
Buyer or shall be Liens in favor of any Person other than Buyer;
 
(p) Reserved.
 
(q) Seller or any Subsidiary or Affiliate of Seller shall experience an “Event
of Default” as defined under any instrument, agreement or contract between
Seller or such other entity, on the one hand, and Buyer or any of Buyer’s
Affiliates on the other; or Seller or any Subsidiary or Affiliate of Seller
shall experience an “Event of Default” as defined under the terms of any
repurchase agreement, loan and security agreement or similar credit facility or
agreement for Indebtedness entered into by Seller, Guarantor or such other
entity and any third party in an amount individually or in the aggregate greater
than $25,000,000, which default or failure entitles any party to require
acceleration or prepayment of such Indebtedness thereunder;
 
(r) Reserved.
 
(s) Seller shall materially fail to service any of the Purchased Loans in
accordance with the terms of this Agreement; or
 
(t)  The Chesapeake 2006-01 Variable Funding Note and Chesapeake 2006-02
Variable Funding Note issued in connection with the Chesapeake Facility shall
not have been renewed by March 4, 2008 in an aggregate amount of at least equal
to $3,900,000,000, less the aggregate amount of gross proceeds paid in
connection with the placement of any of Seller’s term notes on or before such
date;
 
(u) Seller shall at anytime fail to maintain either of the Minimum Servicer
Ratings as set forth in Section 13(ll) herein.
 

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19.  
REMEDIES

 
Upon the occurrence of an Event of Default, Buyer, at its option (which option
shall be deemed to have been exercised immediately upon the occurrence of an
Event of Default pursuant to Section 18(g), (h), (i) or (j) hereof), shall have
the right to exercise any or all of the following rights and remedies:
 
(a)           (i)           The Repurchase Date for each Transaction hereunder
shall, if it has not already occurred, be deemed immediately to occur (provided
that, in the event that the Purchase Date for any Transaction has not yet
occurred as of the date of such exercise or deemed exercise, such Transaction
shall be deemed immediately canceled).  Seller’s obligations hereunder to
repurchase all Purchased Loans at the Repurchase Price therefor on the
Repurchase Date (determined in accordance with the preceding sentence) in such
Transactions shall thereupon become immediately due and payable; all Income then
on deposit in the Collection Account and all Income paid after such exercise or
deemed exercise shall be remitted to and retained by Buyer and applied to the
aggregate Repurchase Price and any other amounts owing by Seller hereunder;
Seller shall immediately deliver to Buyer or its designee any and all original
papers, Servicing Records and files relating to the Purchased Loans subject to
such Transaction then in Seller’s possession and/or control; and all right,
title and interest in and entitlement to such Purchased Loans and Servicing
Rights thereon shall be deemed transferred to Buyer or its designee.
 
(ii)           Buyer shall have the right to (A) sell, on or following the
Business Day following the date on which the Repurchase Price became due and
payable pursuant to Section 19(a)(i) without notice or demand of any kind, at a
public or private sale and at such price or prices as Buyer may deem to be
commercially reasonable for cash or for future delivery without assumption of
any credit risk. Buyer may purchase any or all of the Purchased Assets at any
public or private sale.  Seller shall remain liable to Buyer for any amounts
that remain owing to Buyer following a sale and/or credit under the preceding
sentence.  The proceeds of any disposition of Purchased Loans shall be applied
first to the reasonable costs and expenses incurred by Buyer in connection with
or as a result of an Event of Default; second to costs of cover and/or related
hedging transactions; third to the aggregate Repurchase Prices; and fourth to
all other Obligations.
 
(iii)           Buyer shall have the right to terminate this Agreement and
declare all obligations of Seller to be immediately due and payable, by a notice
in accordance with Section 21 hereof provided no such notice shall be required
for an Event of Default pursuant to Section 18(g), (h), (i) or (j) hereof.
 
(iv)           The parties recognize that it may not be possible to purchase or
sell all of the Purchased Loans on a particular Business Day, or in a
transaction with the same purchaser, or in the same manner because the market
for such Purchased Loans may not be liquid.  In view of the nature of the
Purchased Loans, the parties agree that liquidation of a Transaction or the
underlying Purchased Loans does not require a public purchase or sale and that a
good faith private purchase or sale shall be deemed to have been made in a
commercially reasonable manner.  Accordingly, Buyer may elect the time and
manner of liquidating any Purchased Loan and nothing contained herein shall
obligate Buyer to liquidate any Purchased Loan on the occurrence of an Event of
Default or to liquidate all Purchased Loans in the same manner or on the same
Business Day or constitute a waiver of any right or remedy of
Buyer.  Notwithstanding the foregoing, the parties to this Agreement agree that
the Transactions have been entered into in consideration of and in reliance upon
the fact that all Transactions hereunder constitute a single business and
contractual obligation and that each Transaction has been entered into in
consideration of the other Transactions.
 
 
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(vi)           To the extent permitted by applicable law, the Seller waives all
claims, damages and demands it may acquire against Buyer arising out of the
exercise by Buyer of any of its rights hereunder, other than those claims,
damages and demands arising from the gross negligence or willful misconduct of
Buyer.  If any notice of a proposed sale or other disposition of Purchased Items
shall be required by law, such notice shall be deemed reasonable and proper if
given at least one (1) day before such sale or other disposition.
 
(b) Seller hereby acknowledges, admits and agrees that Seller’s obligations
under this Agreement are recourse obligations of Seller to which Seller pledges
its full faith and credit. In addition to its rights hereunder, Buyer shall have
the right to proceed against any of Seller’s assets which may be in the
possession of Buyer, any of Buyer’s Affiliates or their respective designees
(including the Custodian), including the right to liquidate such assets and to
set-off the proceeds against monies owed by Seller to Buyer pursuant to this
Agreement.  Buyer may set off cash, the proceeds of the liquidation of the
Purchased Loans and Additional Purchased Loans, any other Purchased Items and
their proceeds and all other sums or obligations owed by Buyer to Seller against
all of Seller’s obligations to Buyer, whether under this Agreement, under a
Transaction, or under any other agreement between the parties, or otherwise,
whether or not such obligations are then due, without prejudice to Buyer’s right
to recover any deficiency.
 
(c) Buyer shall have the right to obtain physical possession of the Servicing
Records and all other files of Seller relating to the Purchased Loans and all
documents relating to the Purchased Loans which are then or may thereafter come
into the possession of Seller or any third party acting for Seller and Seller
shall deliver to Buyer such assignments as Buyer shall request.
 
(d) Buyer shall have the right to direct all Persons servicing the Purchased
Loans to take such action with respect to the Purchased Loans as Buyer
determines appropriate.
 
(e) Buyer shall, without regard to the adequacy of the security for the
Obligations, be entitled to the appointment of a receiver by any court having
jurisdiction, without notice, to take possession of and protect, collect,
manage, liquidate, and sell the Purchased Loans and any other Purchased Items or
any portion thereof, collect the payments due with respect to the Purchased
Loans and any other Purchased Items or any portion thereof, and do anything that
Buyer is authorized hereunder or by law to do.  Seller shall pay all costs and
expenses incurred by Buyer in connection with the appointment and activities of
such receiver.
 
(f) Reserved.
 
(g) In addition to all the rights and remedies specifically provided herein,
Buyer shall have all other rights and remedies provided by applicable federal,
state, foreign, and local laws, whether existing at law, in equity or by
statute, including, without limitation, all rights and remedies available to a
purchaser or a secured party, as applicable, under the Uniform Commercial Code.
 
Except as otherwise expressly provided in this Agreement, Buyer shall have the
right to exercise any of its rights and/or remedies without presentment, demand,
protest or further notice of any kind other than as expressly set forth herein,
all of which are hereby expressly waived by Seller.
 
Buyer may enforce its rights and remedies hereunder without prior judicial
process or hearing, and Seller hereby expressly waives, to the extent permitted
by law, any right Seller might otherwise have to require Buyer to enforce its
rights by judicial process.  Seller also waives, to the extent permitted by law,
any defense Seller might otherwise have to the Obligations, arising from use of
nonjudicial process, enforcement and sale of all or any portion of the Purchased
Loans and any other Purchased Items or from any other election of
remedies.  Seller recognizes that nonjudicial remedies are consistent with the
usages of the trade, are responsive to commercial necessity and are the result
of a bargain at arm’s length.
 
 
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Seller shall cause all sums received by it with respect to the Purchased Loans
to be deposited with such Person as Buyer may direct after receipt
thereof.  Seller shall be liable to Buyer for the amount of all expenses (plus
interest thereon at a rate equal to the Post-Default Rate) including, without
limitation, all costs and expenses incurred within thirty (30) days of the Event
of Default in connection with hedging or covering transactions related to the
Purchased Loans, conduit advances and payments for mortgage insurance.
 
20.  
DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE

 
No failure on the part of Buyer to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise by Buyer of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All rights and remedies of Buyer provided for herein are
cumulative and in addition to any and all other rights and remedies provided by
law, the Program Documents and the other instruments and agreements contemplated
hereby and thereby, and are not conditional or contingent on any attempt by
Buyer to exercise any of its rights under any other related document.  Buyer may
exercise at any time after the occurrence of an Event of Default one or more
remedies, as they so desire, and may thereafter at any time and from time to
time exercise any other remedy or remedies.
 
21.  
NOTICES AND OTHER COMMUNICATIONS

 
Except as otherwise expressly permitted by this Agreement, all notices, requests
and other communications provided for herein and under the Custodial Agreement
(including, without limitation, any modifications of, or waivers, requests or
consents under, this Agreement) shall be given or made in writing (including,
without limitation, by telex or telecopy) delivered to the intended recipient at
the “Address for Notices” specified below its name on the signature pages
hereof); or, as to any party, at such other address as shall be designated by
such party in a written notice to each other party. Except as otherwise provided
in this Agreement and except for notices given by Seller under Section 3(a)
(which shall be effective only on receipt), all such communications shall be
deemed to have been duly given when transmitted by telex or telecopier or
personally delivered or, in the case of a mailed notice, upon receipt, in each
case given or addressed as aforesaid.
 
22.  
USE OF EMPLOYEE PLAN ASSETS

 
No assets of an employee benefit plan subject to any provision of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”) shall be used by
either party hereto in a Transaction.
 
23.  
INDEMNIFICATION.

 
(a) Seller agrees to hold Buyer, and its Affiliates and their officers,
directors, employees, agents and advisors (each an “Indemnified Party”) harmless
from and indemnify any Indemnified Party against all liabilities, losses,
damages, judgments, costs and expenses of any kind which may be imposed on,
incurred by or asserted against such Indemnified Party (collectively, the
“Costs”) relating to or arising out of this Agreement, any other Program
Document or any transaction contemplated hereby or thereby, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, any other Program Document or any transaction contemplated
hereby or thereby, that, in each case, results from anything other than any
Indemnified Party’s gross negligence or willful misconduct.  Without limiting
the generality of the foregoing, Seller agrees to hold any Indemnified Party
harmless from and indemnify such Indemnified Party against all Costs with
respect to all Loans relating to or arising out of any violation or alleged
violation of any environmental law, rule or regulation or any consumer credit
laws, including without limitation laws with respect to unfair or deceptive
lending practices and predatory lending practices, the Truth in Lending Act
and/or the Real Estate Settlement Procedures Act, that, in each case, results
from anything other than such Indemnified Party’s gross negligence or willful
misconduct.  In any suit, proceeding or action brought by an Indemnified Party
in connection with any Loan for any sum owing thereunder, or to enforce any
provisions of any Loan, Seller will save, indemnify and hold such Indemnified
Party harmless from and against all expense, loss or damage suffered by reason
of any defense, set-off, counterclaim, recoupment or reduction of liability
whatsoever of the account debtor or obligor thereunder, arising out of a breach
by Seller of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of such account
debtor or obligor or its successors from Seller.  Seller also agrees to
reimburse an Indemnified Party as and when billed by such Indemnified Party for
all such Indemnified Party’s costs and expenses incurred in connection with the
enforcement or the preservation of such Indemnified Party’s rights under this
Agreement, any other Program Document or any transaction contemplated hereby or
thereby, including without limitation the reasonable fees and disbursements of
its counsel.  Seller hereby acknowledges that, the obligations of Seller under
this Agreement are recourse obligations of Seller.
 
 
 
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(b) Seller also agrees not to assert any claim against Buyer or any of its
Affiliates, or any of their respective officers, directors, employees, attorneys
and agents, on any theory of liability, for special, indirect, consequential or
punitive damages arising out of or otherwise relating to the Program Documents,
the actual or proposed use of the proceeds of the Transactions, this Agreement
or any of the transactions contemplated hereby or thereby.  THE FOREGOING
INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY APPLIES, WITHOUT
LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT)
OF THE INDEMNIFIED PARTIES.
 
(c) Without prejudice to the survival of any other agreement of Seller
hereunder, the covenants and obligations of Seller contained in this Section 23
shall survive the payment in full of the Repurchase Price and all other amounts
payable hereunder and delivery of the Purchased Loans by Buyer against full
payment therefor.
 
24.  
WAIVER OF REDEMPTION AND DEFICIENCY RIGHTS

 
Seller hereby expressly waives, to the fullest extent permitted by law, every
statute of limitation on a deficiency judgment, any reduction in the proceeds of
any Purchased Items as a result of restrictions upon Buyer or the Custodian
contained in the Program Documents or any other instrument delivered in
connection therewith, and any right that it may have to direct the order in
which any of the Purchased Items shall be disposed of in the event of any
disposition pursuant hereto.
 
25.  
EXPENSES; REIMBURSEMENT

 
(a)           Seller agrees to pay as and when billed by Buyer all of the out-of
pocket costs and expenses incurred by Buyer in connection with the development,
consummation, administration, preparation and execution of, and any amendment,
supplement or modification to, this Agreement, any other Program Document or any
other documents prepared in connection herewith or therewith including, without
limitation, (i) all the reasonable fees, disbursements and expenses of counsel
to Buyer and (ii) all the due diligence, inspection, testing and review costs
and expenses incurred by Buyer with respect to Purchased Items under this
Agreement, including, but not limited to, those costs and expenses incurred by
Buyer pursuant to Sections 23, 39 and 44 hereof.  If Seller fails to pay when
due any costs, expenses or other amounts payable by it under this Agreement,
including, without limitation, reasonable fees and expenses of counsel and
indemnities, such amount may be paid on behalf of Seller by Buyer, in its sole
discretion and Seller shall remain liable for any such payments by Buyer.  No
such payment by Buyer shall be deemed a waiver of any of Buyer’s rights under
the Program Documents.
 
 
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(b)           All sums reasonably expended by Buyer in connection with the
exercise of any right or remedy provided for herein shall be and remain Seller’s
obligation (unless and to the extent that Seller is the prevailing party in any
dispute, claim or action relating thereto).  Seller agrees to pay, with interest
at the Post-Default Rate to the extent that an Event of Default has occurred,
the reasonable out-of-pocket expenses and reasonable attorneys’ fees incurred by
Buyer and/or the Custodian in connection with the preparation, negotiation,
enforcement (including any waivers), administration and amendment of the Program
Documents (regardless of whether a Transaction is entered into hereunder), the
taking of any action, including legal action, required or permitted to be taken
by Buyer (without duplication to Buyer) and/or the Custodian pursuant thereto,
any “due diligence” or loan agent reviews conducted by Buyer or on its behalf or
by refinancing or restructuring in the nature of a “workout.”
 
(c)           Without prejudice to the survival of any other agreement of Seller
hereunder, the covenants and obligations of Seller contained in this Section 25
shall survive the payment in full of the Repurchase Price and all other amounts
payable hereunder and delivery of the Purchased Loans by Buyer against full
payment therefor.
 
26.  
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 Program Documents, to perfect the
interests of Buyer in the Purchased Items or to better assure and confirm unto
Buyer its rights, powers and remedies hereunder and thereunder.
 
27.  
TERMINATION

 
This Agreement shall remain in effect until the Termination Date.  However, no
such termination shall affect Seller’s outstanding obligations to Buyer at the
time of such termination.
 
28.  
SEVERABILITY

 
If any provision of any Program Document is declared invalid by any court of
competent jurisdiction, such invalidity shall not affect any other provision of
the Program Documents, and each Program Document shall be enforced to the
fullest extent permitted by law.
 
29.  
BINDING EFFECT; GOVERNING LAW

 
This Agreement shall be binding and inure to the benefit of the parties hereto
and their respective successors and assigns, except that Seller may not assign
or transfer any of its respective rights or obligations under this Agreement or
any other Program Document without the prior written consent of Buyer.  THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF (EXCEPT FOR SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
 
 
 
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30.  
AMENDMENTS

 
Except as otherwise expressly provided in this Agreement, any provision of this
Agreement may be modified or supplemented only by an instrument in writing
signed by Seller and Buyer and any provision of this Agreement may be waived by
Buyer.
 
31.  
SUCCESSORS AND ASSIGNS

 
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
 
32.  
SURVIVAL

 
The obligations of Seller under Section 3(h), Section 3(i), Section 5, Section
23 and Section 25 hereof and any other reimbursement or indemnity obligation of
Seller to Buyer pursuant to this Agreement or any other Program Document shall
survive the repurchase of the Loans hereunder and the termination of this
Agreement. In addition, each representation and warranty made, or deemed to be
made by a request for a purchase, herein or pursuant hereto shall survive the
making of such representation and warranty, and Buyer shall not be deemed to
have waived, by reason of purchasing any Loan, any Default that may arise by
reason of such representation or warranty proving to have been false or
misleading, notwithstanding that Buyer may have had notice or knowledge or
reason to believe that such representation or warranty was false or misleading
at the time such purchase was made.
 
33.  
CAPTIONS

 
The table of contents and captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
 
34.  
COUNTERPARTS

 
This Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any of the parties
hereto may execute this Agreement by signing any such counterpart.
 
35.  
SUBMISSION TO JURISDICTION; WAIVERS

 
EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY:
 
(A)           SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND/OR ANY OTHER PROGRAM DOCUMENT, OR FOR
RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE
NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE
FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND APPELLATE COURTS FROM ANY THEREOF;
 
(B)           CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND
AGREES NOT TO PLEAD OR CLAIM THE SAME;
 
 
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(C)           AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR
ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET
FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH BUYER SHALL
HAVE BEEN NOTIFIED; AND
 
(D)           AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
TO SUE IN ANY OTHER JURISDICTION.
 
36.  
WAIVER OF JURY TRIAL

 
EACH OF SELLER AND BUYER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
 
37.  
ACKNOWLEDGEMENTS

 
Seller hereby acknowledges that:
 
(a) it has been advised by counsel in the negotiation, execution and delivery of
this Agreement and the other Program Documents to which it is a party;
 
(b) Buyer has no fiduciary relationship to Seller; and
 
(c) no joint venture exists among or between Buyer and Seller.
 
38.  
HYPOTHECATION OR PLEDGE OF PURCHASED ITEMS. 

 
Buyer shall have free and unrestricted use of all Loans and Purchased Items and
nothing in this Agreement shall preclude Buyer from engaging in repurchase
transactions with the Loans and Purchased Items or otherwise pledging,
repledging, transferring, hypothecating, or rehypothecating the Loans and
Purchased Items, in all cases subject to Buyer’s obligation to reconvey the
Purchased Items (and not substitute therefore) on the Repurchase Date. Nothing
contained in this Agreement shall obligate Buyer to segregate any Loans or
Purchased Items delivered to Buyer by Seller.
 
39.  
ASSIGNMENTS; PARTICIPATIONS.

 
(a) Seller may assign any of its rights or obligations hereunder only with the
prior written consent of Buyer.  Buyer may assign at any time in its sole
discretion all or a portion of its rights and obligations under this Agreement
and the Program Documents; provided, however, that Buyer shall maintain, for
review by Seller upon written request, a register of assignees and a copy of an
executed assignment and acceptance by Buyer and assignee (“Assignment and
Acceptance”), specifying the percentage or portion of such rights and
obligations assigned.  Upon such assignment, (a) such assignee shall be a party
hereto and to each Program Document to the extent of the percentage or portion
set forth in the Assignment and Acceptance, and shall succeed to the applicable
rights and obligations of Buyer hereunder, and (b) Buyer shall, to the extent
that such rights and obligations have been so assigned by it to either (i) an
Affiliate of Buyer which assumes the obligations of Buyer hereunder or (ii) to
another Person which assumes the obligations of Buyer hereunder, be released
from its obligations hereunder accruing thereafter and under the Program
Documents.  The Seller agrees that, for any such assignment, Seller will
cooperate with the prompt execution and delivery of documents reasonably
necessary for such assignment process.  Unless otherwise stated in the
Assignment and Acceptance, Seller shall continue to take directions solely from
Buyer unless otherwise notified by Buyer in writing.  Buyer may distribute to
any prospective assignee any document or other information delivered to Buyer by
Seller.
 
 
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(b) Buyer may, in accordance with applicable law, at any time sell to one or
more entities (“Participants”) participating interests in this Agreement, its
agreement to purchase Loans, or any other interest of Buyer hereunder and under
the other Program Documents.  In the event of any such sale by Buyer of
participating interests to a Participant, Buyer’s obligations under this
Agreement to Seller shall remain unchanged, Buyer shall remain solely
responsible for the performance thereof and Seller shall continue to deal solely
and directly with Buyer in connection with Buyer’s rights and obligations under
this Agreement and the other Program Documents. Seller agrees that if amounts
outstanding under this Agreement are due or unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Buyer under this Agreement; provided, that such Participant shall only be
entitled to such right of set-off if it shall have agreed in the agreement
pursuant to which it shall have acquired its participating interest to share
with Buyer the proceeds thereof.  Buyer also agrees that each Participant shall
be entitled to the benefits of Sections 3(h), 3(i), 23 and 25 with respect to
its participation in the Loans and Purchased Items outstanding from time to
time; provided, that Buyer and all Participants shall be entitled to receive no
greater amount in the aggregate pursuant to such Sections than Buyer would have
been entitled to receive had no such transfer occurred.
 
(c) Buyer may furnish any information concerning Seller or any of its
Subsidiaries in the possession of Buyer from time to time to assignees and
Participants (including prospective assignees and Participants) only after
notifying Seller in writing and securing signed confidentiality statements (a
form of which is attached hereto as Exhibit H) and only for the sole purpose of
evaluating assignments or participations and for no other purpose.
 
(d) Seller agrees to cooperate with Buyer in connection with any such assignment
and/or participation, to execute and deliver replacement notes, and to enter
into such restatements of, and amendments, supplements and other modifications
to, this Agreement and the other Program Documents in order to give effect to
such assignment and/or participation. Seller further agrees to furnish to any
Participant identified by Buyer to Seller copies of all reports and certificates
to be delivered by Seller to Buyer hereunder, as and when delivered to Buyer.
 
40.  
SINGLE AGREEMENT

 
Seller and Buyer acknowledge that, and have entered hereinto and will enter into
each Transaction hereunder in consideration of and in reliance upon the fact
that, all Transactions hereunder constitute a single business and contractual
relationship and have been made in consideration of each other.  Accordingly,
Seller and Buyer each agree (i) to perform all of its obligations in respect of
each Transaction hereunder, and that a default in the performance of any such
obligations shall constitute a default by it in respect of all Transactions
hereunder, and (ii) that payments, deliveries and other transfers made by any of
them in respect of any Transaction shall be deemed to have been made in
consideration of payments, deliveries and other transfers in respect of any
other Transaction hereunder, and the obligations to make any such payments,
deliveries and other transfers may be applied against each other and netted.
 
 
 
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41.  
INTENT

 
Seller and Buyer recognize that each Transaction is a “repurchase agreement” as
that term is defined in Section 101 of Title 11 of the USC, a “securities
contract” as that term is defined in Section 741 of Title 11 of the USC, and a
“master netting agreement” as that term is defined in Section 101 of Title 11 of
the USC.
 
It is understood that Buyer’s right to liquidate the Purchased Loans delivered
to it in connection with the Transactions hereunder or to accelerate or
terminate this Agreement or otherwise exercise any other remedies pursuant to
Section 19 hereof is a contractual right to liquidate, accelerate or terminate
such Transaction as described in Sections 555, 559 and 561 of Title 11 of the
USC.
 
42.  
CONFIDENTIALITY

 
The Program Documents and their respective terms, provisions, supplements and
amendments, and transactions and notices thereunder, are proprietary to Buyer
and shall be held by Seller in strict confidence and shall not be disclosed to
any third party without the consent of Buyer (such consent not to be
unreasonably withheld) except for (i) disclosure to Seller’s direct and indirect
parent companies, directors, attorneys, agents or accountants, provided that
such attorneys or accountants likewise agree to be bound by this covenant of
confidentiality, or are otherwise subject to confidentiality restrictions or
(ii) upon prior written notice to Buyer, disclosure required by law, rule,
regulation or order of a court or other regulatory body or (iii) any disclosures
or filing required under Securities and Exchange Commission (“SEC”) or state
securities’ laws or (iv) such other circumstances as are reasonably within the
discretion of a public company in order to meet its corporate obligations;
provided that in the case of (ii), (iii) and (iv), Seller shall take reasonable
actions to provide Buyer with prior written notice.  Notwithstanding anything
herein to the contrary, each party (and each employee, representative, or other
agent of each party) may disclose to any and all persons, without limitation of
any kind, the tax treatment and tax structure of the transaction and all
materials of any kind (including opinions or other tax analyses) that are
provided to it relating to such tax treatment and tax structure.  For this
purpose, tax treatment and tax structure shall not include (i) the identity of
any existing or future party (or any Affiliate of such party) to this Agreement
or (ii) any specific pricing information or other commercial terms, including
the amount of any fees, expenses, rates or payments arising in connection with
the transactions contemplated by this Agreement.  Buyer acknowledges that this
Agreement may be filed with the Securities and Exchange Commission; provided
that, Seller shall redact any pricing and other confidential provisions,
including, without limitation, the amount of the Commitment Fee, Non Usage Fee,
Price Differential and Purchase Price from such filed Agreement.
 
43.  
SERVICING

 
(a) Seller covenants to maintain or cause the servicing of the Purchased Loans
to be maintained in conformity with Accepted Servicing Practices. In the event
that the preceding language is interpreted as constituting one or more servicing
contracts, each such servicing contract shall terminate automatically upon the
earliest of (i) the occurrence of an Event of Termination, or (ii) an Event of
Default, or (iii) the date on which all the Obligations have been paid in full,
or (iv) the transfer of servicing to any entity approved by Buyer and the
assumption thereof by such entity.
 
(b) During the period Seller is servicing the Purchased Loans, (i) Seller agrees
that Buyer is the owner of all servicing records, including but not limited to
any and all servicing agreements, files, documents, records, data bases,
computer tapes, copies of computer tapes, proof of insurance coverage, insurance
policies, appraisals, other closing documentation, payment history records, and
any other records relating to or evidencing the servicing of such Loans (the
“Servicing Records”), and (ii) Seller grants Buyer a security interest in all
servicing fees and rights relating to the Purchased Loans and all Servicing
Records to secure the obligation of Seller or its designee to service in
conformity with this Section 43 and any other obligation of Seller to
Buyer.  Seller covenants to safeguard such Servicing Records and to deliver them
promptly to Buyer or its designee (including the Custodian) at Buyer’s
request.  It is understood and agreed by the parties that prior to an Event of
Default, Seller shall retain the servicing fees with respect to the Purchased
Loans.
 
 
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(c) If the Loans are serviced by any other third party servicer (such third
party servicer, the “Subservicer”) Seller shall provide a copy of the related
servicing agreement with a properly executed Instruction Letter to Buyer at
least three (3) Business Days prior to the applicable Purchase Date or the date
on which the Subservicer shall begin subservicing the Loans, which shall be in
the form and substance acceptable to Buyer (the “Servicing Agreement”) and shall
have obtained the written consent of Buyer for such Subservicer to subservice
the Loans. Initially, there shall not be any Subservicer.
 
(d) Seller agrees that upon the occurrence of an Event of Default, Buyer may
terminate Seller in its capacity as servicer and terminate any Servicing
Agreement and Seller shall transfer such servicing to Buyer or its designee, at
no cost or expense to Buyer.  In addition, Seller shall provide to Buyer an
Instruction Letter from Seller to the effect that upon the occurrence of an
Event of Default, Buyer may terminate  any Subervicer or Servicing Agreement and
direct that collections with respect to the Loans be remitted in accordance with
Buyer’s instructions.  Seller agrees to cooperate with Buyer in connection with
the transfer of servicing.
 
(e) After the Purchase Date, until the Repurchase Date, Seller will have no
right to modify or alter the terms of the Loan or consent to the modification or
alteration of the terms of any Loan, and Seller will have no obligation or right
to repossess any Loan or substitute another Loan, except as provided in any
Custodial Agreement.
 
(f) Seller shall permit Buyer to inspect upon reasonable prior written notice at
a mutually convenient time, Seller’s or its Affiliate’s servicing facilities, as
the case may be, for the purpose of satisfying Buyer that Seller or its
Affiliate, as the case may be, has the ability to service the Loans as provided
in this Agreement.  In addition, with respect to any Subservicer which is not an
Affiliate of Seller, Seller shall use its best efforts to enable Buyer to
inspect the servicing facilities of such Subservicer.
 
(g) With respect to the Additional Collateral Loans that are Purchased Loans
hereunder:
 
(i) Pursuant to the related Additional Collateral Servicing Agreement, the
related Additional Collateral shall be maintained and serviced by the Additional
Collateral Servicer in accordance with Accepted Servicing Practices.
 
(ii) Pursuant to the related Additional Collateral Servicing Agreement, the
Additional Collateral Servicer, at its own cost and expense, shall administer
the Additional Collateral and the Account Agreement for the benefit of Buyer (i)
in a prudent and non-negligent manner and in accordance with the procedures it
employs to administer Securities Accounts for its own benefit (as the same may
be amended from time to time); (ii) in accordance with the terms of the related
Account Agreements, the applicable Loan Documents and this Agreement; and (iii)
in accordance with applicable law;
 
(iii) Buyer will cooperate with the Seller to transfer to the Buyer the coverage
of the Surety Bond in respect of the Additional Collateral Loans;
 
 
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(iv) Pursuant to the related Additional Collateral Servicing Agreement, the
Additional Collateral Servicer shall use its best efforts to realize upon any
related Additional Collateral for such of the Additional Collateral Loans as
come into and continue in default and as to which no satisfactory arrangements
can be made for collection of delinquent payments; provided that the Seller
shall not obtain title to any such Additional Collateral as a result of or in
lieu of the disposition thereof or otherwise; and provided further that (i) the
Additional Collateral Servicer shall not proceed with respect to such Additional
Collateral in any manner that would impair the ability to recover against the
related Mortgaged Property, and (ii) the Seller shall proceed with any
acquisition of real-estate owned property in a manner that preserves the ability
to apply the proceeds of such Additional Collateral against amounts owed under
the defaulted Loan. Any proceeds realized from such Additional Collateral (other
than amounts to be released to the Mortgagor or the related guarantor in
accordance with procedures that the Seller would follow in servicing loans held
for its own account, subject to the terms and conditions of the related Mortgage
and Note and to the terms and conditions of any security agreement, guarantee
agreement, mortgage or other agreement governing the disposition of the proceeds
of such Additional Collateral) shall be remitted to the Buyer; provided, that
such proceeds shall not be so deposited if the Required Surety Payment in
respect of such Additional Collateral Loan has been otherwise paid to the Buyer
(except to the extent of any such proceeds taken into account in calculating the
amount of the Required Surety Payment).
 
(v) With respect to each Additional Collateral Loan sold to Buyer under this
Agreement, the Seller, as Servicer, will assign, on the related Purchase Date,
to the Buyer its security interest in and to any related Additional Collateral,
all of its rights in each related Account Agreement, its right to receive
amounts due or to become due in respect of any related Additional Collateral and
its rights as beneficiary under the related Surety Bond in respect of any
Additional Collateral Loans;
 
(vi) The Seller’s obligations to administer the Securities Accounts shall
terminate upon termination of the related Account Agreement. Buyer acknowledges
coverage under the terms and provisions of the related Surety Bond as to any
particular Additional Collateral Loan shall terminate upon termination of the
related Account Agreement; provided, however, that such termination shall not
affect claims arising under this Agreement or the related Surety Bond prior to
the date of termination of the related Account Agreement; and
 
(vii) If a Required Surety Payment is payable pursuant to the related Surety
Bond with respect to any Additional Collateral Loan as determined by the Seller,
as servicer, the Additional Collateral Servicer shall so notify the related
Surety Bond Issuer promptly.  Seller shall cause the prompt completion of any
necessary documentation relating to the related Surety Bond and shall cause the
prompt submission of such documentation to the related Surety Bond Issuer as a
claim for a required surety.  Buyer shall execute such documentation if
requested by Seller.
 
44.  
PERIODIC DUE DILIGENCE REVIEW

 
Seller acknowledges that Buyer has the right to perform continuing due diligence
reviews with respect to the Loans, for purposes of verifying compliance with
Buyer’s valuation, underwriting, credit and compliance standards and the
representations, warranties, covenants and specifications made hereunder or
under any other Program Document, or otherwise, and Seller agrees that upon
reasonable (but no less than one (1) Business Day’s) prior notice to Seller
(provided that upon the occurrence of a Default or an Event of Default, no such
prior notice shall be required), Buyer or its authorized representatives will be
permitted during normal business hours to examine, inspect, make copies of, and
make extracts of, the Mortgage Files, the Servicing Records and any and all
documents, records, agreements, instruments or information relating to such
Loans in the possession, or under the control, of Seller and/or the Custodian.
Seller also shall make available to Buyer a knowledgeable financial or
accounting officer for the purpose of answering questions respecting the
Mortgage Files and the Loans. Without limiting the generality of the foregoing,
Seller acknowledges that Buyer shall purchase Loans from Seller based solely
upon the information provided by Seller to Buyer in the Loan Schedule and the
representations, warranties and covenants contained herein, and that Buyer, at
its option, has the right, at any time to conduct a partial or complete due
diligence review on some or all of the Purchased Loans, including, without
limitation, ordering new credit reports, new appraisals on the related Mortgaged
Properties and otherwise re-generating the information used to originate such
Loan.  Buyer may underwrite such Loans itself or engage a third party
underwriter to perform such underwriting.  Seller agrees to cooperate with Buyer
and any third party underwriter in connection with such underwriting, including,
but not limited to, providing Buyer and any third party underwriter with access
to any and all documents, records, agreements, instruments or information
relating to such Loans in the possession, or under the control, of Seller. In
addition, Buyer has the right to perform continuing Due Diligence Reviews of
Seller and its Affiliates, directors, and their respective Subsidiaries and the
officers, employees and significant shareholders thereof.  Seller and Buyer
further agree that all reasonable out-of-pocket costs and expenses incurred by
Buyer in connection with Buyer’s activities pursuant to this Section 44 shall be
paid by Seller.
 
 
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45.  
SET-OFF

 
In addition to any rights and remedies of Buyer provided by this Agreement and
by law, Buyer shall have the right, without prior notice to Seller, any such
notice being expressly waived by Seller to the extent permitted by applicable
law, upon any amount becoming due and payable by Seller hereunder (whether at
the stated maturity, by acceleration or otherwise) to set-off and appropriate
and apply against such amount any and all Property and deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by Buyer or any Affiliate thereof to or for the credit or the account of
Seller or any Affiliate of Seller.  Buyer may set-off cash, the proceeds of the
liquidation of any Purchased Items and all other sums or obligations owed by
Buyer or its Affiliates to Seller or any of its Affiliates against all of
Seller’s or any of its Affiliates obligations to Buyer or its Affiliates,
whether under this Agreement or under any other agreement between Seller  or any
Affiliate of Seller and Buyer or any Affiliate of Buyer, or otherwise, whether
or not such obligations are then due, without prejudice to Buyer’s or its
Affiliate’s right to recover any deficiency.  Buyer agrees promptly to notify
Seller after any such set-off and application made by Buyer; provided that the
failure to give such notice shall not affect the validity of such set-off and
application. Notwithstanding anything contained within this Section 45, the
terms of this Section 45 shall not apply to any of the Chesapeake Facilities.
 
46.  
ENTIRE AGREEMENT

 
This Agreement and the other Program Documents embody the entire agreement and
understanding of the parties hereto and thereto and supersede any and all prior
agreements, arrangements and understandings relating to the matters provided for
herein and therein.  No alteration, waiver, amendments, or change or supplement
hereto shall be binding or effective unless the same is set forth in writing by
a duly authorized representative of each party hereto.
 
[SIGNATURE PAGE FOLLOWS]
 
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
 

PHH MORTGAGE CORPORATION, a New Jersey corporation, as Seller
By:  /s/ Mark E. Johnson
Name:                      Mark E. Johnson
Title:                      Vice President and Treasurer
 
 
Address for Notices:
 
3000 Leadenhall Road
Mount Laurel, New Jersey 08054
Attention: Mark Johnson, Vice President and Treasurer
Telephone: (856) 917-0183
Fax:  (856) 917-0107
     
CITIGROUP GLOBAL MARKETS REALTY CORP., as Buyer and Agent, as applicable
By:  /s/ Perry J. DeFelice, Jr.
Name:                      Perry J. DeFelice, Jr.
Title:                      Authorized Signatory
 
 
Address for Notices:
 
Citigroup Global Markets Realty Corp.
390 Greenwich Street
New York, New York  10013
Attention: Bobbie Theivakumaran
Telephone: (212) 723-6753
Fax:  (212) 723-8604
 

 
 
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