Exhibit 10.4

POOL 2 EXCESS MSR ACQUISITION and RECAPTURE AGREEMENT

by and between

FREEDOM MORTGAGE CORPORATION

(Seller)

and

CHERRY HILL MORTGAGE INVESTMENT CORP.

(Purchaser)

Dated as of October 9, 2013

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TABLE OF CONTENTS

 

         Page  

ARTICLE I

  DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES      2   

Section 1.01

  Definitions      2   

Section 1.02

  General Interpretive Principles      12   

ARTICLE II

  Purchase and sale      13   

Section 2.01

  Sale of Excess MSRs      13   

Section 2.02

  Grant of Security Interest      13   

Section 2.03

  Closing Date Transactions      14   

ARTICLE III

  RECAPTURE PROVISIONS      14   

Section 3.01

  Refinancing and Substitution of Mortgage Loans      14   

Section 3.02

  Requirement to Designate Additional Mortgage Loans      14   

Section 3.03

  Criteria for Additional Mortgage Loans      15   

Section 3.04

  Assignment of Excess MSRs      16   

ARTICLE IV

  PAYMENTS AND DISTRIBUTIONS      17   

Section 4.01

  Distributions      17   

Section 4.02

  Withdrawals from the Reserve Account      18   

Section 4.03

  Investment of Funds in the Reserve Account      18   

Section 4.04

  Payment to Seller of Base Servicing Fee      18   

Section 4.05

  Intent and Characterization      18   

ARTICLE V

  REPRESENTATIONS AND WARRANTIES OF SELLER      19   

Section 5.01

  Due Organization and Good Standing      19   

Section 5.02

  Authority and Capacity      19   

Section 5.03

  Agency Consents      20   

Section 5.04

  Title to the Mortgage Servicing Rights      20   

Section 5.05

  Effective Agreements      20   

Section 5.06

  No Accrued Liabilities      20   

Section 5.07

  Seller/Servicer Standing      20   

Section 5.08

  MERS Membership      20   

Section 5.09

  Agency Set-off Rights      21   

Section 5.10

  Solvency      21   

Section 5.11

  Obligations with Respect to Origination      21   

Section 5.12

  No Actions      21   

Section 5.13

  No Purchaser Responsibility      21   

Section 5.14

  Representations Concerning the Excess MSRs      22   

Section 5.15

  Accuracy of Servicing Information      22   

 

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ARTICLE VI

  REPRESENTATIONS AND WARRANTIES OF PURCHASER      22   

Section 6.01

  Due Organization and Good Standing      22   

Section 6.02

  Authority and Capacity      23   

Section 6.03

  Effective Agreements      23   

Section 6.04

  Sophisticated Investor      23   

Section 6.05

  No Actions      23   

ARTICLE VII

  SELLER COVENANTS      24   

Section 7.01

  Servicing Obligations      24   

Section 7.02

  Cooperation; Further Assurances      24   

Section 7.03

  Financing Statements      24   

Section 7.04

  Supplemental Information      25   

Section 7.05

  Access to Information      25   

Section 7.06

  Home Affordable Modification Program      25   

Section 7.07

  Distribution Date Data Tapes and Reports      26   

Section 7.08

  Financial Statements and Officer’s Certificates      27   

Section 7.09

  Make Whole Calculation      28   

Section 7.10

  Timely Payment of Agency Obligations      28   

Section 7.11

  Servicing Agreements      28   

Section 7.12

  Transfer of Mortgage Servicing Rights      29   

Section 7.13

  Consents to Transaction Documents      29   

Section 7.14

  Notification of Certain Events      29   

Section 7.15

  Financing; Pledge of Excess MSRs      29   

Section 7.16

  Existence, etc.      30   

Section 7.17

  Selection of, or Consent to, Successor Sub-Servicer      30   

Section 7.18

  Non-petition Covenant      30   

Section 7.19

  Insurance      31   

Section 7.20

  Defense of Title      31   

ARTICLE VIII

  CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER      31   

Section 8.01

  Correctness of Representations and Warranties      31   

Section 8.02

  Compliance with Conditions      31   

Section 8.03

  Corporate Resolution      31   

Section 8.04

  No Material Adverse Change      32   

Section 8.05

  Consents      32   

Section 8.06

  Delivery of Transaction Documents      32   

Section 8.07

  Certificate of Seller      33   

Section 8.08

  No Actions or Proceedings      33   

Section 8.09

  Fees, Costs and Expenses      33   

Section 8.10

  Valuation      33   

ARTICLE IX

  CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER      33   

Section 9.01

  Correctness of Representations and Warranties      33   

Section 9.02

  Compliance with Conditions      33   

Section 9.03

  Corporate Resolution      34   

 

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Section 9.04

  No Material Adverse Change      34   

Section 9.05

  Certificate of Purchaser      34   

Section 9.06

  Good Standing Certificate of Purchaser      34   

ARTICLE X

  INDEMNIFICATION; CURE      34   

Section 10.01

  Indemnification by Seller      34   

Section 10.02

  Indemnification by Purchaser      36   

ARTICLE XI

  MISCELLANEOUS      37   

Section 11.01

  Costs and Expenses      37   

Section 11.02

  Payment Adjustments      37   

Section 11.03

  Term and Termination      37   

Section 11.04

  Relationship of Parties      37   

Section 11.05

  Notices      38   

Section 11.06

  Waivers      38   

Section 11.07

  Entire Agreement; Amendment      38   

Section 11.08

  Binding Effect      38   

Section 11.09

  Headings      38   

Section 11.10

  Governing Law      39   

Section 11.11

  Submission to Jurisdiction; Waiver      39   

Section 11.12

  Waivers, etc.      39   

Section 11.13

  Incorporation of Exhibits      40   

Section 11.14

  Counterparts      40   

Section 11.15

  Severability of Provisions      40   

Section 11.16

  Assignment      40   

Section 11.17

  Certain Acknowledgements      41   

EXHIBITS

 

Exhibit A – Form of Assignment Agreement    A-1 Exhibit B – Schedule of Mortgage
Loans    B-1 Exhibit C – Location of Credit Files    C-1 Exhibit D – Form of
Summary Remittance Report    D-1 Exhibit E – Form of Delinquency Report    E-1
Exhibit F – Form of Disbursement Report    F-1 Exhibit H – Seller Jurisdictions
and Recording Offices    H-1 Exhibit I – List of Required Fields on Data Tape   
I-1

 

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POOL 2 EXCESS MSR ACQUISITION and RECAPTURE AGREEMENT

THIS POOL 2 EXCESS MSR ACQUISITION and RECAPTURE AGREEMENT, dated as of October
9, 2013, is by and between Cherry Hill Mortgage Investment Corp., a Maryland
corporation (together with its successors and permitted assigns, “Purchaser”),
and Freedom Mortgage Corporation, a New Jersey corporation (together with its
successors and permitted assigns, “Seller”).

W I T N E S S E T H:

WHEREAS, Seller originates and services residential mortgage loans and is
entitled to a servicing spread and other incidental fees with respect to those
residential mortgage loans;

WHEREAS, the servicing spread exceeds the compensation that Seller requires to
service the related residential mortgage loans;

WHEREAS, Seller desires to sell, and Purchaser desires to purchase, a portion of
the servicing spread that exceeds such required compensation amount;

WHEREAS, Purchaser and Seller desire to set forth the terms and conditions
pursuant to which Seller will sell, transfer and assign to Purchaser, all of
Seller’s right, title and interest in and to a portion of the servicing spread
that exceeds the Seller’s required compensation amount, and Purchaser will
purchase all right, title and interest in and to such portion of the servicing
spread;

WHEREAS, Seller desires to retain the right to refinance the residential
mortgage loans subject to this Agreement, and Purchaser is willing to grant such
right, as long as the newly-originated residential mortgage loans and, in
certain cases, additional residential mortgage loans are included in this
Agreement in replacement of the refinanced residential mortgage loans as
described herein; and

WHEREAS, Purchaser and Seller desire to set forth the conditions under which
Seller may refinance the residential mortgage loans with respect to which Seller
sold a portion of its servicing spread to Purchaser.

NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows.

 

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ARTICLE I

DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES

Section 1.01 Definitions.

Whenever used herein, the following words and phrases shall have the following
meanings:

Accepted Servicing Practices: With respect to any Mortgage Loan, those mortgage
servicing practices (including collection procedures) of prudent mortgage
lending institutions that service mortgage loans of the same type as the
Mortgage Loans in the jurisdictions in which the Mortgaged Properties are
located and which are in accordance with Agency servicing practices and
procedures as set forth in the applicable Servicing Agreements, and in a manner
at least equal in quality to the servicing that Seller provides for mortgage
loans which it owns in its own portfolio.

Acknowledgment Agreement: The acknowledgment agreement by and among the Agency,
Seller and Purchaser, in form and substance reasonably acceptable to such
Persons, dated on or before the Closing Date, pursuant to which, among other
things, the Agency acknowledges the Purchaser’s security interest in the Excess
MSRs and any other arrangements specified therein.

Additional Mortgage Loan: A Mortgage Loan for which the applicable Sold
Percentage of the related Excess MSR is assigned to Purchaser in total or
partial satisfaction of the Make Whole Amount.

Agency: Ginnie Mae, or any successor thereto.

Agreement: This agreement, as the same may be amended in accordance with the
terms hereof.

Agreement Date: The date first set forth above.

Ancillary Income: All incidental fees that are supplemental to the servicing
spread payable to the servicer pursuant to the Servicing Agreements, including
without limitation, late fees, assignment transfer fees, returned check fees,
special services fees, amortization schedule fees, HAMP fees, modification and
incentive income and any interest or earnings on funds deposited in an account
maintained by Seller as servicer with respect to the Mortgage Loans.

Applicable Law: With reference to any Person, all laws (including common law),
statutes, regulations, ordinances, treaties, judgments, decrees, injunctions,
writs and orders of any court, governmental agency or authority and rules,
regulations, orders, directives, licenses and permits of any Governmental
Authority applicable to such Person or its property or in respect of its
operations.

Approved Valuation Firm: Any valuation firm that has been approved by the
Independent Directors and that is agreed to by Seller and Purchaser.

 

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ARM: A mortgage loan the interest rate on which is subject to adjustment in
accordance with the related mortgage note.

Assignment Agreement: An agreement substantially in the form of Exhibit A to
this Agreement or in such other form as mutually agreed upon by the Parties.

Assignment Date: With respect to a Refinanced Mortgage Loan and the related New
Mortgage Loan, the first day of the second month after the month in which the
related Refinancing Date occurred. With respect to any Additional Mortgage Loan,
the first day of the Calculation Period beginning after the Calculation Period
with respect to which the applicable Make Whole Amount was calculated.

Bank: The financial institution mutually agreed upon by Seller and Purchaser,
acting in its capacity as “Bank” under the Reserve Account Control Agreement.

Base Servicing Fee: With respect to a Collection Period, an amount equal to the
aggregate, for each Mortgage Loan, of the product of (A) the outstanding
principal balance of such Mortgage Loan as of the related Measurement Date,
(B) the related Base Servicing Fee Rate and (C) (i) in the case of the initial
Collection Period, a fraction, the numerator of which is the number of days in
the period from and including the Closing Date to and including the last day of
the initial Collection Period, and the denominator of which is 360, and (ii) in
the case of all other Collection Periods, 1/12th; provided, however, that the
Base Servicing Fee with respect to any Mortgage Loan (i) that is prepaid in full
or (ii) whose Servicing Agreement is terminated during a Collection Period shall
be pro-rated based on the actual number of days within such Collection Period in
which such Mortgage Loan was serviced by Seller; and provided further, that
payment of the Base Servicing Fee for any delinquent Mortgage Loan shall be
suspended unless and until Seller recovers the amount thereof from payments in
respect thereof by the Mortgagor or the amount thereof is otherwise recovered
from the liquidation of the related Mortgaged Property.

Base Servicing Fee Rate: For each Initial Loan and each New Mortgage Loan,
Substitute Mortgage Loan and Additional Mortgage Loan that is an ARM, 0.10% per
annum. For each New Mortgage Loan, Substitute Mortgage Loan and Additional
Mortgage Loan that is a Fixed Rate Mortgage Loan, 0.08% per annum.

Business Day: Any day other than (a) a Saturday or Sunday, (b) a day on which
banking institutions in the States of New Jersey or New York are authorized or
obligated by law or by executive order to be closed or (c) such other days as
agreed upon by the Parties.

Calculation Period: Each calendar quarter during the term of this Agreement
beginning (x) in the case of the first such period, on the first day of the
month in which the Closing Date occurs, and (y) in the case of each subsequent
period, on the first day of the month occurring after the end of the prior
period.

Closing Date: October 9, 2013 or such other date as Seller and Purchaser shall
agree.

Code: The Internal Revenue Code of 1986, as amended from time to time.

 

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Collateral: The meaning given to such term in Section 2.02.

Collection Period: With respect to any Distribution Date, the calendar month
preceding the month in which such Distribution Date occurs.

Control: The meaning specified in Section 8-106 of the UCC.

Credit File: Those documents, which may be originals, copies or electronically
imaged, pertaining to each Mortgage Loan, held by or on behalf of Seller in
connection with the servicing of the Mortgage Loan, which may include Mortgage
Loan Documents and the credit documentation relating to the origination of such
Mortgage Loan, and any documents gathered during the Servicing of a Mortgage
Loan.

Data Tape: Each tape accompanying an Assignment Agreement and containing the
information specified in Exhibit I with respect to the related Mortgage Loans
underlying the Excess MSRs that are subject to this Agreement.

Distribution Date: The sixth (6th) Business Day of each calendar month beginning
in the month following the month in which the Closing Date occurs, or such other
day as mutually agreed upon by Seller and Purchaser.

Electronic Data File: A computer tape or other electronic medium in form and
substance reasonably satisfactory to Purchaser generated by or on behalf of
Seller and delivered or transmitted on each Distribution Date to Purchaser or
its designee which provides information relating to the Mortgage Loans.

Eligible Investments: Any one or more of the obligations and securities listed
below which investment provides for a date of maturity not later than the
Distribution Date in each month or is payable on demand:

(1) direct obligations of, and obligations fully guaranteed as to timely payment
of principal and interest by, the United States of America or any agency or
instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America (“Direct
Obligations”);

(2) federal funds, or demand and time deposits in, certificates of deposits of,
or bankers’ acceptances issued by, any depository institution or trust company
(including U.S. subsidiaries of foreign depositories) incorporated or organized
under the laws of the United States of America or any state thereof and subject
to supervision and examination by federal or state banking authorities, so long
as at the time of investment or the contractual commitment providing for such
investment the commercial paper or other short term debt obligations of such
depository institution or trust company (or, in the case of a depository
institution or trust company which is the principal subsidiary of a holding
company, the commercial paper or other short term debt or deposit obligations of
such holding company or deposit institution, as the case may be) have been rated
by at least one nationally recognized statistical rating organization (“NRSRO”)
in its highest short-term rating category or one of its two highest long-term
rating categories;

 

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(3) repurchase agreements collateralized by Direct Obligations or securities
guaranteed by Fannie Mae or Freddie Mac with any registered broker/dealer
subject to Securities Investors’ Protection Corporation jurisdiction or any
commercial bank insured by the Federal Deposit Insurance Corporation, if such
broker/dealer or bank has an uninsured, unsecured and unguaranteed obligation
rated by at least one NRSRO in its highest short-term rating category;

(4) securities bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States of America or any state thereof
which have a credit rating from at least one NRSRO, at the time of investment or
the contractual commitment providing for such investment NRSRO provided,
however, that such securities will not be Eligible Investments if they are
published as being under review with negative implications from any NRSRO;

(5) commercial paper (including both non-interest-bearing discount obligations
and interest bearing obligations payable on demand or on a specified date not
more than 180 days after the date of issuance thereof) rated by any NRSRO in its
highest short-term rating category;

(6) certificates or receipts representing direct ownership interests in future
interest or principal payments on obligations of the United States of America or
its agencies or instrumentalities (which obligations are backed by the full
faith and credit of the United States of America) held by a custodian in
safekeeping on behalf of the holders of such receipts; and

(7) any other demand, money market, common trust fund or time deposit or
obligation, or interest bearing or other security or investment, rated, if
applicable, in the highest rating category by any NRSRO. Such investments in
this subsection (7) may include money market mutual funds or a common trust
fund, and such funds may be managed by the Bank or one of its Affiliates;
provided, however, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest payments
with respect to the obligations underlying such instrument, or (ii) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations.

Eligible Servicing Agreement: Unless otherwise agreed to by Purchaser, a
Servicing Agreement in respect of which the following eligibility requirements
have been satisfied:

(a) such Servicing Agreement is in full force and effect, and is in all respects
genuine as appearing on its face or as represented in the books and records of
Seller, and no event of default, early amortization event, termination event, or
other event giving any party thereto

 

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(including with notice or lapse of time or both) the right to terminate Seller
as servicer thereunder for cause has occurred and is continuing; provided,
however, that with respect to any Servicing Agreement and the occurrence of any
event set forth in this clause (a) which is based on a breach of a collateral
performance test, such Servicing Agreement shall remain an Eligible Servicing
Agreement so long as no notice of termination based on such breach has been
given or threatened in writing and subject to the restrictions set forth herein;
and

(b) Seller has not resigned or been terminated as servicer under such Servicing
Agreement and has no actual knowledge of any pending or threatened action to
terminate Seller, as servicer (whether for cause or without cause).

Entitlement Holder: The meaning specified in Section 8-102(a)(7) of the UCC.

Excess MSRs: The rights of Seller, severable from each (and all) of the other
rights under the applicable Servicing Agreements, to the sum, for each Mortgage
Loan, of the portion of the Servicing Spread Collections attributable to such
Mortgage Loan that exceeds the Base Servicing Fee for such Mortgage Loan.

Excess Servicing Fee Rate: As to any Mortgage Loan, the excess of the Gross
Servicing Fee Rate for such Mortgage Loan over the Base Servicing Fee Rate for
such Mortgage Loan.

Fannie Mae: The Federal National Mortgage Association or any successor thereto.

Fixed Rate Mortgage Loan: A mortgage loan the interest rate on which is fixed
for the life of the loan.

Freddie Mac: The Federal Home Loan Mortgage Corporation or any successor
thereto.

GAAP: Generally accepted accounting principles in the United States of America
as in effect from time to time set forth in the opinions and pronouncements of
the Accounting Principles Board and the American Institute of Certified Public
Accountants and the statements and pronouncements of the Financial Accounting
Standards Board, or in such other statements by such other entity as may be in
general use by significant segments of the accounting profession, that are
applicable to the circumstances as of the date of determination.

Ginnie Mae: Government National Mortgage Association, or any successor thereto.

Governmental Authority: 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.

Grant: To grant, bargain, sell, warrant, alienate, remise, demise, release,
convey, assign, transfer, mortgage, pledge, create and grant a security interest
in and right of setoff against, deposit, set over or confirm.

 

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Gross Servicing Fee Rate: As to any Mortgage Loan, the annual rate at which the
servicing fee is calculated for such Mortgage Loan, determined as provided in
the related Servicing Agreement.

HAMP: The U.S. Department of the Treasury’s Home Affordable Modification
Program.

HAMP Loans: Mortgage Loans that have been modified or will be modified in
accordance with HAMP.

Independent Directors: The non-executive officer members of Purchaser’s board of
directors.

Initial Mortgage Loans: The Mortgage Loans identified on the Schedule of
Mortgage Loans attached to the Assignment Agreement that is delivered on the
Closing Date.

IRS: The United States Internal Revenue Service.

Lien: Any mortgage, deed of trust, pledge, hypothecation, collateral assignment,
charge, deposit, arrangement, encumbrance, lien (statutory or other), security
interest or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever intended to assure payment of any
indebtedness or the performance of any other obligation, including any
conditional sale or other title retention agreement.

Loss or Losses: Any and all direct, actual and out-of-pocket losses (including
any loss in the value of the Excess MSRs), damages, deficiencies, claims, costs
or expenses, including reasonable attorneys’ fees and disbursements, excluding
(i) any amounts attributable to or arising from overhead allocations, general or
administrative costs and expenses, or any cost for the time of any Party’s
employees, (ii) consequential losses or damages consisting of speculative lost
profits, lost investment or business opportunity, damage to reputation or
operating losses, or (iii) punitive or treble damages; provided, however, that
the exclusions set forth in clauses (ii) or (iii) above do not apply if and to
the extent any such amounts are actually incurred in payment to a third party or
Governmental Authority.

Make Whole Amount: For any Calculation Period, an amount equal to the sum, for
each Mortgage Loan that became a Refinanced Mortgage Loan during such
Calculation Period, of the product of (x) the applicable Sold Percentage for
such Refinanced Mortgage Loan, and (y) 90% of the excess, if any, of (i) the
product of the Excess Servicing Fee Rate of such Refinanced Mortgage Loan and
the unpaid principal balance of such Refinanced Mortgage Loan as of its
Refinancing Date over (ii) the product of the Excess Servicing Fee Rate of the
related New Mortgage Loan and the original principal balance of such New
Mortgage Loan.

Measurement Date: With respect to any Collection Period, the first day of such
Collection Period.

MERS: Mortgage Electronic Registration Systems, Inc., or any successor thereto.

 

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MI: Insurance provided by private mortgage insurance companies to make payments
on certain Mortgage Loans in the event that the related Mortgagor defaults in
its obligation in respect of the Mortgage.

Mortgage: Each of those mortgages, deeds of trust, security deeds or deeds to
secure debt creating a first lien on or an interest in real property securing a
Mortgage Note and related to a Mortgage Loan.

Mortgage Loan: A loan originated by Seller that is secured by a mortgage, deed
of trust or similar instrument on a one- to four-family residence and that is
listed on a Schedule of Mortgage Loans delivered pursuant to this Agreement.

Mortgage Loan Documents: With respect to each Mortgage Loan, the documents and
agreements related to such Mortgage Loan required to be held by the applicable
custodian, including, without limitation, the original Mortgage Note, and any
other documents or agreements evidencing and/or governing such Mortgage Loan.

Mortgage Note: With respect to any Mortgage Loan, the note or other evidence of
indebtedness of the Mortgagor, thereunder, including, if applicable, an allonge
and lost note affidavit.

Mortgage Servicing Rights: The rights and responsibilities of Seller with
respect to servicing the Mortgage Loans under the Servicing Agreements,
including any and all of the following if and to the extent provided therein:
(a) all rights to service a Mortgage Loan; (b) all rights to receive servicing
fees, Ancillary Income, reimbursements or indemnification for servicing the
Mortgage Loan, and any payments received in respect of the foregoing and
proceeds thereof; (c) the right to collect, hold and disburse escrow payments or
other payments with respect to the Mortgage Loan and any amounts actually
collected with respect thereto and to receive interest income on such amounts to
the extent permitted by Applicable Law; (d) all accounts and other rights to
payment related to any of the property described in this paragraph;
(e) possession and use of any and all Credit Files pertaining to the Mortgage
Loan or pertaining to the past, present or prospective servicing of the Mortgage
Loan; (f) to the extent applicable, all rights and benefits relating to the
direct solicitation of the related Mortgagors for refinance or modification of
the Mortgage Loans and attendant right, title and interest in and to the list of
such Mortgagors and data relating to their respective Mortgage Loans; and
(g) all rights, powers and privileges incident to any of the foregoing.

Mortgaged Property: The Mortgagor’s real property, securing repayment of a
related Mortgage Note, consisting of an interest in a single parcel of real
property, improved by a one- to four-family residential dwelling.

Mortgagor: An obligor under a residential mortgage loan.

New Mortgage Loan: A Mortgage Loan that would meet the criteria for an
Additional Mortgage Loan the proceeds of which were used, in whole or in part,
to prepay the related Refinanced Mortgage Loan.

 

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Non-qualifying Income: Any amount that is treated as gross income for purposes
of Section 856 of the Code and which is not Qualifying Income.

Opinion of Counsel: One or more written opinions, in form and substance
reasonably satisfactory to the recipient, of an attorney at law admitted to
practice in any state of the United States or the District of Columbia, which
attorney may be counsel for Seller or Purchaser, as the case may be.

Party or Parties: Either Seller or Purchaser, as the context may require, or
both of Seller and Purchaser.

Permitted Liens: Liens in favor of the Agency required pursuant to the
applicable Servicing Agreements.

Person: Any individual, partnership, corporation, limited liability company,
limited liability partnership, business entity, joint stock company, trust,
business trust, unincorporated organization, association, enterprise, joint
venture, government, any department or agency of any government or any other
entity of whatever nature.

Prime Rate: The prime rate announced to be in effect from time to time, as
published as the average rate in The Wall Street Journal.

Purchase Price: $38,406,794.68.

Purchaser: As defined in the preamble hereof.

Purchaser Indemnitees: The meaning given to such term in Section 10.01(a).

Qualifying Income: Gross income that is described in Section 856(c)(2) or
856(c)(3) of the Code.

Refinanced Interest Payment: For any New Mortgage Loan, an amount equal to the
applicable Sold Percentage of interest accrued at the related Excess Servicing
Fee Rate on the unpaid principal balance of such New Mortgage Loan for the
period from the Refinancing Date for the related Refinanced Mortgage Loan to the
Assignment Date for such New Mortgage Loan.

Refinanced Mortgage Loan: A Mortgage Loan that is refinanced by Seller through
its retail channel during the term of the Agreement.

Refinancing Date: The date on which a Refinanced Mortgage Loan is prepaid by the
related New Mortgage Loan.

REIT Requirements: The requirements imposed on real estate investment trusts
pursuant to Sections 856 through and including 860 of the Code.

Related Escrow Accounts: Mortgage Loan escrow impound accounts maintained by
Seller relating to the Mortgage Servicing Rights, including accounts for buydown
funds, real estate taxes and MI, flood and hazard insurance premiums.

 

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Release Document: As defined in Section 10.01(b) hereof.

Remaining Expected Servicing Spread: As of any date of determination, the Total
Servicing Spread expected to be paid over the expected remaining lives of the
Mortgage Loans.

Reporting Date: As to any Distribution Date, the tenth (10th) Business Day after
such Distribution Date.

Required Reserve Amount: On the Closing Date, $3,900,000. On any Distribution
Date on which a Trigger Event is not in effect, an amount equal to one month’s
expected Servicing Spread Collections on the Mortgage Loans, assuming no
delinquencies or prepayments. On any Distribution Date on which a Trigger Event
is in effect, an amount equal to two month’s expected Servicing Spread
Collections (assuming no delinquencies or prepayments).

Requirement of Law: 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.

Reserve Account: The account specified in the Reserve Account Control Agreement
and maintained by Bank or any successor thereto, or any other third party
custodian or trustee selected by Purchaser.

Reserve Account Agreement: The applicable deposit account agreement and other
related account documentation governing the Reserve Account.

Reserve Account Control Agreement: The account control agreement among Seller,
Purchaser and Bank, dated on or before the Closing Date, entered into with
respect to the Reserve Account, as amended, restated, supplemented or otherwise
modified from time to time.

Retained Servicing Spread: The rights of Seller, severable from each (and all)
of the other rights under the applicable Servicing Agreement, to the sum, for
each Mortgage Loan, of the product of the applicable Retained Percentage and the
portion of the Total Servicing Spread attributable to such Mortgage Loan.

Retained Percentage: For each Initial Mortgage Loan and each New Mortgage Loan,
Substitute Mortgage Loan and Additional Mortgage Loan that is an ARM, 50%. For
each New Mortgage Loan, Substitute Mortgage Loan and Additional Mortgage Loan
that is a Fixed Rate Mortgage Loan, 15%.

Sales Proceeds: The proceeds received upon a sale (approved by the Parties) of
the Total Servicing Spread (except without giving effect to clause (b) of the
definition thereof), in whole or in part.

 

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Schedule of Mortgage Loans: As of any date of determination, the list or lists
of Mortgage Loans for which Seller has sold the Sold Percentage of the related
Excess MSRs to Purchaser pursuant to this Agreement.

Scheduled Total Servicing Spread: As to any Distribution Date, an amount equal
to the Total Servicing Spread for the related Collection Period, calculated on
the basis of the scheduled unpaid principal balances of the Mortgage Loans.

Seller: As defined in the preamble hereof.

Seller Indemnitees: The meaning given to such term in Section 10.02.

Servicing: The responsibilities with respect to servicing the Mortgage Loans
under the Servicing Agreements.

Servicing Agreements: The servicing agreements, as amended from time to time,
and any waivers, consent letters, acknowledgments and other agreements under
which Seller is the servicer of the Mortgage Loans relating to the Mortgage
Servicing Rights and governing the servicing of the Mortgage Loans, or with
respect to Mortgage Loans owned by Seller, the credit and collection standards,
policies, procedures and practices of Seller relating to residential mortgage
loans owned and serviced by Seller.

Servicing Spread Collections: For each Collection Period, the funds collected on
the Mortgage Loans and allocated as the servicing compensation payable to Seller
as servicer of the Mortgage Loans with respect to such Collection Period
pursuant to the applicable Servicing Agreements, other than Ancillary Income
and, for the avoidance of doubt, other than reimbursements, if any, received by
Seller for advances and other out-of- pocket expenditures.

Sold Percentage: For each Mortgage Loan, 100% minus the Retained Percentage for
such Mortgage Loan.

Solvent: With respect to any Person as of any date of determination, (a) the
value of the assets of such Person is greater than the total amount of
liabilities (including contingent and un-liquidated liabilities) of such Person
as determined in accordance with GAAP, (b) such Person is able to pay all
liabilities of such Person as such liabilities mature and (c) such Person does
not have unreasonably small capital. In computing the amount of contingent or
un-liquidated liabilities at any time, such liabilities will be computed at the
amount that, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

Standby Trigger Event: The existence of any of the following: (i) Seller’s
Tangible Net Worth is less than the sum of $40,000,000 plus the required net
worth determined in accordance with HUD’s regulations; (ii) the percentage of
the loans serviced for Ginnie Mae that are more than 90 days delinquent,
determined as provided in the Ginnie Mae guide, exceeds 4.25% as of any date
such delinquency percentage is reported to Ginnie Mae in accordance with that
guide; (iii) the existence of a default, an event of default or an event which
with the giving of notice or the passage of time or both, will become a default
or an event of default under any warehouse agreement of Seller; or (iv) Seller’s
cash and cash equivalents are less $50,000,000.

 

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Substitute Mortgage Loan: A mortgage loan originated by Seller that would
satisfy the criteria for Additional Mortgage Loans set forth in Section 3.03
hereof.

Tangible Net Worth: The net worth of Seller determined in accordance with GAAP,
minus all intangibles determined in accordance with GAAP (including goodwill,
capitalized financing costs and capitalized administration costs but excluding
originated and purchased mortgage servicing rights or retained residual
securities) and any and all advances to, investments in and receivables held
from affiliates; provided, however, that the non-cash effect (gain or loss) of
any mark-to-market adjustments made directly to stockholders’ equity for
fluctuation of the value of financial instruments as mandated under the
Statement of Financial Accounting Standards No. 133 (or any successor statement)
shall be excluded from the calculation of Tangible Net Worth.

Third Party Claim: The meaning given to such term in Section 10.01.

Total Servicing Spread: For each Collection Period, the sum of the following:
(a) the Servicing Spread Collections received during such Collection Period and
remaining after payment of the Base Servicing Fee, (b) all Sales Proceeds
received during such Collection Period; and (c) all other amounts payable by the
Agency to Seller (or Purchaser under the Acknowledgement Agreement) with respect
to the Mortgage Servicing Rights for Mortgage Loans, including any termination
fees paid by the Agency to Seller for terminating Seller as the servicer of any
of the Mortgage Loans, but for the avoidance of doubt, excluding all Ancillary
Income and reimbursements, if any, received by Seller for advances and other
out-of-pocket expenditures.

Transaction Documents: The Acknowledgement Agreement, the Reserve Account
Agreement, the Reserve Account Control Agreement and each Assignment Agreement.

Trigger Event: As of any date of determination: (i) the existence of a default,
an event of default or an event which, with the giving of notice or the passage
of time or both, will become a default or an event of default, under any of
Seller’s warehouse agreements; or (ii) Seller is in default under, or in breach
of any material covenant or obligation in, this Agreement or any other agreement
then in effect to which Seller and Purchaser are parties.

UCC: The Uniform Commercial Code as in effect from time to time in the
applicable jurisdiction.

Section 1.02 General Interpretive Principles.

For purposes of this Agreement, except as otherwise expressly provided or unless
the context otherwise requires:

(a) The terms defined in this Agreement have the meanings assigned to them in
this Agreement and include the plural as well as the singular, and the use of
any gender herein shall be deemed to include the other gender;

 

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(b) Accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with GAAP;

(c) References herein to “Articles,” “Sections,” “Subsections,” “Paragraphs,”
and other subdivisions without reference to a document are to designated
Articles, Sections, Subsections, Paragraphs and other subdivisions of this
Agreement;

(d) A reference to a Subsection without further reference to a Section is a
reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;

(e) The words “herein,” “hereof,” “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular provision; and

(f) The term “include” or “including” shall mean without limitation by reason of
enumeration.

ARTICLE II

PURCHASE AND SALE

Section 2.01 Sale of Excess MSRs.

Subject to, and upon the terms and conditions of this Agreement, Seller agrees
to sell, transfer and assign to Purchaser, and Purchaser agrees to acquire from
Seller, all of Seller’s right, title and interest in and to the applicable Sold
Percentages of the Excess MSRs with respect to (i) the Initial Mortgage Loans,
(ii) the New Mortgage Loans and (iii) the Additional Mortgage Loans, if any, and
all proceeds thereof.

Section 2.02 Grant of Security Interest.

In order to secure Seller’s obligations (i) to deliver the applicable Sold
Percentages of the Total Servicing Spread, which arises from the Excess MSRs
described in Section 2.01, the payments in respect thereof, any payments in
respect of Make Whole Amounts and the Refinanced Interest Payments and (ii) to
perform its obligations hereunder, Seller hereby Grants to Purchaser a valid and
continuing first priority and perfected Lien on and security interest in all of
Seller’s right, title and interest in, to and under (x) the Excess MSRs
(including both the applicable Sold Percentages and the related Retained
Percentages thereof) on the Initial Mortgage Loans, the New Mortgage Loans and
any Additional Mortgage Loans, (y) the Reserve Account, together with all
amounts on deposit therein from time to time and (z) all cash and non-cash
proceeds thereof, in each case, whether now owned or existing, or hereafter
acquired and arising (the “Collateral”).

 

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Section 2.03 Closing Date Transactions.

On the Closing Date, subject to the satisfaction of the terms and conditions
herein:

(a) Seller shall execute and deliver an Assignment Agreement with respect to the
Sold Percentages of the Excess MSRs on the Initial Mortgage Loans;

(b) Seller shall deposit the Required Reserve Amount into the Reserve Account;
and

(c) Purchaser shall remit to Seller the Purchase Price by wire transfer of
immediately available funds to the account designated by Seller.

ARTICLE III

RECAPTURE PROVISIONS

Section 3.01 Refinancing and Substitution of Mortgage Loans.

(a) If Seller, through its retail channel, refinances any Mortgage Loan during
the term of this Agreement, Seller hereby sells, assigns, transfers and conveys
(a “Transfer”) to Purchaser, the applicable Sold Percentage of the Excess MSR
with respect to the related New Mortgage Loan, such Transfer to be effective on
the Assignment Date for such New Mortgage Loan; provided, however that Seller
may Transfer the applicable Sold Percentage of the Excess MSR with respect to a
Substitute Mortgage Loan in lieu of a New Mortgage Loan so long as the aggregate
unpaid principal balance of all Substitute Mortgage Loans, as of their
respective Assignment Dates, Transferred over the term of this Agreement does
not exceed 3% of the aggregate unpaid principal balance of the Initial Mortgage
Loans as of the Closing Date. Once a Substitute Mortgage Loan is so Transferred,
it shall be deemed to be a New Mortgage Loan thereafter.

(b) On the Assignment Date for any New Mortgage Loan, Seller shall (i) execute
and deliver an Assignment Agreement with a Schedule of Mortgage Loans attached
and (ii) deliver the related Data Tape to Purchaser. In addition on that
Assignment Date, Seller shall remit to Purchaser the related Refinanced Interest
Payment by wire transfer of immediately available funds to the account
designated by Purchaser.

Section 3.02 Requirement to Designate Additional Mortgage Loans.

(a) Within 5 days after the end of each Calculation Period, Seller shall
calculate the Make Whole Amount, if any, with respect to such Calculation Period
and shall furnish the same to Purchaser along with commercially reasonable
documentation supporting such calculation. Purchaser shall have 5 days to notify
Seller that Purchaser accepts or objects to such calculation. If Purchaser
objects to such calculation, it shall furnish Seller with commercially
reasonable supporting documentation of its objection, and the Parties shall
cooperate in good faith to resolve the objection. If the Parties cannot resolve
the disagreement, they shall proceed in accordance with subsection (d) below. If
Purchaser accepts the calculation, or the disagreement is otherwise resolved as
provided in this Section, Seller shall designate Additional Mortgage Loans as
provided in Section 3.02(b) below such that the Make Whole Amount (calculated as
though such Additional Mortgage Loans were New Mortgage Loans) is not more than
zero.

 

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(b) Seller shall designate eligible Mortgage Loans as Additional Mortgage Loans
in an amount calculated in accordance with Section 3.02(a) by the 15th day of
the month after the month in which the applicable Calculation Period ended by
preparing and delivering to Purchaser an Assignment Agreement with a Schedule of
Mortgage Loans attached. Each Assignment Agreement shall also be accompanied by
a Data Tape with respect to the Mortgage Loans on the related Mortgage Loan
Schedule. Upon delivery of such Assignment Agreement, Seller will have sold,
assigned, transferred and otherwise conveyed the applicable Sold Percentage of
the Excess MSR on each such Additional Mortgage Loan as of the related
Assignment Date. The Additional Mortgage Loans shall satisfy the requirements of
Section 3.03 below and shall have Excess Servicing Fee Rates such that the Make
Whole Amount (calculated as though such Additional Mortgage Loans were New
Mortgage Loans) is not more than zero.

(c) In lieu of designating Additional Mortgage Loans to eliminate the Make Whole
Amount, Seller may pay Purchaser an amount in cash equal to the fair market
value of the Make Whole Amount. Within 5 days after the end of each Calculation
Period for which Seller desires to make a cash payment in lieu of designating
Additional Loans, Seller shall submit its calculation of the fair market value
of the Make Whole Amount, which shall take into account the delay between the
first day of the month and the date on which the cash payment is to be made,
along with commercially reasonable supporting documentation to Purchaser.
Purchaser shall have 5 days to notify Seller that Purchaser accepts or objects
to such calculation. If Purchaser accepts such calculation, Seller shall pay the
agreed upon amount within one Business Day after receipt of Purchaser’s
acceptance of the fair market value calculation. If Purchaser objects to such
calculation, it shall furnish Seller with commercially reasonable supporting
documentation of its objection, and the Parties shall cooperate in good faith to
resolve the objection. If the Parties cannot resolve the disagreement, they
shall proceed in accordance with subsection (d) below.

(d) If the Parties cannot resolve a disagreement under this Section 3.02, they
shall pick an Approved Valuation Firm to calculate the amount in dispute, and
the decision of such Approved Valuation Firm shall be final and binding on the
Parties. Each Party agrees to cooperate in good faith with the requests for
information by such Approved Valuation Firm, and each Party shall pay 50% of the
fees and expenses of such firm. Within 2 Business Days after the decision of the
Approved Valuation Firm, Seller shall designate Additional Mortgage Loans or pay
the cash fair market value, as applicable so that the Make Whole Amount is not
more than zero.

Section 3.03 Criteria for Additional Mortgage Loans.

As of the applicable Assignment Date, unless otherwise agreed upon by Seller and
Purchaser, the Additional Mortgage Loans shall satisfy the following criteria:

(1) Each Additional Mortgage Loan is included in a mortgage backed security
guaranteed by Ginnie Mae;

 

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(2) The weighted average of the mortgage rates on the Additional Mortgage Loans
is within 0.125 basis points per annum of the weighted average of the mortgage
rates on the New Mortgage Loans originated during the applicable Calculation
Period;

(3) The weighted average remaining term to maturity of the Additional Mortgage
Loans is not less than the weighted average remaining term to maturity of the
New Mortgage Loans originated during the applicable Calculation Period;

(4) The weighted average seasoning of the Additional Mortgage Loans is less than
or equal to that of the New Mortgage Loans originated during the applicable
Calculation Period;

(5) The average unpaid principal balance of the Additional Mortgage Loans is not
less than the average unpaid principal balance of the New Mortgage Loans that
were originated during the applicable Calculation Period;

(6) The remaining material credit characteristics of the Additional Mortgage
Loan (other than as specified in clauses (1), (2), (3), (4) and (5) above) are
substantially similar to the credit characteristics of the New Mortgage Loans
originated during the applicable Calculation Period;

(7) Each Additional Mortgage Loan is current as of the applicable Assignment
Date; and

(8) Each Additional Mortgage Loan is not subject to any foreclosure or similar
proceeding, is not in, and has not gone through, the process of modification,
workout or any other loss mitigation process and is not involved in litigation.

Section 3.04 Assignment of Excess MSRs.

Subject to the satisfaction of the terms and conditions in this Agreement, on
each Assignment Date, Seller shall execute and deliver an Assignment Agreement
(with a Schedule of Mortgage Loans attached and accompanied by a Data Tape with
respect to the Mortgage Loans listed on such schedule) for the applicable Sold
Percentages of the Excess MSRs to be assigned on such Assignment Date with
respect to (i) the New Mortgage Loans originated during the applicable
Calculation Period (or any Substitute Mortgage Loans Transferred in lieu
thereof) and (ii) any Additional Mortgage Loans designated as provided in
Section 3.02 to satisfy the Make Whole Amount for the applicable Calculation
Period.

 

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ARTICLE IV

PAYMENTS AND DISTRIBUTIONS

Section 4.01 Distributions.

(a) On each Distribution Date, Seller shall remit by wire transfer of
immediately available funds to the account designated in writing by Purchaser
the sum, for each Mortgage Loan, of the applicable Sold Percentage of the
Scheduled Total Servicing Spread attributable to such Mortgage Loan for the
prior Collection Period. Notwithstanding the foregoing, on the first
Distribution Date, Seller shall remit an amount equal to the amount calculated
pursuant to the preceding sentence and (ii) the percentage equivalent of a
fraction, the numerator of which is the number of days from and including the
Closing Date to and including the last day of the month in which the Closing
Date occurs, and the denominator of which is 30. Within ten (10) Business Days
after each Distribution Date, Seller shall (x) reconcile the Scheduled Total
Servicing Spread for the applicable Collection Period and the actual Total
Servicing Spread for such Collection Period, (y) deliver to Purchaser
commercially reasonable documentation of such reconciliation and (z) remit by
wire transfer of immediately available funds to the above account the amount of
any shortfall in the amount to which Purchaser is entitled. If Purchaser was
over paid on the Distribution Date, it shall promptly remit the over payment to
Seller by wire transfer of immediately available funds.

(b) With respect to any distribution received by Purchaser after the Business
Day on which such payment was due, Seller shall pay Purchaser interest on any
such late payment at an annual rate equal to the Prime Rate, adjusted as of the
date of each change, plus three (3) percentage points, but in no event greater
than the maximum amount permitted by Applicable Law. Such interest shall be paid
on the date such late payment is made and shall cover the period commencing with
the Business Day on which such payment was due and ending on the Business Day
immediately preceding the Business Day on which such payment was made, both
inclusive. The payment by Seller of any such interest shall not be deemed an
extension of time for payment or a waiver of any breach of Seller’s obligations
hereunder.

(c) The Reserve Account will be established with the Bank pursuant to the
Reserve Account Control Agreement with respect to which Purchaser is an
Entitlement Holder with Control. The Reserve Account shall be a blocked account
for which Purchaser shall have the sole right to make withdrawals. Seller agrees
to take all actions reasonably necessary, including the filing of appropriate
financing statements, to protect Purchaser’s interest in the Reserve Account.

(d) On each Distribution Date, Seller shall deposit in the Reserve Account an
amount equal to the excess, if any, of the Required Reserve Amount for such
Distribution Date over the amount on deposit in the Reserve Account. Seller
shall immediately notify Purchaser in writing if a Trigger Event is in effect
and when the Trigger Event is no longer in effect.

 

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Section 4.02 Withdrawals from the Reserve Account.

On any Business Day, Purchaser may direct the Bank to apply funds in the Reserve
Account, if any, to the payment of indemnity payments payable to a Purchaser
Indemnitee pursuant to Section 11.01. In addition, if on any Distribution Date,
Purchaser does not receive the Sold Percentage of the Total Servicing Spread as
provided in Section 4.01, Purchaser may direct the Bank to remit to Purchaser
the amount of the shortfall to the extent of funds then on deposit in the
Reserve Account. If on any Distribution Date the amount on deposit in the
Reserve Account exceeds the Required Reserve Amount for such date (after any
other withdrawals therefrom on such date), Purchaser shall direct the Bank to
disburse such excess to Seller. Upon termination of this Agreement, after all
amounts due to Purchaser shall have been paid, Purchaser shall direct the Bank
to distribute any amounts remaining in the Reserve Account to or upon the order
of Seller.

Section 4.03 Investment of Funds in the Reserve Account.

Seller may direct the Bank to invest amounts on deposit in the Reserve Account
in Eligible Investments that mature not later than the Business Day next
preceding the first Distribution Date occurring after the date of the investment
except that if the investment is an obligation of the Bank it may mature on the
Distribution Date. Any Eligible Investment shall not be sold or disposed of
before its maturity. Any gain or loss on such investments shall be taxed to
Seller.

Section 4.04 Payment to Seller of Base Servicing Fee.

Seller shall be entitled to payment of the Base Servicing Fee only to the extent
payments from Mortgagors are available therefor. Under no circumstances shall
Purchaser be liable to Seller for payment of the Base Servicing Fee. The
servicing fees and expenses of any sub-servicer shall be paid by Seller and in
no event will the amount of Servicing Spread Collections or termination payments
otherwise allocable to the Excess MSRs be reduced due to the payment of
sub-servicing fees and expenses.

Section 4.05 Intent and Characterization.

(a) Seller and Purchaser intend that the sale of the applicable Sold Percentages
of the Excess MSRs pursuant to this Agreement constitutes a valid sale of such
percentages of the Excess MSRs from Seller to Purchaser, conveying good title
thereto free and clear of any Lien other than Permitted Liens, and that the
beneficial interest in and title to the applicable Sold Percentages of the
Excess MSRs not be part of Seller’s estate in the event of the bankruptcy of
Seller. Seller and Purchaser intend and agree to treat the transfer and
assignment of the applicable Sold Percentages of the Excess MSRs as an absolute
sale for tax purposes, and as an absolute and complete conveyance of title for
property law purposes. In the case of the applicable Sold Percentage of the
Excess MSR with respect to a New Mortgage Loan, Seller and Purchaser intend
that, solely for income tax purposes, the sale and assignment shall occur as of
the Refinancing Date of the related Refinanced Mortgage Loan. Seller and
Purchaser intend that, for income tax purposes, the replacement of the
applicable Sold Percentage of the Excess MSR with respect to a Refinanced
Mortgage Loan with the applicable Sold Percentage of the Excess MSR with respect
to the related New Mortgage Loan and any related Additional Mortgage Loans
pursuant to Article III shall be treated as a sale of the applicable Sold
Percentage of the Excess MSR with respect to the Refinanced Mortgage Loan in
exchange for the applicable Sold Percentage of the Excess MSR with respect to
the related New Mortgage Loan and any related

 

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Additional Mortgage Loans (or payment in cash of the Make Whole Amount in lieu
thereof pursuant to Section 3.02(c). Except for financial accounting purposes,
neither party intends the transactions contemplated hereby to be characterized
as a loan from Purchaser to Seller.

(b) The Parties hereto shall treat the Excess MSRs for income tax purposes as a
series of “stripped coupons” within the meaning of Section 1286 of the Code.
Seller shall not, without Purchaser’s prior written consent, make an election
under Revenue Procedure 91-50 for any taxable year that would result in the
Revenue Procedure 91-50 safe harbor applying to any Mortgage Servicing Right
with respect to which an Excess MSR is transferred to Purchaser pursuant to this
Agreement.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER

As an inducement to Purchaser to enter into this Agreement, Seller represents
and warrants to Purchaser as of the Agreement Date, the Closing Date and each
Assignment Date (or as of the date specified below, as applicable):

Section 5.01 Due Organization and Good Standing.

Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of New Jersey. Seller is qualified to transact
business in each jurisdiction in which such qualification is necessary to
service the Mortgage Loans. Seller has, in full force and effect (without notice
of possible suspension, revocation or impairment), all required permits,
approvals, licenses, and registrations to conduct all activities in all states
in which its activities with respect to the Mortgage Loans or the Mortgage
Servicing Rights require it to be licensed, registered or approved in order to
service the Mortgage Loans and own the Mortgage Servicing Rights.

Section 5.02 Authority and Capacity.

Seller has all requisite corporate power, authority and capacity, subject to the
approvals required pursuant to Section 5.03, to enter into this Agreement and
each other Transaction Document to which it is a party and to perform the
obligations required of it hereunder and thereunder. The execution and delivery
of this Agreement and each other Transaction Document to which Seller is a party
and the consummation of the transactions contemplated hereby and thereby have
each been duly and validly authorized by all necessary corporate action. This
Agreement and each other Transaction Document to which it is a party has been
duly executed and delivered by Seller. This Agreement constitutes, and each
other applicable Transaction Document to which Seller is a party constitutes or
will constitute, a valid and legally binding agreement of Seller enforceable in
accordance with its terms, and no offset, counterclaim or defense exists to the
full performance by Seller of this Agreement or such other Transaction Document,
except as the same may be limited by bankruptcy, insolvency, reorganization and
similar laws affecting the enforcement of creditors’ rights generally and by
general equity principles.

 

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Section 5.03 Agency Consents.

Seller will have obtained the Acknowledgement Agreement and all necessary
approvals, agreements and consents, if any, of the Agency with respect to this
Agreement and the Transaction Documents on or prior to the Closing Date.

Section 5.04 Title to the Mortgage Servicing Rights.

As of the Closing Date and each applicable Assignment Date, Seller will be the
lawful owner of the Mortgage Servicing Rights, will be responsible for the
maintenance of the Related Escrow Accounts, and will have the sole right and
authority to Transfer the Sold Percentage of the applicable Excess MSRs as
contemplated hereby. Each transfer, assignment and delivery of the Sold
Percentage of the Excess MSRs shall be free and clear of any and all claims,
charges, defenses, offsets, Liens and encumbrances of any kind or nature
whatsoever other than Permitted Liens.

Section 5.05 Effective Agreements.

The execution, delivery and performance of this Agreement and each other
Transaction Document that has been executed by Seller, the compliance with the
terms hereof and thereof and the consummation of the transactions contemplated
hereby and thereby did not, and will not, violate, conflict with, result in a
breach of, constitute a default under, be prohibited by or require any
additional approval under its corporate charter, any material instrument or
material agreement to which it is a party or by which it is bound or which
affects the Mortgage Servicing Rights or the Excess MSRs, or any state or
federal law, rule or regulation or any judicial or administrative decree, order,
ruling or regulation applicable to it or to the Mortgage Servicing Rights or the
Excess MSRs.

Section 5.06 No Accrued Liabilities.

There are no accrued liabilities of Seller with respect to the Mortgage Loans or
the Mortgage Servicing Rights or circumstances under which such accrued
liabilities will arise against Purchaser as purchaser of the applicable Sold
Percentages of the Excess MSRs.

Section 5.07 Seller/Servicer Standing.

Seller is approved by the Agency as an issuer in good standing with the
requisite financial criteria and adequate resources to complete the transactions
contemplated hereby on the conditions stated herein. No event has occurred,
including but not limited to a change in insurance coverage, which would make
Seller unable to comply with the Agency eligibility requirements or which would
require notification to the Agency.

Section 5.08 MERS Membership.

Seller is a member in good standing under the MERS system.

 

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Section 5.09 Agency Set-off Rights.

Seller has no actual notice, including any notice received from the Agency, or
any reason to believe, that, other than in the normal course of Seller’s
business, any circumstances exist that would result in Seller being liable to
the Agency for any amount by reason of: (i) any breach of servicing obligations
or breach of mortgage selling warranty to the Agency under the Servicing
Agreements relating to Seller’s entire servicing portfolio for the Agency
(including any unmet mortgage repurchase obligation that is not in dispute),
(ii) any unperformed obligation with respect to mortgage loans that Seller is
servicing for the Agency, (iii) any loss or damage to the Agency by reason of
any inability to transfer to a purchaser of the servicing rights Seller’s
selling and servicing representations, warranties and obligations, or (iv) any
other unmet obligations to the Agency under a servicing contract relating to
Seller’s entire servicing portfolio with the Agency.

Section 5.10 Solvency.

Seller is Solvent and the sale of the applicable Sold Percentages of the Excess
MSRs will not cause Seller to become insolvent. The sale of the applicable Sold
Percentages of the Excess MSRs is not undertaken to hinder, delay or defraud any
of the creditors of Seller. The consideration received by Seller upon the sale
of the applicable Sold Percentages of the Excess MSRs constitutes fair
consideration and reasonably equivalent value therefor.

Section 5.11 Obligations with Respect to Origination.

Purchaser shall not be liable for any obligation with respect to the origination
of each Mortgage Loan and, if applicable, for any obligation with respect to the
sale of such Mortgage Loan.

Section 5.12 No Actions.

There are no pending or, to the best of Seller’s knowledge, threatened, actions,
suits or proceedings which will likely materially and adversely affect the
consummation of the transactions contemplated by any Transaction Document.

Section 5.13 No Purchaser Responsibility.

Purchaser shall have no responsibility, liability or other obligation whatsoever
under any Servicing Agreement or with respect to any Mortgage Loan, or to make
any advance thereunder, or to pay any servicing fees. Purchaser shall have no
right to control the manner in which Seller satisfies its obligations under the
Servicing Agreements. Seller is and shall be responsible for the acts or
omissions of its sub-servicer and, where applicable, for all costs of
originating any Mortgage Loan. Notwithstanding the foregoing, Purchaser is
obligated as provided in the Acknowledgement Agreement.

 

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Section 5.14 Representations Concerning the Excess MSRs.

(a) Seller has not assigned, pledged, conveyed, or encumbered the Collateral,
including without limitation, the Excess MSRs to any other Person (other than
Permitted Liens) and immediately prior to the sale of the applicable Sold
Percentages of the Excess MSRs on the Closing Date or the applicable Assignment
Date, Seller was the sole owner thereof and had good and marketable title
thereto (subject to the rights of the Agency under the Servicing Agreements and
the Acknowledgement Agreement), free and clear of all Liens (other than
Permitted Liens), and no Person, other than Purchaser, has any Lien (other than
Permitted Liens) on the Collateral, including without limitation, the Excess
MSRs. No security agreement, financing statement, equivalent security or lien
instrument or continuation statement covering all or any part of the Collateral,
including without limitation, the Excess MSRs, which has been signed by Seller
or which Seller has authorized any other Person to sign or file or record, is on
file or of record with any public office, except such as may have been
terminated or filed by or on behalf of Purchaser.

(b) The sale and grant of a security interest by Seller to Purchaser of and on
the Excess MSRs does not and will not violate any Requirement of Law, the effect
of which violation is to render void or voidable such assignment.

(c) As contemplated under Section 2.02, upon the filing of financing statements
on Form UCC-1 naming Purchaser as “Secured Party” and Seller as “Debtor”, and
describing the Collateral, in the jurisdictions and recording offices listed on
Exhibit H attached hereto, the sale and security interests granted hereunder in
the Collateral, including without limitation, the Excess MSRs, will constitute
perfected first priority security interests under the UCC in all right, title
and interest of Seller in, to and under the Collateral, including without
limitation, the Excess MSRs.

(d) Purchaser has and will continue to have the full right, power and authority
to pledge the applicable Sold Percentages of the Excess MSRs, and the applicable
Sold Percentages of the Excess MSRs may be further assigned without any
requirement, in each case, subject only to the Agency’s consent.

(e) Each Servicing Agreement constitutes an Eligible Servicing Agreement.

Section 5.15 Accuracy of Servicing Information.

The information in each Data Tape and Electronic Data File is true and correct
in all material respects as of the date specified therein.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF PURCHASER

As an inducement to Seller to enter into this Agreement, Purchaser represents
and warrants to Seller as of the Agreement Date and the Closing Date (or as of
the date specified below, as applicable):

Section 6.01 Due Organization and Good Standing.

Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Maryland. Purchaser is qualified to transact
business in each jurisdiction in which such qualification is necessary for the
conduct of its business and the failure to be so qualified would have a material
adverse effect on Purchaser.

 

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Section 6.02 Authority and Capacity.

Purchaser has all requisite corporate power, authority and capacity to enter
into this Agreement and each other Transaction Document to which it is a party
and to perform the obligations required of it hereunder and thereunder. The
execution and delivery of this Agreement and each other Transaction Document to
which it is a party and the consummation of the transactions contemplated hereby
and thereby have each been duly and validly authorized by all necessary
corporate action. This Agreement constitutes, and each other applicable
Transaction Document to which Purchaser is a party constitutes or will
constitute, a valid and legally binding agreement of Purchaser enforceable in
accordance with its terms, and no offset, counterclaim or defense exists to the
full performance by Purchaser of this Agreement or such other Transaction
Document, except as the same may be limited by bankruptcy, insolvency,
reorganization and similar laws affecting the enforcement of creditors’ rights
generally and by general equity principles.

Section 6.03 Effective Agreements.

The execution, delivery and performance of this Agreement and each other
Transaction Document to which it is a party by Purchaser, its compliance with
the terms hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not violate, conflict with, result in a
breach of, constitute a default under, be prohibited by or require any
additional approval under its corporate charter or by-laws, any instrument or
agreement to which it is a party or by which it is bound, or any state or
federal law, rule or regulation or any judicial or administrative decree, order,
ruling or regulation applicable to it, in each case which violation, conflict,
breach or requirement would reasonably be expected to have a material adverse
effect on Purchaser’s ability to perform its obligations under this Agreement
and any other Transaction Document to which it is a party.

Section 6.04 Sophisticated Investor.

Purchaser is a sophisticated investor and its decision to acquire the Sold
Percentage of the Excess MSRs is based upon Purchaser’s own independent
experience, knowledge, due diligence and evaluation of this transaction.
Purchaser has relied solely on such experience, knowledge, due diligence and
evaluation and has not relied on any oral or written information provided by
Seller other than the representations and warranties made by Seller herein.

Section 6.05 No Actions.

There are no pending or, to the best of Purchaser’s knowledge, threatened
actions, suits or proceedings against Purchaser that will likely materially and
adversely affect the consummation of the transactions contemplated hereby.

 

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ARTICLE VII

SELLER COVENANTS

Section 7.01 Servicing Obligations.

(a) Seller shall pay, perform and discharge all liabilities and obligations
relating to the Servicing, including all liabilities and obligations under the
Mortgage Loan Documents, Applicable Law, the Servicing Agreements and the
agreement with any sub-servicer, and shall pay, perform and discharge all the
rights, obligations and duties with respect to the Related Escrow Accounts as
required by the Agency, the Servicing Agreements, the Mortgage Loan Documents
and Applicable Law.

(b) Under no circumstances shall Purchaser be responsible for the Servicing acts
and omissions of Seller or any other servicer or any originator of the Mortgage
Loans, or for any servicing related obligations or liabilities of any servicer
in the Servicing Agreements or of any Person under the Mortgage Loan Documents,
or for any other obligations or liabilities of Seller. Notwithstanding the
foregoing, Purchaser is obligated as provided in the Acknowledgement Agreement

(c) Upon termination of any Servicing Agreement, Seller shall remain liable to
Purchaser and the Agency for all liabilities and obligations incurred by the
servicer or its designee while Seller or its designee was acting as the servicer
thereunder.

(d) Seller shall conduct quality control reviews of its servicing operations in
accordance with Applicable Law, Accepted Servicing Practices and the
requirements of the Agency.

Section 7.02 Cooperation; Further Assurances.

Seller shall cooperate with and assist Purchaser, as reasonably requested, in
carrying out the purposes of this Agreement. Seller will cooperate and assist
Purchaser, as reasonably requested in obtaining consents from the Agency as may
be required or advisable to assign, transfer, deliver, hypothecate, pledge,
subdivide, finance or otherwise deal with the Excess MSRs. If Seller is
terminated under any Servicing Agreement, (i) subject to the rights of the
Agency, Purchaser shall have the right to appoint or approve a successor and
(ii) Seller shall cooperate fully and at its own expense in transferring such
Servicing to such successor.

Section 7.03 Financing Statements.

Seller hereby authorizes the filing of any financing statements or continuation
statements, and amendments to financing statements, in any jurisdictions and
with any filing offices as Purchaser may determine, in its sole discretion, are
necessary or advisable to perfect the sale of the applicable Sold Percentages of
the Excess MSRs and the security interests granted to Purchaser in the
Collateral. Seller agrees to execute financing statements in form reasonably
acceptable to Purchaser and Seller at the request of Purchaser in order to
reflect Purchaser’s interest in the Collateral.

 

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Section 7.04 Supplemental Information.

From time to time after the Closing Date, Seller promptly shall furnish
Purchaser such incidental information, which is reasonably available to Seller,
supplemental to the information contained in the documents and schedules
delivered pursuant to this Agreement, as may reasonably be requested to monitor
performance of the Mortgage Loans and the payment of the Excess MSRs.

Section 7.05 Access to Information.

(a) From time to time, at such times as are reasonably convenient to Seller,
Purchaser or its designees may conduct audits or visit and inspect (a) any of
the Mortgage Loans or places where the Credit Files are located, to examine the
Credit Files, warehouse agreements, internal controls and procedures maintained
by Seller and its agents, and take copies and extracts therefrom, and to discuss
Seller’s affairs with its officers, employees and, upon notice to Seller,
independent accountants and (b) Seller’s servicing facilities and those of its
sub-servicer, for the purpose of satisfying the Purchaser that Seller, has the
ability to service the Mortgage Loans related to Mortgage Servicing Rights in
accordance with the standards set forth in the applicable Servicing Agreement.
Any audit provided for herein will be conducted in accordance with Seller’s
rules respecting safety and security on its premises, in accordance with
applicable privacy and confidentiality laws and without materially disrupting
operations. Seller hereby authorizes such officers, employees, designees and
independent accountants to discuss with Purchaser the affairs of Seller.

(b) Seller shall arrange for Purchaser to have access to the investor website of
Seller’s sub-servicer so that Purchaser may monitor the servicing of the
Mortgage Loans. In addition, Seller shall furnish to Purchaser copies of all
performance reporting received from Ginnie Mae promptly following Seller’s
receipt thereof. If any such reporting indicates any issues, Seller agrees to
keep Purchaser informed of the response or action being taken to resolve the
same, as when the same are made or taken.

(c) Seller and Purchaser are aware of their obligations under Gramm-Leach-Bliley
Act and the regulations promulgated thereunder and each has in place policies
intended to protect the private information of consumers. Any access to consumer
information under this Agreement will be undertaken in a manner that complies
with such law and regulations.

Section 7.06 Home Affordable Modification Program.

Seller shall continue to service any HAMP Loan in accordance with the terms and
requirements of HAMP and will ensure the timely compliance and filing of any
appropriate HAMP documentation with the applicable regulator.

 

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Section 7.07 Distribution Date Data Tapes and Reports.

Seller shall deliver the following to Purchaser on each Reporting Date:

(a) An Electronic Data File in form and substance acceptable to Purchaser
containing, for each Mortgage Loan, principal, interest and Servicing Spread
Collections, and delinquency status (i.e. 30, 60, 90, FCL, REO) as of the last
day of the prior Collection Period;

(b) A summary activity report with respect to the Mortgage Loans, with an
identifier for each Initial Pool Mortgage Loan, New Mortgage Loan (including an
identifier of any Substitute Mortgage Loan that became a New Mortgage Loan as
described herein) and Additional Mortgage Loan, with respect to the prior
Collection Period containing:

(i) aggregate principal balance as of the first and last date of the Collection
Period,

(ii) aggregate scheduled principal collected,

(iii) aggregate interest collected,

(iv) aggregate liquidation principal,

(v) aggregate unscheduled principal,

(vi) short sales,

(vii) aggregate balance of loans refinanced by Seller and by third parties,

(viii) aggregate amount of uncollected principal and interest payments,

(ix) recoveries in respect of Base Servicing Fees and Excess MSRs on delinquent
or defaulted loans,

(x) for each New Mortgage Loan, an identifier of the related Refinanced Mortgage
Loan, and

(xi) (1) for each Mortgage Loan, the principal balance, the applicable servicing
spread, the final maturity date, the mortgage interest rate, the loan-to-value
ratio and the FICO score, and (2) for each Mortgage Loan that was refinanced by
a lender other than Seller or an affiliate thereof, to the extent such
information is known to Seller in the ordinary course of business and the
collection and delivery of such information does not impose any additional and
undue burden on Seller, the name of such lender and the mortgage interest rate
of the newly originated residential mortgage loan.

 

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(c) A delinquency report (using MBA delinquency methodology) with respect to the
Mortgage Loans containing:

(i) The aggregate outstanding principal balance of the Mortgage Loans and
percentages of the aggregate outstanding principal balance of the Mortgage Loans
in each of the following categories as of the last day of the prior Collection
Period:

(1) Current Mortgage Loans,

(2) 30-59 days delinquent,

(3) 60-89 days delinquent,

(4) 90 days or more delinquent,

(5) Mortgage Loans in Foreclosure (current and delinquent),

(6) Mortgage Loans with respect to which the related Mortgaged Properties have
become real estate owned properties, and

(7) Mortgage Loans in which the Mortgagor is in bankruptcy (current and
delinquent);

(ii) For each of the above categories, a roll report showing the migration of
Mortgage Loans in such category from the last day of the second prior Collection
Period.

(d) A disbursement report containing:

(i) The Servicing Spread Collections for the prior Collection Period,

(ii) The Base Servicing Fee paid to Seller,

(iii) The amount of the Excess MSRs paid to Purchaser and Seller, and

(iv) The amount of funds, if any, transferred to the Reserve Account.

(e) Such other or additional reports and information as Purchaser may reasonably
request.

Section 7.08 Financial Statements and Officer’s Certificates.

(a) If Seller’s financial statements are not filed with the U.S. Securities and
Exchange Commission and are not publicly available, Seller shall deliver to
Purchaser copies of Seller’s most recent unaudited quarterly financial
statements within 45 days of the end of each of Seller’s fiscal quarters and its
most recent audited annual financial statements within 90 days of the end of
each of Seller’s fiscal years.

(b) On each Distribution Date Seller shall deliver to Purchaser a certificate
from a duly authorized officer of Seller certifying that no Trigger Event or
Standby Trigger Event has occurred

 

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Section 7.09 Make Whole Calculation.

Each calculation of a Make Whole Amount shall include the following information
for the applicable Calculation Period:

(i) the weighted average Excess Servicing Fee Rate of the Mortgage Loans that
became Refinanced Mortgage Loans during such Calculation Period,

(ii) the aggregate unpaid principal balance of such Refinanced Mortgage Loans as
of their respective Refinancing Dates,

(iii) the weighted average Excess Servicing Fee Rate of the related New Mortgage
Loans,

(iv) the aggregate original principal balance of the related New Mortgage Loans,

(v) the aggregate principal balance of any Additional Mortgage Loans,

(vi) the weighted average Excess Servicing Fee Rate of such Additional Mortgage
Loans,

(vii) the cash payment to be made by Seller in lieu of adding Additional
Mortgage Loans and the fair market value calculation used to determine such
amount, and

(viii) a Data Tape of the Refinanced Mortgage Loans, the related New Mortgage
Loans and the proposed Additional Mortgage Loans.

Section 7.10 Timely Payment of Agency Obligations.

Seller shall pay all of its obligations to the Agency in a timely manner so as
to avoid exercise of any right of set-off by the Agency against Seller.

Section 7.11 Servicing Agreements.

Seller shall service the Mortgage Loans in accordance with Accepted Servicing
Practices and shall perform its obligations in all material respects in
accordance with the Servicing Agreements and Applicable Law. In particular,
without limitation, Seller shall comply with any advancing obligation under the
Servicing Agreements. Without the express written consent of Purchaser (which
consent may be withheld in its absolute discretion), Seller shall not
(a) cancel, terminate or amend any Mortgage Servicing Rights, (b) expressly
provide any required consent to any termination, amendment or modification of
any Servicing Agreements either verbally or in writing, (c) expressly provide
any required consent to any termination, amendment or modification of any other
servicing agreements or enter into any other agreement or arrangement with the
Agency that may be reasonably material to Purchaser either verbally or in
writing, (d) expressly or verbally waive any material default under or breach of
any Servicing Agreement by the Agency that may be material to Purchaser (in
Purchaser’s reasonable determination) or (e)

 

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take any other action in connection with any such Servicing Agreement that would
impair in any material respect the value of the interests or rights of Purchaser
hereunder. Seller shall conduct its business and perform its obligations under
the Servicing Agreements in a manner such that the Agency will not have cause to
terminate any Servicing Agreement. Notwithstanding the foregoing, in no event
will the prohibitions contained in this Section 7.11 apply to any amendments or
modifications of the Servicing Agreements that are either (i) required by the
Agency or (ii) applicable to mortgage loans owned by Seller which do not affect
the Excess MSRs and are not reasonably material to the Purchaser.

Section 7.12 Transfer of Mortgage Servicing Rights.

Seller shall not assign, transfer, sell or otherwise encumber any of its
(x) Mortgage Servicing Rights related to the Excess MSRs, or (y) the applicable
Retained Percentages of the Excess MSRs without the prior written consent of
Purchaser which may be granted or withheld in Purchaser’s absolute discretion;
provided, however, that Purchaser’s consent is not required if the transfer of
the Mortgage Servicing Rights is directed by the Agency.

Section 7.13 Consents to Transaction Documents.

Seller shall not terminate, amend, restate, modify or waive any conditions or
provisions of any Transaction Document without the prior written consent of
Purchaser, which consent shall not be unreasonably withheld, delayed or
conditioned.

Section 7.14 Notification of Certain Events.

Seller shall promptly notify Purchaser of any event which, with the passage of
time, the giving of notice or both could reasonably be expected to result in a
Trigger Event or termination of any Servicing Agreement. Seller shall provide
Purchaser with copies of (i) any notices from or to a warehouse lender of a
default or potential default under any such warehouse agreement, (ii) any
notices from the Agency of any breach, potential breach, default or potential
default by Seller under any Servicing Agreement between Seller and the Agency,
and (iii) any notices from the Agency of any termination, potential termination
or threatened termination of any Servicing Agreement. Seller shall promptly
forward copies of any material notices received from the Agency or from any
Governmental Authority with respect to the Mortgage Loans. Seller shall provide
Purchaser with copies of all amendments to the its warehouse agreements,
Transaction Documents or the Servicing Agreements promptly after execution
thereof. Furthermore, if at any time prior to the termination of this Agreement,
Seller is unable to comply with any of the Agency eligibility requirements, it
shall immediately notify Purchaser of the facts and circumstances surrounding
such inability and of the course of action Seller proposes to take to address
the same.

Section 7.15 Financing; Pledge of Excess MSRs.

Seller shall not pledge, obtain financing for, or otherwise permit any Lien of
any creditor of Seller to exist on, any portion of the Servicing Spread
Collections without the prior written consent of Purchaser. Seller’s financial
statements shall contain footnotes indicating that the applicable Sold
Percentages of the Excess MSRs have been sold, and Seller does not maintain any
ownership interest therein.

 

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Section 7.16 Existence, etc.

Seller shall:

(a) preserve and maintain its legal existence, good standing and material
licenses necessary to service the Mortgage Loans;

(b) comply with the requirements of all Applicable Law, rules, regulations and
orders of Governmental Authorities (including truth in lending and real estate
settlement procedures);

(c) keep adequate records and books of account, in which complete entries will
be made in accordance with GAAP consistently applied, and maintain adequate
accounts and reserves for all taxes (including income taxes), all depreciation,
depletion, obsolescence and amortization of its properties, all contingencies,
and all other reserves;

(d) not move its chief executive office or chief operating office from the
addresses referred to in Exhibit H unless it shall have provided Purchaser not
less than thirty (30) days prior written notice of such change;

(e) pay and discharge all material taxes, assessments and governmental charges
or levies imposed on it or its income or profits or on any of its property prior
to the date on which penalties attach thereto, except for any such tax,
assessment, charge or levy the payment of which is being contested in good faith
and by proper proceedings and against which adequate reserves are being
maintained. Seller and its subsidiaries 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; and

(f) comply with its obligations under the Transaction Documents to which it is a
party and each other agreement entered into with the Agency.

Section 7.17 Selection of, or Consent to, Successor Sub-Servicer.

If Seller chooses to replace the sub-servicer, Purchaser shall have the right to
approve the successor and the terms of the related sub-servicing agreement, such
approval not to be withheld, delayed or conditioned unreasonably. In addition,
if the sub-servicer defaults under its agreement with Seller, Purchaser shall
have the right to require Seller to replace the sub-servicer with a successor
and a sub-servicing agreement reasonably satisfactory to Purchaser.
Notwithstanding the foregoing, the approval by the Purchaser of a new
sub-servicer or the terms of the sub-servicing agreement shall not be required
if the Agency selects or directs the selection of a new sub-servicer.

Section 7.18 Non-petition Covenant.

Seller shall not, prior to the date that is one year and one day after the
payment in full of the Excess MSRs, petition or otherwise invoke the process of
any court or governmental authority for the purpose of commencing or sustaining
a case against Purchaser under any insolvency law or appointing a receiver,
liquidator, assignee, trustee, custodian or other similar official of Purchaser
or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of Purchaser.

 

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Section 7.19 Insurance.

Seller shall maintain (a) general liability insurance, (b) errors and omission
insurance or blanket bond coverage and (c) fidelity bond insurance, in each
case, from reputable companies with coverage in amounts customarily maintained
by such similarly situated entities in the same jurisdiction and industry as
Seller.

Section 7.20 Defense of Title.

Seller shall warrant and defend the right, title and interest of Purchaser in
and to the applicable Sold Percentages of the Excess MSRs against all adverse
claims and demands subject to Permitted Liens.

ARTICLE VIII

CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER

The obligations of Purchaser under this Agreement and under each Assignment
Agreement are subject to the satisfaction of the following conditions as of the
Closing Date and each Assignment Date:

Section 8.01 Correctness of Representations and Warranties.

The representations and warranties made by Seller in this Agreement and each
other Transaction Document to which Seller is a party shall be true and correct
as if the same were made on and as of the Closing Date or the Assignment Date,
as applicable.

Section 8.02 Compliance with Conditions.

All of the terms, covenants, conditions and obligations of this Agreement and
each other Transaction Document required to be complied with and performed by
Seller on or prior to the Closing Date or the Assignment Date, as applicable,
shall have been duly complied with and performed, including without limitation,
the deposit in the Reserve Account of the Required Reserve Amount.

Section 8.03 Corporate Resolution.

On or prior to the Closing Date, Purchaser shall have received a certified copy
of Seller’s corporate resolution approving the execution and delivery of this
Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby, together with such other
certificates of incumbency and other evidences of corporate authority as
Purchaser or its counsel may reasonably request.

 

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Section 8.04 No Material Adverse Change.

From the Agreement Date, there shall not have been any change to Seller’s
financial or operating condition, or in the Mortgage Servicing Rights, the
Mortgage Loans, the Related Escrow Accounts or to Seller’s relationship with, or
authority from, the Agency, that in each case will likely materially and
adversely affect the consummation of the transactions contemplated hereby or the
Excess MSRs. No Trigger Event shall be in effect.

Section 8.05 Consents.

Seller shall have obtained all consents, approvals or other requirements of
third parties required for the consummation of the transactions contemplated by
this Agreement and the Transaction Documents. All actions of all Governmental
Authorities required to consummate the transactions contemplated by this
Agreement and the Transaction Documents and the documents related thereto shall
have been obtained or made.

Section 8.06 Delivery of Transaction Documents.

On or prior to the Closing Date, Seller shall have delivered to the Purchaser
executed copies of each of the following:

(i) The Acknowledgement Agreement;

(ii) An Assignment Agreement with respect to the Excess MSRs on the Initial
Mortgage Loans;

(iii) The executed Reserve Account Agreement;

(iv) The executed Reserve Account Control Agreement;

(v) An Opinion of Counsel of Seller, in form and substance reasonably acceptable
to Purchaser, regarding due authorization, authority, and enforceability of the
applicable Transaction Documents to which Seller is a party, and regarding no
conflicts with other material Seller agreements;

(vi) An Opinion of Counsel of Seller, reasonably acceptable to Purchaser,
regarding the perfection of the assignment of Excess MSRs to Purchaser and the
security interests granted hereunder;

(vii) A recent certificate of good standing of Seller and of Purchaser;

(viii) A secretary’s certificate of Seller attaching its organizational
documents, board resolutions and incumbency certificates; and

(ix) A UCC-1 financing statement relating to the security interest of Purchaser
in the Collateral in form and substance reasonably acceptable to Purchaser.

 

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Section 8.07 Certificate of Seller.

On the Closing Date Seller shall have provided Purchaser a certificate, signed
by an authorized officer of Seller dated as of such date, applicable to the
transactions contemplated by this Agreement, to the effect that: (a) each of
Seller’s representations and warranties made in this Agreement and each other
Transaction Document to which Seller is a party is true and correct in all
material respects as of such date; (b) all of the terms, covenants, conditions
and obligations of this Agreement and each other Transaction Document to which
Seller is a party that are required to be complied with and performed by Seller
at or prior to the Closing Date have been duly complied with and performed in
all material respects; (c) the conditions set forth in Section 8.04 and
Section 8.05 have been satisfied; and (d) as of the Closing Date, a Trigger
Event is not in effect.

Section 8.08 No Actions or Proceedings.

No action, suit, proceeding or investigation by or before any Governmental
Authority shall have been instituted to restrain or prohibit the consummation
of, or to invalidate, any of the transactions contemplated by this Agreement and
the documents related hereto in any material respect.

Section 8.09 Fees, Costs and Expenses.

The fees, costs and expenses payable by Seller on or prior to the Closing Date
pursuant to Section 11.01 hereof and any other Transaction Document shall have
been paid.

Section 8.10 Valuation.

Purchaser shall have received from an Approved Valuation Firm a valuation of
Purchaser’s investment in the Excess MSRs related to the Initial Mortgage Loans
that reasonably approximates the amount of the Purchase Price.

ARTICLE IX

CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER

The obligations of Seller under this Agreement are subject to the satisfaction
of the following conditions as of the Closing Date.

Section 9.01 Correctness of Representations and Warranties.

The representations and warranties made by Purchaser in this Agreement shall be
true and correct as if the same were made on and as of the Closing Date.

Section 9.02 Compliance with Conditions.

All of the terms, conditions, covenants and obligations of this Agreement
required to be complied with and performed by Purchaser on or prior to the
Closing Date shall have been duly complied with and performed.

 

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Section 9.03 Corporate Resolution.

Seller shall have received from Purchaser a certified copy of its corporate
resolution approving the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, together with such other
certificates of incumbency and other evidences of corporate authority as Seller
or its counsel may reasonably request.

Section 9.04 No Material Adverse Change.

Since the Agreement Date, there shall not have been any change to Purchaser’s
financial condition that will likely materially and adversely affect the
consummation of the transactions contemplated hereby.

Section 9.05 Certificate of Purchaser.

Purchaser shall have provided Seller a certificate, signed by an authorized
officer of Purchaser dated as of such date, applicable to the transactions
contemplated by this Agreement, to the effect that: (a) each of Purchaser’s
representations and warranties made in this Agreement is true and correct in all
material respects as of such date; and (b) all of the terms, covenants,
conditions and obligations of this Agreement required to be complied with and
performed by Purchaser at or prior to the Closing Date have been duly complied
with and performed in all material respects.

Section 9.06 Good Standing Certificate of Purchaser.

Purchaser shall have provided Seller a recent certificate of good standing of
Purchaser.

ARTICLE X

INDEMNIFICATION; CURE

Section 10.01 Indemnification by Seller.

(a) Seller shall indemnify, defend and hold Purchaser, its affiliates and its
and their respective directors, managers, officers, employees, agents,
representatives and advisors (the “Purchaser Indemnitees”) harmless from and
shall reimburse the applicable Purchaser Indemnitee for any Losses suffered or
incurred by any Purchaser Indemnitee after the Closing Date which result from:

(i) Any material breach of a representation or warranty by Seller, or
non-fulfillment of any covenant or obligation of Seller, contained in this
Agreement or any Assignment Agreement;

(ii) Any servicing act or omission of any prior servicer relating to any
Mortgage Loan and any act or omission of any party related to the origination of
any Mortgage Loan;

 

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(iii) Any act, error or omission of Seller in servicing any of the Mortgage
Loans, including improper action or failure to act when required to do so;

(iv) Any exercise of any rights of setoff or other netting arrangements by the
Agency against Seller that results in a decrease in Servicing Agreements
termination payments due to Seller with respect to the Mortgage Loans from the
Agency or in a shortfall of funds to pay the Excess MSRs; and

(v) Litigation, proceedings, governmental investigations, orders, injunctions or
decrees resulting from any of the items described in
Section 10.01(a)(i)-(iii) above;

provided, however, that the applicable Purchaser Indemnitee has taken all
commercially reasonable and appropriate actions to mitigate any such Losses as
reasonably requested by Seller, which such failure of mitigation shall not
relieve Seller of its indemnification obligations in this Section 10.01 but may
affect the amount of such obligation; and further provided, that any Losses
incurred by the Purchaser Indemnitee pursuant to any attempt to mitigate any
such Losses shall be reimbursed by Seller as part of its indemnification
obligations in this Section 10.01.

(b) Purchaser shall notify Seller promptly after receiving written notice of the
assertion of any litigation, proceedings, governmental investigations, orders,
injunctions, decrees or any third party claims subject to indemnification under
this Agreement (each, a “Third Party Claim”). Upon receipt of notice of a Third
Party Claim, Seller shall have the right to assume the defense of such Third
Party Claim using counsel of its choice reasonably satisfactory to the
applicable Purchaser Indemnitee, but may not enter into any settlement without
the prior written consent of the applicable Purchaser Indemnitee; provided,
however, that Seller may enter into a settlement without the prior consent of
the Purchaser Indemnitee if Seller secures a full and unconditional release from
any liability for the Third Party Claim in favor of the Purchaser Indemnitee. A
Purchaser Indemnitee shall have the right to select separate counsel and to
otherwise participate in its defense at its own expense. Any exercise of such
rights by a Purchaser Indemnitee shall not relieve Seller of its obligations and
liabilities under this Section 10.01 or any other provision of this Agreement.
With respect to any Third Party Claim subject to indemnification under this
Agreement, the applicable Purchaser Indemnitee shall be required to cooperate in
good faith with Seller to ensure the proper and adequate defense of such
Third-Party Claim. For the avoidance of doubt, Seller’s obligations for
Purchaser Indemnitees shall not be limited to funds available in the Reserve
Account.

(c) Notwithstanding anything in Section 10.01(a) above, in the event that
counsel or independent accountants for Purchaser determine that there exists a
material risk that any amounts due to Purchaser under ARTICLE X hereof would be
treated as Non-qualifying Income upon the payment of such amounts to Purchaser,
the amount paid to Purchaser pursuant to this Agreement in any tax year shall
not exceed the maximum amount that can be paid to Purchaser in such year without
causing Purchaser to fail to meet the REIT Requirements for such year,
determined as if the payment of such amount were Non-qualifying Income as
determined by such counsel or independent accountants. If the amount payable for
any tax year under the preceding sentence is less than the amount which Seller
would otherwise be obligated to pay to Purchaser pursuant to ARTICLE X of this
Agreement (the “Expense Amount”), then Seller shall place the Expense Amount
into an escrow account (the “Expense Escrow Account”) using an

 

35

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escrow agent and agreement reasonably acceptable to Purchaser and shall not
release any portion thereof to Purchaser, and Purchaser shall not be entitled to
any such amount, unless and until Purchaser delivers to Seller, at the sole
option of Purchaser, (i) an opinion (an “Expense Amount Tax Opinion”) of
Purchaser’s tax counsel to the effect that such amount, if and to the extent
paid, would not constitute Non-qualifying Income, (ii) a letter (an “Expense
Amount Accountant’s Letter”) from Purchaser’s independent accountants indicating
the maximum amount that can be paid at that time to Purchaser without causing
Purchaser to fail to meet the REIT Requirements for any relevant taxable year,
or (iii) a private letter ruling issued by the IRS to Purchaser indicating that
the receipt of any Expense Amount hereunder will not cause Purchaser to fail to
satisfy the REIT Requirements (a “REIT Qualification Ruling” and, collectively
with an Expense Amount Tax Opinion and an Expense Amount Accountant’s Letter, a
“Release Document”).

Section 10.02 Indemnification by Purchaser.

Purchaser shall indemnify, defend and hold Seller, its affiliates and its and
their respective directors, managers, officers, employees, agents,
representatives and advisors (the “Seller Indemnitees”) harmless from and shall
reimburse the applicable Seller Indemnitee for any Losses suffered or incurred
by any Seller Indemnitee which result from:

(i) Any material breach of a representation or warranty by Purchaser, or
non-fulfillment of any covenant or obligation of Purchaser contained in this
Agreement; and

(ii) Litigation, proceedings, governmental investigations, orders, injunctions
or decrees, the basis for which occurred after the Agreement Date, resulting
from any of the items described in Section 10.01(a)(i) above;

provided, however, that the applicable Seller Indemnitee has taken all
commercially reasonable and appropriate actions to mitigate any such Losses as
reasonably requested by Purchaser, which such failure of mitigation shall not
relieve Purchaser of its indemnification obligations in this Section 10.02 but
may affect the amount of such obligation; and further provided, that any Losses
incurred by the Seller Indemnitee pursuant to any attempt to mitigate any such
Losses shall be reimbursed by Purchaser as part of its indemnification
obligations in this Section 10.02. Seller shall notify Purchaser promptly after
receiving written notice of the assertion of any Third Party Claim. Upon receipt
of such notice of a Third Party Claim, Purchaser shall have the right to assume
the defense of such Third Party Claim using counsel of its choice reasonably
satisfactory to the applicable Seller Indemnitee, but may not enter into any
settlement without the prior written consent of Purchaser; provided, however,
Purchaser may enter into a settlement without the Seller Indemnitee’s prior
consent if Purchaser obtains a full and unconditional release from liability for
the Third Party Claim in favor of the Seller Indemnitee. A Seller Indemnitee
shall have the right to select separate counsel and to otherwise participate in
its defense at its own expense. Any exercise of such rights by a Seller
Indemnitee shall not relieve Purchaser of its obligations and liabilities under
this Section 10.02 or any other provision of this Agreement. With respect to any
Third Party Claim subject to indemnification under this Agreement, the
applicable Seller Indemnitee shall be required to cooperate in good faith with
Purchaser to ensure the proper and adequate defense of such Third-Party Claim.

 

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ARTICLE XI

MISCELLANEOUS

Section 11.01 Costs and Expenses.

Except as otherwise provided herein, Purchaser and Seller shall each pay the
expenses incurred by it in connection with the transactions contemplated hereby.

Section 11.02 Payment Adjustments.

If, subsequent to the payment of the Purchase Price or the payment of any
amounts due hereunder to either Party, the outstanding principal balance of any
Mortgage Loan is found to be in error, or if for any reason the Purchase Price
or such other amounts is found to be in error, the Party benefiting from the
error shall pay an amount sufficient to correct and reconcile the Purchase Price
or such other amounts and shall provide a reconciliation statement and other
such documentation to reasonably satisfy the other Party concerning the accuracy
of such reconciliation. Such amounts shall be paid by the proper Party within
ten (10) Business Days from receipt of satisfactory written verification of
amounts due.

Section 11.03 Term and Termination.

(a) This Agreement shall remain in full force until the tenth (10th) anniversary
of the Agreement Date, unless earlier terminated as provided below, and shall be
renewed automatically for successive one-year periods thereafter until this
Agreement is terminated in accordance with the terms hereof.

(b) Either Party may elect not to renew this Agreement at the expiration of the
initial term or any renewal term by notice to the other Party at least 180 days,
but not more than 270 days, prior to the end of the applicable term.

(c) A Party may terminate this Agreement for cause by giving the other Party
thirty (30) days prior written notice thereof. Any termination pursuant to this
Section 11.03(c) shall not relieve any party from any liability or obligation
arising prior to the effective date of such termination.

Section 11.04 Relationship of Parties.

The Parties intend that the transactions contemplated in this Agreement and the
Transaction Documents constitute arms-length transactions between unaffiliated
parties. Nothing contained in this Agreement or the Transaction Documents will
establish any fiduciary, partnership, joint venture or similar relationship
between the Parties except to the extent otherwise expressly stated therein.

 

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Section 11.05 Notices.

All notices, requests, demands and other communications which are required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if personally delivered or sent by registered or
certified mail, return receipt requested, postage prepaid or by prepaid
overnight delivery service:

 

(a)

  

If to Purchaser, to:

 

Cherry Hill Mortgage Investment Corp.

301 Harper Drive, Suite 110

Moorestown, New Jersey 08057

Att: Chief Financial Officer

(b)

  

If to Seller, to:

 

Freedom Mortgage Corporation

907 Pleasant Valley Ave., Suite 3

Mount Laurel, New Jersey 08054

Att: Chief Corporate Counsel

or to such other address as Purchaser or Seller shall have specified in writing
to the other.

Section 11.06 Waivers.

Either Purchaser or Seller may, by written notice to the other extend the time
for the performance of any of the obligations or other transactions of the other
or waive compliance with or performance of any of the terms, conditions,
covenants or obligations required to be complied with or performed by the other
hereunder. The waiver by Purchaser or Seller of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any other
subsequent breach.

Section 11.07 Entire Agreement; Amendment.

This Agreement and the Transaction Documents constitute the entire agreement
between the Parties with respect to the transactions contemplated hereby and
supersede all prior agreements with respect thereto. This Agreement may be
amended only in a written instrument signed by both Seller and Purchaser.

Section 11.08 Binding Effect.

This Agreement shall inure to the benefit of and be binding upon the Parties and
their successors and permitted assigns. Nothing in this Agreement, express or
implied, is intended to confer on any Person other than the Parties and their
successors and permitted assigns, any rights, obligations, remedies or
liabilities.

Section 11.09 Headings.

Headings on the Articles and Sections in this Agreement are for reference
purposes only and shall not be deemed to have any substantive effect.

 

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Section 11.10 Governing Law.

This Agreement shall be governed by the internal laws of the State of New York
without giving effect to the conflict of law principles thereof, other than
Section 5-1401 of the New York General Obligations Law.

Section 11.11 Submission to Jurisdiction; Waiver.

Each of Seller and Purchaser hereby unconditionally

(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT AND THE OTHER FACILITY DOCUMENTS, OR FOR RECOGNITION
AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE EXCLUSIVE GENERAL
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE
COURTS FROM ANY THEREOF;

(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS
AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT
OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND
AGREES NOT TO PLEAD OR CLAIM THE SAME;

(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE
EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH
UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH BUYER SHALL HAVE
BEEN NOTIFIED;

(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; AND

(e) 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 TRANSACTION DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

Section 11.12 Waivers, etc.

No failure on the part of Purchaser to exercise and no delay in exercising, and
no course of dealing with respect to, any right, power or privilege under this
Agreement or any Transaction Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege under this
Agreement or any Transaction Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
provided herein are cumulative and not exclusive of any remedies provided by
law.

 

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Section 11.13 Incorporation of Exhibits.

The Exhibits attached hereto shall be incorporated herein and shall be
understood to be a part hereof as though included in the body of this Agreement.

Section 11.14 Counterparts.

This Agreement may be executed in counterparts, each of which, when so executed
and delivered, shall be deemed to be an original but all of which, taken
together, shall constitute one and the same agreement.

Section 11.15 Severability of Provisions.

If any one or more of the covenants, agreements, provisions or terms of this
Agreement shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Agreement
or of the rights of the Parties hereto.

Section 11.16 Assignment.

(a) Seller may not assign, transfer, sell or subcontract all or any part of this
Agreement, any interest herein, or any of Seller’s interest in the Servicing
Spread Collections, without the prior written consent of Purchaser, provided
that any successor to Seller must assume Seller’s obligations under this
Agreement. Subject to the rights of the Agency, Purchaser shall have the
unrestricted right to further assign, transfer, deliver, hypothecate, pledge,
subdivide or otherwise deal with its rights under this Agreement on whatever
terms Purchaser shall determine without the consent of Seller; including the
right to assign all or any portion of the applicable Sold Percentages of the
Excess MSRs and to assign the related rights under this Agreement. If Purchaser
assigns any rights under this Agreement to a third party (a “Third Party
Assignment”), such third party (a “Third Party Assignee”) shall enter into a new
agreement with Seller or Seller’s assignee that provides such Third Party
Assignee with the same rights with respect to the applicable Sold Percentages of
the Excess MSRs that Purchaser would have had under this Agreement if the Third
Party Assignment had not occurred. Purchaser shall give prompt notice of any
such assignment to Ginnie Mae.

(b) Seller shall maintain a register on which it enters the name and address of
each holder of an interest in the Excess MSRs and each holder’s interest in the
Excess MSRs (the “Holder Register”) for each transaction described in
Section 11.16(a). The entries in the Holder Register shall be conclusive absent
manifest error, and Seller shall treat each Person whose name is recorded in the
Holder Register as an owner of an interest in the Excess MSRs for all purposes
of this Agreement notwithstanding any notice to the contrary.

 

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Section 11.17 Certain Acknowledgements.

Notwithstanding anything to the contrary contained herein:

(1) The property subject to the security interest reflected in this instrument
includes all of the right, title and interest of Seller in certain mortgages
and/or participation interests related to such mortgages (“Pooled Mortgages”)
and pooled under the mortgage-backed securities program of the Government
National Mortgage Association (“Ginnie Mae”), pursuant to section 306(g) of the
National Housing Act, 12 U.S.C. § 1721(g);

(2) To the extent that the security interest reflected in this instrument
relates in any way to the Pooled Mortgages, such security interest is subject
and subordinate to all rights, powers and prerogatives of Ginnie Mae, whether
now existing or hereafter arising, under and in connection with: (i) 12 U.S.C. §
1721(g) and any implementing regulations; (ii) the terms and conditions of that
certain Acknowledgment Agreement, with respect to the Security Interest, by and
between Ginnie Mae, Freedom Mortgage Corporation (“Seller”), and Cherry Hill
Mortgage Investment Corp.; (iii) applicable Guaranty Agreements and contractual
agreements between Ginnie Mae and Seller; and (iv) the Ginnie Mae
Mortgage-Backed Securities Guide, Handbook 5500.3 Rev. 1, and other applicable
guides; and

(3) Such rights, powers and prerogatives of Ginnie Mae include, but are not
limited to, Ginnie Mae’s right, by issuing a letter of extinguishment to Seller,
to effect and complete the extinguishment of all redemption, equitable, legal or
other right, title or interest of Seller in the Pooled Mortgages, in which event
the security interest as it relates in any way to the Pooled Mortgages shall, as
more particularly described in the Acknowledgement Agreement instantly and
automatically be extinguished as well.

[The remainder of this page left blank intentionally]

 

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IN WITNESS WHEREOF, each of the undersigned Parties has caused this Agreement to
be duly executed in its corporate name by one of its duly authorized officers,
all as of the date first above written.

 

CHERRY HILL MORTGAGE INVESTMENT CORP. Purchaser By:   /s/ Martin Levine   Name:
  Martin Levine   Title:   Chief Financial Officer, Treasurer and Secretary
FREEDOM MORTGAGE CORPORATION Seller By:   /s/ Stanley C. Middleman   Name:  
Stanley C. Middleman   Title:   Chief Executive Officer

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EXHIBIT A

FORM OF ASSIGNMENT AGREEMENT

Subject to, and upon the terms and conditions of the Excess MSR Acquisition and
Recapture Agreement, dated as of [            ], 2013 (the “Agreement”), by and
between Freedom Mortgage Corporation, a New Jersey corporation (together with
its successors and permitted assigns, the “Seller”) and Cherry Hill Mortgage
Investment Corp. a Maryland corporation (together with its successors and
permitted assigns, the “Purchaser”), as may be amended, restated, or otherwise
modified and in effect from time to time, Seller hereby assigns, transfers and
delivers to Purchaser all of Seller’s right, title and interest in and to the
applicable Sold Percentage of the Excess MSR for each of the Mortgage Loans set
forth in Annex A attached hereto and all proceeds thereof, and agrees that as of
the [Closing] [Assignment] Date, the applicable Mortgage Loan shall be deemed to
be a “Mortgage Loan” for all purposes of the Agreement. Capitalized terms used
in this Assignment Agreement have the meanings given to such terms in, or
incorporated by reference into, the Agreement.

All of the terms, covenants, conditions and obligations of the Agreement
required to be complied with and performed by Seller on or prior to the date
hereof have been duly complied with and performed in all material respects.

 

FREEDOM MORTGAGE CORPORATION Seller By:       Name:     Title:  

 

A-1

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Annex A

[ATTACH ANNEX A, WHICH MAY BE ON COMPUTER TAPE, COMPACT DISK, OR

MICROFICHE, CONTAINING THE INFORMATION SET FORTH BELOW]

 

A-2

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EXHIBIT B

SCHEDULE OF MORTGAGE LOANS

[SEPARATELY DELIVERED]

 

B-1

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EXHIBIT C

LOCATION OF CREDIT FILES

 

C-1

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EXHIBIT D

FORM OF SUMMARY REMITTANCE REPORT

[DELIVERED SEPARATELY]

 

D-1

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EXHIBIT E

FORM OF DELINQUENCY REPORT

[DELIVERED SEPARATELY]

 

E-1

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EXHIBIT F

FORM OF DISBURSEMENT REPORT

[DELIVERED SEPARATELY]

 

F-1

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EXHIBIT H

SELLER JURISDICTIONS AND RECORDING OFFICES

Chief Executive Office:

907 Pleasant Valley Ave.

Mount Laurel, New Jersey 08054

Recording Office:

Secretary of State, State of New Jersey

 

H-1

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EXHIBIT I

LIST OF REQUIRED FIELDS FOR EACH DATA TAPE

 

  1    Cut-off Date      45       Origination Rate   2    Loan #      46      
Origination P&I   3    Agency      47       Index Code   4    Remit      48   
   Plan Code   5    Product Description      49       Current Index   6    Note
Rate      50       Margin   7    Loan Amount      51       Rate Chg Freq   8   
Current Balance      52       Next Rate Change Date   9    P & I      53      
First Rate Change Date 10    T & I      54       Initial Period 11    Total
Payment      55       P&I Chg Freq 12    Term      56       Next P&I Chg Date 13
   Stated Remaining Term      57       First P&I Chg Date 14    Age      58   
   Initial PI Chg Period 15    Closing Date      59       Initial Cap 16   
First Payment Date      60       Periodic Cap Inc 17    Next Due Date      61   
   Periodic Cap Dec 18    Interest Paid Through Date      62       Life Of Loan
Cap Inc 19    Maturity Date      63       Maximum Rate 20    Escrow Balance     
64       Minimum Rate 21    Other Advances      65       Bankruptcy Status 22   
Suspense Funds      66       Foreclosure Status 23    LTV      67       Interest
Only 24    CLTV      68       Interest Only Term 25    DTI      69      
Interest Method 26    Appraised Value      70       Prepay Penalty Term 27   
Sale Price      71       Prepay Penalty Indicator 28    No Units      72      
Prepay Penalty Description 29    Loan Type      73       Balloon Flag 30   
Property Type      74       Balloon Term 31    Loan Purpose      75      
Origination Fico 32    Cash-out Flag      76       Current Fico 33    Occupancy
     77       Doc Type 34    Lien Position      78       Pay String History 35
   Address      79       Status

 

I-1

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36    City      80       BK_Chapter 37    State      81       Foreclosure Start
Date 38    Zip      82       Loss_Mitigation_Flag 39    County      83      
Modification_Flag 40    Gross Serv Fee      84       LitigationFlag 41    Net
Serv Fee      85       MI Flag 42    LPMI Fee      86       MI Provider 43   
Guar Fee      87       Channel 44    Pool Number      

 

I-2