Exhibit 10.5

 

Execution

 

MASTER REPURCHASE AGREEMENT

 

between

 

BANK OF AMERICA, N.A.

(“Buyer”)

 

and

 

FIVE OAKS ACQUISITION CORP.

(“Seller”)

 

dated as of

 

December 30, 2014

 

 

 

 

TABLE OF CONTENTS

 

    Page       ARTICLE 1 DEFINITIONS AND PRINCIPLES OF CONSTRUCTION 1       1.1
Defined Terms 1 1.2 Interpretation; Principles of Construction. 1       ARTICLE
2 AMOUNT AND TERMS OF TRANSACTIONS 2       2.1 Agreement to Enter into
Transactions 2 2.2 Transaction Limits 2 2.3 Description of Purchased Assets 3
2.4 Maximum Transaction Amounts 3 2.5 Use of Proceeds 3 2.6 Price Differential 3
2.7 “Servicing Released” Transactions 4 2.8 Terms and Conditions of Transactions
4 2.9 Guarantee and/or Additional Security Agreements 4 2.10 Temporary Increase
of Aggregate Transaction Limit 4       ARTICLE 3 PROCEDURES FOR REQUESTING AND
ENTERING INTO TRANSACTIONS 4       3.1 Policies and Procedures 4 3.2 Request for
Transaction; Asset Data Record 5 3.3 Delivery of Mortgage Loan Documents 5 3.4
Haircut 6 3.5 Over/Under Account 6 3.6 Payment of Purchase Price. 9 3.7 Approved
Payees. 10 3.8 Delivery of Mortgage-Backed Securities 11       ARTICLE 4
REPURCHASE 11       4.1 Repurchase Price 11 4.2 Repurchase Acceleration Events
11 4.3 Reduction of Asset Value as Alternative Remedy 12 4.4 Designation as
Noncompliant Asset as Alternative Remedy 12 4.5 Illegality 13 4.6 Increased
Costs 13 4.7 Payments Pursuant to Sale to Approved Investors 14 4.8 Application
of Payments from Seller or Approved Investors 14 4.9 Method of Payment 15 4.10
Notification of Payment 15 4.11 Authorization to Debit 15 4.12 Book Account 15

  

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4.13 Full Recourse 15       ARTICLE 5 FEES 16       5.1 Payment of Fees 16      
ARTICLE 6 SECURITY; SERVICING; MARGIN ACCOUNT MAINTENANCE; CUSTODY OF MORTGAGE
LOAN DOCUMENTS; REPURCHASE TRANSACTIONS; DUE DILIGENCE 16       6.1
Precautionary Grant of Security Interest in Purchased Assets and Purchased Items
16 6.2 Servicing 17 6.3 Margin Account Maintenance 21 6.4 Custody of Mortgage
Loan Documents 22 6.5 Repurchase and Release of Purchased Assets 24 6.6
Repurchase Transactions 24 6.7 Periodic Due Diligence 25       ARTICLE 7
CONDITIONS PRECEDENT 25       7.1 Initial Transaction 25 7.2 All Transactions 27
7.3 Reserved 29 7.4 Satisfaction of Conditions 29       ARTICLE 8
REPRESENTATIONS AND WARRANTIES 29       8.1 Representations and Warranties
Concerning Seller 29 8.2 Representations and Warranties Concerning Purchased
Assets 34 8.3 Continuing Representations and Warranties 34 8.4 Amendment of
Representations and Warranties 34       ARTICLE 9 AFFIRMATIVE COVENANTS 34      
9.1 Financial Statements and Other Reports. 34 9.2 Inspection of Properties and
Books 35 9.3 Notice 36 9.4 Existence, Etc. 37 9.5 Servicing of Mortgage Loans 38
9.6 Evidence of Purchased Assets 38 9.7 Defense of Title; Protection of
Purchased Items 38 9.8 Further Assurances 38 9.9 Fidelity Bonds and Insurance 39
9.10 Table-Funded Mortgage Loans 39 9.11 Sharing of Information. 39 9.12 ERISA.
39 9.13 Additional Repurchase or Warehouse Facility 40 9.14 MERS 40

  

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9.15 Agency Audit and Approval Maintenance. 40 9.16 Additional Facilities. 40
9.17 Financial Covenants and Ratios 40       ARTICLE 10 NEGATIVE COVENANTS 41  
    10.1 Debt 41 10.2 Lines of Business 41 10.3 Debt and Subordinated Debt 41
10.4 Loss of Eligibility 41 10.5 Loans to Officers, Employees and Shareholders
41 10.6 Liens on Purchased Assets and Purchased Items 41 10.7 Transactions with
Affiliates 41 10.8 Consolidation, Merger, Sale of Assets and Change of Control
42 10.9 Reserved 42 10.10 Purchased Items 42 10.11 Secondary Marketing,
Underwriting, Third Party Origination and Interest Rate Risk Management
Practices 42       ARTICLE 11 DEFAULTS AND REMEDIES 42       11.1 Events of
Default 42 11.2 Remedies 45 11.3 Treatment of Custodial Account 47 11.4 Sale of
Purchased Assets 47 11.5 No Obligation to Pursue Remedy 47 11.6 No Judicial
Process 48 11.7 Reimbursement of Costs and Expenses 48 11.8 Application of
Proceeds 48 11.9 Rights of Set-Off 48 11.10 Reasonable Assurances 49      
ARTICLE 12 INDEMNIFICATION 49       12.1 Indemnification 49 12.2 Reimbursement
50 12.3 Payment of Taxes 50 12.4 Buyer Payment 51 12.5 Agreement not to Assert
Claims 51 12.6 Survival 52       ARTICLE 13 TERM AND TERMINATION 52       13.1
Term 52 13.2 Termination 52 13.3 Extension of Term 52       ARTICLE 14 GENERAL
53

  

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14.1 Integration; Servicing Provisions Integral and Non-Severable 53 14.2
Amendments 53 14.3 No Waiver 53 14.4 Remedies Cumulative 53 14.5 Assignment 53
14.6 Successors and Assigns 54 14.7 Participations 54 14.8 Invalidity 54 14.9
Additional Instruments 54 14.10 Survival. 54 14.11 Notices 54 14.12 Governing
Law 55 14.13 Submission to Jurisdiction; Service of Process; Waivers 55 14.14
Waiver of Jury Trial 56 14.15 Counterparts 56 14.16 Headings 56 14.17 Reserved
56 14.18 Confidential Information 56 14.19 Intent 57 14.20 Right to Liquidate 58
14.21 Insured Depository Institution 58 14.22 Netting Contract 58 14.23 Tax
Treatment 58 14.24 Examination and Oversight by Regulators 58

 

EXHIBITS

 

Exhibit A: Glossary of Defined Terms Exhibit B: Irrevocable Closing Instructions
Exhibit C: Secretary’s Certificate Exhibit D: Corporate Resolutions Exhibit E:
Officer’s Certificate Exhibit F: Assignment of Closing Protection Letter Exhibit
G: Assignment of Fidelity Bond and Errors and Omission Policy Exhibit H: Form of
Power of Attorney Exhibit I: Acknowledgement of Password Confidentiality
Agreement Exhibit J: Wiring Instructions Exhibit K: Form of Servicer Notice
Exhibit L: Representations and Warranties Exhibit M: Required Agency Documents
Exhibit N: Form of Trade Assignment Exhibit O: Form of Request for Temporary
Increase Exhibit P: Reserved Exhibit Q: Reserved Exhibit R: Auto Fund
Authorization Request

 

SCHEDULES

 

Schedule 1: Filing Jurisdictions and Offices Schedule 2: States and
Jurisdictions Schedule 3: List of Seller’s Existing Debt

 

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MASTER REPURCHASE AGREEMENT

 

THIS MASTER REPURCHASE AGREEMENT (the “Agreement”) is made and entered into as
of December 30, 2014, by and between Bank of America, N.A., a national banking
association (“Buyer”), and Five Oaks Acquisition Corp., a Delaware corporation
(“Seller”).

 

RECITALS

 

A.Seller has requested Buyer to enter into transactions with Seller whereby
Seller may, from time to time, sell to Buyer certain residential mortgage loans
(including the Servicing Rights related thereto) and/or other mortgage related
assets and interests, against the transfer of funds by Buyer, with a
simultaneous agreement by Buyer to sell to Seller such purchased assets at a
date certain or on demand after the Purchase Date, against the transfer of funds
by Seller (each such transaction, a “Transaction”).

 

B.Buyer has agreed to enter into such Transactions, subject to the terms and
conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual rights and obligations provided
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Seller and Buyer agree as follows:

 

ARTICLE 1
DEFINITIONS AND PRINCIPLES OF CONSTRUCTION

 

1.1Defined Terms. As used in this Agreement, capitalized terms shall have the
meanings set forth in Exhibit A hereto, unless the context otherwise requires.
All such defined terms shall, unless specifically provided to the contrary, have
the defined meanings set forth herein when used in any other agreement,
certificate or document made or delivered pursuant hereto.

 

1.2Interpretation; Principles of Construction. The following rules of this
Section 1.2 apply unless the context requires otherwise. A gender includes all
genders. Where a word or phrase is defined, its other grammatical forms have a
corresponding meaning. A reference to a subsection, Section, Schedule or Exhibit
is, unless otherwise specified, a reference to a Section of, or schedule or
exhibit to, this Agreement. A reference to a party to this Agreement or another
agreement or document includes the party’s successors and permitted substitutes
or assigns. A reference to an agreement or document (including any Principal
Agreement) is to the agreement or document as amended, modified, novated,
supplemented or replaced, except to the extent prohibited thereby or by any
Principal Agreement and in effect from time to time in accordance with the terms
thereof. A reference to legislation or to a provision of legislation includes a
modification or re-enactment of it, a legislative provision substituted for it
and a regulation or statutory instrument issued under it. A reference to writing
includes a facsimile transmission and any means of reproducing words in a
tangible and permanently visible form. A reference to conduct includes, without
limitation, an omission, statement or undertaking, whether or not in writing.
The words “hereof”, “herein”, “hereunder” and similar words refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
term “including” is not limiting and means “including without limitation”. In
the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including”, the words “to” and “until”
each mean “to but excluding”, and the word “through” means “to and including”.

 

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Except where otherwise provided in this Agreement, any determination, consent,
approval, statement or certificate made or confirmed in writing with notice to
Seller by Buyer or an authorized officer of Buyer provided for in this Agreement
is conclusive and binds the parties in the absence of manifest error. A
reference to an agreement includes a security interest, guarantee, agreement or
legally enforceable arrangement whether or not in writing related to such
agreement.

 

A reference to a document includes an agreement (as so defined) in writing or a
certificate, notice, instrument or document, or any information recorded in
electronic form. Where Seller is required to provide any document to Buyer under
the terms of this Agreement, the relevant document shall be provided in writing
or printed form unless Buyer requests otherwise. At the request of Buyer, the
document shall be provided in electronic form or both printed and electronic
form.

 

This Agreement is the result of negotiations among, and has been reviewed by
counsel to, Buyer and Seller, and is the product of all parties. In the
interpretation of this Agreement, no rule of construction shall apply to
disadvantage one party on the ground that such party proposed or was involved in
the preparation of any particular provision of this Agreement or this Agreement
itself. Except where otherwise expressly stated, Buyer may give or withhold, or
give conditionally, approvals and consents and may form opinions and make
determinations at its sole and absolute discretion. Any requirement of good
faith, discretion or judgment by Buyer shall not be construed to require Buyer
to request or await receipt of information or documentation not immediately
available from or with respect to Seller, a servicer of the Purchased Mortgage
Loans, any other Person or the Purchased Assets themselves. All references
herein or in any Principal Agreement to “good faith” means good faith as defined
in Section 1-201(19) of the Uniform Commercial Code.

 

ARTICLE 2
AMOUNT AND TERMS OF TRANSACTIONS

 

2.1Agreement to Enter into Transactions. Subject to the terms and conditions of
this Agreement and provided that no Event of Default or Potential Default has
occurred and is continuing, Buyer shall, from time to time during the term of
this Agreement, enter into Transactions with Seller; provided, however, that (a)
the Aggregate Outstanding Purchase Price as of any date shall not exceed the
Aggregate Transaction Limit and (b) the Aggregate Outstanding Purchase Price for
any Type of Transaction shall not exceed the applicable Type Sublimit. Buyer
shall have the obligation to enter into Transactions with an Aggregate
Outstanding Purchase Price equal to or less than the Committed Amount, and Buyer
shall have no obligation to enter into Transactions with respect to the
Uncommitted Amount. All purchases of Purchased Assets shall be first deemed
committed up to the Committed Amount and then the remainder, if any, shall be
deemed uncommitted up the Uncommitted Amount. Seller may request Transactions in
excess of the Aggregate Transaction Limit and Buyer may, from time to time, in
its sole and absolute discretion, consent to a Temporary Increase of the
Aggregate Transaction Limit in accordance with Section 2.10.

 

2.2Transaction Limits. The Aggregate Transaction Limit and each Type Sublimit
shall be as set forth in the Transactions Terms Letter. Upon two (2) Business
Days prior written notice to Seller, Buyer shall have the right to terminate any
Transactions with respect to the Uncommitted Amount and require the repurchase
of any such Purchased Assets, or reduce, whether permanently or temporarily, and
without refund of any fee or other amount previously paid by Seller, the
Aggregate Transaction Limit and/or each Type Sublimit by an amount up to the
Uncommitted Amount. In the event of any reduction pursuant to this Section 2.2,
Buyer shall give Seller prior notice thereof, which notice shall designate (a)
the effective date of any such reduction, (b) the amount of the reduction and
(c) the Transaction and/or Type Sublimit limit(s) to which such reduction amount
shall apply. Buyer shall not be liable to Seller for any costs, losses or
damages arising from or relating to a reduction by Buyer in the Aggregate
Transaction Limit or any Type Sublimit.

 

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2.3Description of Purchased Assets. With respect to each Transaction, Seller
shall cause to be maintained with Buyer Purchased Assets with an Asset Value not
less than, at any date, the related Purchase Price for such Transaction. With
respect to each Transaction, the type of Purchased Asset shall be the type of
Asset as specified in the Transactions Terms Letter as the Type, and in each
case shall consist of the type of mortgage loans, mortgage related securities,
or interests therein as described in Bankruptcy Code Section 101(47)(A). If
there is uncertainty as to the Type of a Purchased Asset, Buyer shall determine
the correct Type for such Purchased Asset.

 

2.4Maximum Transaction Amounts. The Purchase Price for each proposed Transaction
shall not exceed the least of:

 

(a)the Aggregate Outstanding Purchase Price for the applicable Type Sublimit
(after giving effect to all Transactions then subject to the Agreement), as
determined by the Type of Purchased Asset;

 

(b)the Aggregate Transaction Limit (as such amount may be increased from time to
time in the sole discretion of Buyer as provided in Section 2.10), minus the
Aggregate Outstanding Purchase Price of all other Transactions outstanding, if
any; and

 

(c)the Asset Value of the related Purchased Asset(s).

 

2.5Use of Proceeds. Seller shall use the Purchase Price of each Transaction
solely for the purpose of acquiring the related Purchased Asset(s).

 

2.6Price Differential.

 

(a)Price Differential. Notwithstanding that Buyer and Seller intend that the
Transactions hereunder be sales by Seller to Buyer of the Purchased Assets for
all purposes except accounting and tax purposes, Seller shall pay Buyer interest
on the Purchase Price for each Purchased Asset from the Purchase Date until, but
not including, the date on which the Repurchase Price is paid, at an annual rate
equal to the Price Differential; provided that if the Repurchase Price for a
Transaction is not paid by Seller when due (whether at the Repurchase Date, upon
acceleration or otherwise), the Repurchase Price shall bear a Price Differential
from the date due until paid in full at an annual rate equal to the Default
Rate. For the avoidance of doubt, from and after the date on which a Purchased
Asset is deemed to be a Noncompliant Asset, the Purchase Price for such
Purchased Asset shall bear a Price Differential at an annual rate equal to the
sum of the Applicable Pricing Rate plus the Type Margin for a Noncompliant
Asset.

 

(b)Time for Payment. Price Differential with respect to any Purchased Asset
shall be due and payable on the Payment Date occurring in the second month
following the related Purchase Date and thereafter on each subsequent Payment
Date. On the date that the Repurchase Price for such Purchased Asset is paid,
all accrued Price Differential not otherwise paid by the Seller with respect to
such Purchased Asset shall be due and payable. Notwithstanding anything to the
contrary in this Section 2.6(b), in the event the Asset Value of any Purchased
Asset is marked to zero and Seller requests Buyer to release its security
interest in such Purchased Asset or any Purchased Items related thereto, Buyer
shall not release any such security interest therein unless and until Seller
shall have paid to Buyer the Repurchase Price for such Purchased Asset.

 

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(c)Computations. All computations of Price Differential and fees payable
hereunder shall be based upon the actual number of days (including the first day
but excluding the last day) occurring in the relevant period, and a
three-hundred sixty (360) day year.

 

2.7“Servicing Released” Transactions. The sale of all Servicing Released
Mortgage Loans by Seller to Buyer pursuant to Transactions under this Agreement
includes the Servicing Rights related to the Mortgage Loans and all Transactions
in respect of Servicing Released Mortgage Loans under this Agreement are
“servicing released” purchase and sale transactions for all intents and
purposes, it being understood that the Purchase Price paid by Buyer to Seller
for each such Servicing Released Mortgage Loan includes a premium that
compensates Seller for the Servicing Rights related to such Mortgage Loan and
upon payment of the Purchase Price by Buyer to Seller, Buyer becomes the owner
of such Mortgage Loan and the Servicing Rights related thereto.

 

2.8Terms and Conditions of Transactions. The terms and conditions of the
Transactions as set forth in the Transactions Terms Letter, this Agreement or
otherwise may be changed from time to time by Buyer by providing prior notice to
Seller. The terms and conditions of the Transactions Terms Letter are hereby
incorporated and form a part of this Agreement as if fully set forth herein;
provided however, to the extent of any conflict between the terms of this
Agreement and the terms of the Transactions Terms Letter, the Transactions Terms
Letter shall control.

 

2.9Guarantee and/or Additional Security Agreements. As mutually agreed by Buyer
and Seller, Seller agrees to cause to be executed and delivered to Buyer such
Guarantees and/or additional security agreements as additional support for
Seller’s obligations hereunder, which Guarantees and/or additional security
agreements shall be considered “a security agreement or other arrangement or
other credit enhancement” that is “related to” the Agreement and Transactions
hereunder within the meaning of Bankruptcy Code Sections 101(38A)(A),
101(47)(a)(v) and 741(7)(A)(x).

 

2.10Temporary Increase of Aggregate Transaction Limit Seller may request a
temporary increase of the Aggregate Transaction Limit (a “Temporary Increase”)
by submitting to Buyer an executed request for Temporary Increase in the form of
Exhibit O hereto (a “Request for Temporary Increase”), setting forth the
requested increased Aggregate Transaction Limit (such increased amount, the
“Temporary Aggregate Transaction Limit”), the effective date and time of such
Temporary Increase and the date and time on which such Temporary Increase shall
terminate. Buyer may from time to time, in its sole and absolute discretion,
consent to such Temporary Increase, which consent shall be in writing as
evidenced by Buyer’s delivery to Seller of a countersigned Request for Temporary
Increase. At any time that a Temporary Increase is in effect, the Aggregate
Transaction Limit shall equal the Temporary Aggregate Transaction Limit for all
purposes of this Agreement and all calculations and provisions relating to the
Aggregate Transaction Limit shall refer to the Temporary Aggregate Transaction
Limit, including without limitation, Type Sublimits and the Minimum Over/Under
Account Balance. Upon the termination of a Temporary Increase, Seller shall
repurchase Purchased Assets in order to reduce the Aggregate Outstanding
Purchase Price to the Aggregate Transaction Limit (as reduced by the termination
of such Temporary Increase) in accordance with Section 4.2(k).

 

ARTICLE 3
PROCEDURES FOR REQUESTING AND ENTERING INTO TRANSACTIONS

 

3.1Policies and Procedures. In connection with the Transactions contemplated
hereunder, Seller shall comply with all applicable policies and procedures of
Buyer as may currently exist or as hereafter created. Such policies and
procedures may be in writing, published on Buyer’s website(s) or otherwise
contained in the Handbook. Buyer shall have the right to change, revise, amend
or supplement its policies and procedures and the Handbook from time to time to
conform to current legal requirements or Buyer practices by giving prior notice
to Seller of such changes, revisions, amendments or supplements. To the extent
of any conflict between the terms of this Agreement and the terms of the
Handbook, this Agreement shall control.

 

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3.2Request for Transaction; Asset Data Record.

 

(a)Request for Transaction. Seller shall request a Transaction by delivering to
Buyer, electronically or in writing, an Asset Data Record for each Asset
intended to be the subject of the Transaction no later than 4:00 p.m. (New York
City time); provided, however, that if Seller intends to request a Transaction
or series of Transactions with an Aggregate Purchase Price equal to or greater
than ten million ($10,000,000) dollars, Seller shall provide Buyer not fewer
than one (1) Business Day prior written notice thereof. Buyer shall be under no
obligation to enter into any Transaction or Transactions requested by Seller if
the Purchase Price relates to the Uncommitted Amount. Assuming the satisfaction
of all conditions precedent set forth in Article 7 and as otherwise set forth in
this Agreement, Buyer may, for any Transaction with respect to the Uncommitted
Amount and shall, for any Transaction with respect to the Committed Amount,
confirm to Seller the terms of Transactions electronically or in writing. Buyer
reserves the right to reject any Transaction request that Buyer determines fails
to comply with the terms and conditions of this Agreement or Buyer’s then
current policies and procedures.

 

(b)Failure to Enter into Transaction; Cancellation of Transaction. If Seller
fails five (5) times or more to enter into a Transaction in each case, after
Seller has requested such Transaction and submitted an Asset Data Record in
connection with such request, for each Transaction requested by Seller
thereafter for which Seller fails to enter into such Transaction after Seller
has requested such Transaction and submitted an Asset Data Record in connection
with such request, Seller shall pay and/or reimburse Buyer for any reasonable
out-of-pocket losses, costs and expenses incurred by Buyer in connection with
such failure to enter into the Transaction, including, without limitation, costs
relating to re-employment of funds obtained by Buyer and fees payable to
terminate the arrangements through which such funds were obtained. In addition,
with respect to any Transaction, including the initial Transaction, if following
disbursement by Buyer of the Purchase Price relating to such Transaction, Seller
cancels such Transaction, in each case, Seller shall pay Buyer a Price
Differential on such Purchase Price from the Purchase Date until, but not
including, the date the Purchase Price is returned to Buyer.

 

(c)Form of Asset Data Record. Buyer shall have the right to revise or supplement
the form of the Asset Data Record from time to time by giving thirty (30) days’
prior notice thereof to Seller.

 

3.3Delivery of Mortgage Loan Documents.

 

(a)Dry Mortgage Loans. Prior to any Transaction related to a Dry Mortgage Loan,
Seller shall deliver to Buyer or its Custodian, or authorize and direct the
Closing Agent to deliver to Buyer or its Custodian, the related Mortgage Loan
Documents in accordance with and pursuant to the terms of Section 7.2 hereof and
the Custodial Agreement.

 

(b)Wet Mortgage Loans. With respect to a Transaction the subject of which is a
Wet Mortgage Loan, (i) Seller shall deliver to Buyer or its Custodian any
Mortgage Loan Documents in Seller’s possession, and (ii) Seller shall authorize
and direct the Closing Agent to deliver the related Mortgage Loan Documents to
Seller, for delivery to Buyer or its Custodian, in each case, within the Maximum
Dwell Time in accordance with the terms of Section 7.2 hereof, Exhibit B hereof
and the Custodial Agreement.

 

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(c)Pooled Mortgage Loans. With respect to a Transaction the subject of which is
a Pooled Mortgage Loan, Seller shall deliver to Buyer or its Custodian, as
applicable, the related Agency Documents in accordance with and pursuant to the
terms of Section 7.2(e) hereof and the Custodial Agreement and Seller shall
cause the Custodian to deliver a trust receipt to Buyer with respect to such
Mortgage Loans in accordance with the terms of the Custodial Agreement. In
addition, Seller shall deliver to Buyer a duly executed Trade Assignment
together with a true and complete copy of the Purchase Commitment with respect
to the related Mortgage-Backed Security in accordance with and pursuant to the
terms of Section 7.2(b) and Section 7.2(e).

 

(d)Government Mortgage Loans. With respect to a Transaction the subject of which
is a Government Mortgage Loan, Seller shall, at the request of Buyer, deliver to
Buyer or its Custodian, within forty five (45) calendar days following the
Purchase Date for such Mortgage Loan, the FHA Mortgage Insurance Contract or the
VA Loan Guaranty Agreement, as applicable, or evidence of such insurance or
guaranty, as applicable, including proof of payment of the premium and the case
number so Buyer can access the information on the computer system maintained by
FHA or the VA.

 

(e)Mortgage Loan Documents in Seller’s Possession. At all times during which the
Mortgage Loan Documents related to any Purchased Mortgage Loan are in the
possession of Seller, and until such Purchased Mortgage Loan is repurchased by
Seller, Seller shall hold such Mortgage Loan Documents in trust separate and
apart from Seller’s own documents and assets and for the exclusive benefit of
Buyer and shall act only in accordance with Buyer’s written instructions
thereto.

 

(f)Other Mortgage Loan Documents in Seller’s Possession. With respect to each
Purchased Mortgage Loan, until such Purchased Mortgage Loan is repurchased by
Seller, Seller shall hold in trust separate and apart from Seller’s own
documents and assets and for the exclusive benefit of Buyer all mortgage loan
documents related to such Purchased Mortgage Loan and not delivered to Buyer,
including, without limitation, the Other Mortgage Loan Documents, as applicable.
All such mortgage loan documents shall be clearly marked as subject to delivery
to Buyer.

 

3.4Haircut. With respect to each Transaction for which the related Purchase
Price is being remitted by Buyer to one or more Approved Payees, Seller shall
ensure that there are sufficient funds on deposit in the Over/Under Account such
that following the withdrawal of the related Haircut by Buyer, the balance of
the Over/Under Account is equal to or greater than the Minimum Over/Under
Account Balance, as set forth in the Transactions Terms Letter.

 

3.5Over/Under Account.

 

(a)Minimum Balance. Seller shall at all times maintain a balance in the
Over/Under Account of not less than the Minimum Over/Under Account Balance, as
set forth in the Transactions Terms Letter. The Over/Under Account shall be used
to assist in settling the Transactions and any other obligations under this
Agreement. Buyer shall not be required to segregate and hold funds deposited by
or on behalf of Seller in the Over/Under Account separate and apart from Buyer’s
own funds or funds deposited by or held for others. Upon the occurrence of a
Potential Default or an Event of Default, Buyer shall have the right to increase
the Minimum Over/Under Account Balance Seller is required to maintain in the
Over/Under Account by giving notice to Seller thereof. If Seller fails to
deposit funds in the Over/Under Account to comply with any such required
increase within the time frame required by Buyer, Buyer shall have the right to
retain in the Over/Under Account any amounts received by Buyer on behalf of
Seller or otherwise credited to the Over/Under Account to comply with any such
required increases, including, without limitation, any purchase proceeds
received by Buyer from any Approved Investor pursuant to Section 4.7. Buyer
shall not be liable to Seller for any costs, losses or damages arising from or
relating to the increase of the Minimum Over/Under Account Balance that Seller
is required to maintain in the Over/Under Account or retention of excess funds
by Buyer to comply with any such increase.

 

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(b)Deposits.

 

(i)Seller. Seller shall deposit margin in the form of funds in the Over/Under
Account in accordance with the terms of this Agreement, including, without
limitation, Section 3.4 and Section 3.5(a).

 

(ii)Buyer. Buyer shall credit to the Over/Under Account all amounts in excess of
those amounts due to Buyer in accordance with the Principal Agreements on the
date Buyer receives or has received both (1) a payment by Seller or an Approved
Investor pursuant to a Purchase Commitment and (2) a Purchase Advice relating to
such payment without discrepancy; provided, however, that funds and Purchase
Advices received by Buyer after 4:00 p.m. (New York City time), shall be deemed
to have been received on the next Business Day. Buyer shall use reasonable
efforts to notify Seller if there is a discrepancy between a wire transfer and
the related Purchase Advice, and thereafter, Seller shall notify Buyer as to
whether Buyer should accept such settlement payment despite the discrepancy
between the amount received and the related Purchase Advice; provided, however,
that if an Event of Default or Potential Default has occurred and is continuing,
Buyer is not obligated to receive approval from Seller prior to accepting any
amounts received and releasing the related Purchased Assets.

 

(iii)Settlement Statement. Buyer shall deliver to Seller via facsimile or make
available to Seller via the internet within one (1) Business Day following
settlement of a Transaction, or as soon thereafter as is reasonably possible, a
settlement statement, which includes an explanation of all amounts credited by
Buyer to the Over/Under Account to settle the Transaction.

 

(c)Withdrawals.

 

(i)Seller. If the amount credited to the Over/Under Account creates a balance in
excess of the Minimum Over/Under Account Balance required pursuant to Section
3.5(a) above, provided that no Potential Default or Event of Default has
occurred and is continuing, Seller may submit a written request to Buyer for
return or payment of such excess funds. If any such request is received by Buyer
prior to 1:00 p.m. (New York City time) on a Business Day, Buyer shall use
commercially reasonable efforts to wire such requested excess funds to Seller by
the end of such Business Day and in no event no later than two (2) Business Days
after Buyer’s receipt of such request. Notwithstanding anything contained in
this Section 3.5(c)(i) to the contrary, Buyer reserves the right to reject any
request for excess funds from the Over/Under Account if Buyer determines that
such excess funds shall be used to satisfy Seller’s outstanding obligations
under this Agreement or are subject to other rights as provided in this
Agreement.

 

7

 

 

(ii)Buyer. Buyer may, from time to time and without separate authorization by
Seller or notice to Seller, withdraw funds from the Over/Under Account to settle
amounts owed in accordance with the terms of this Agreement or to otherwise
satisfy Seller’s obligations under this Agreement, including, without
limitation:

 

(1)with respect to any Transaction with respect to which the Purchase Price is
being paid to one or more Approved Payees on behalf of Seller, to deliver the
Haircut to such Approved Payees;

 

(2)to reimburse itself for any reasonable costs and expenses incurred by Buyer
in connection with this Agreement, as permitted herein;

 

(3)to pay itself any Price Differential on a Purchase Price that is due and
owing;

 

(4)to Seller as provided in Section 3.5(c)(i);

 

(5)as security for the performance of Seller’s obligations hereunder;

 

(6)without limiting the generality of Section 3.5(c)(ii)(5), to satisfy any
outstanding Margin Deficit as provided in Section 6.3(b); and

 

(7)in the exercise of Buyer’s or its Affiliates’ rights under Section 6.3(d) or
Section 11.9.

 

(d)Failure to Maintain Balance. If, at any time, Seller fails to maintain in the
Over/Under Account the Minimum Over/Under Account Balance as required hereunder,
in addition to any other rights and remedies that Buyer may have against Seller,
Buyer shall have the right to immediately stop entering into Transactions with
Seller and/or to charge Seller accrued interest on that portion of the Minimum
Over/Under Account Balance that Seller has failed to maintain, at the Default
Rate, from the time that such balance failed to be maintained until the time
that funds are deposited into or held in the Over/Under Account to comply with
such Minimum Over/Under Account Balance requirements hereunder. Without limiting
the generality of the foregoing, it is understood and agreed that should the
balance in the Over/Under Account become negative, Seller will continue to owe
Buyer accrued interest as provided herein.

 

(e)Security Interest. Any funds of Seller at any time deposited or held in the
Over/Under Account, whether such funds are required to be deposited and held in
the Over/Under Account pursuant to this Section 3.5 or otherwise, are hereby
pledged by Seller as security for its obligations under this Agreement, and
Seller hereby grants a security interest in such funds to Buyer, and such pledge
and security interest shall be considered “a security agreement or other
arrangement or other credit enhancement” that is “related to” the Agreement and
Transactions hereunder within the meaning of Bankruptcy Code Sections
101(38A)(A), 101(47)(a)(v) and 741(7)(A)(x).

 

8

 

 

3.6Payment of Purchase Price.

 

(a)Payment of Purchase Price. On the Purchase Date for each Transaction,
ownership of the Purchased Assets, including the Servicing Rights related to
Purchased Assets consisting of Purchased Mortgage Loans, shall be transferred to
Buyer against the simultaneous transfer of the Purchase Price to Seller or on
behalf of Seller to an Approved Payee, as applicable, and simultaneously with
the delivery to Buyer of the Purchased Assets relating to each Transaction. With
respect to the Purchased Assets being sold by Seller on the Purchase Date,
Seller hereby sells, transfers, conveys and assigns to Buyer or its designee
without recourse, but subject to the terms of this Agreement, all of Seller’s
right, title and interest in and to the Purchased Assets, including the
Servicing Rights related to the Purchased Mortgage Loans, together with all
right, title and interest of Seller in and to all amounts due and payable under
the terms of such Purchased Assets.

 

(b)Methods of Payment. On the Purchase Date for each Transaction:

 

(i)Buyer shall pay the Purchase Price for all Transactions by wire transfer in
accordance with Seller’s wire instructions set forth on Exhibit J.
Notwithstanding the foregoing, Buyer shall not be obligated to pay the Purchase
Price under any method of payment to any Closing Agent, third party
institutional originator or warehouse lender that is not an Approved Payee.
Further, the payment of the Purchase Price by Buyer to any Closing Agent, third
party institutional originator or warehouse lender that is not an Approved Payee
shall not make such Closing Agent, third party institutional originator or
warehouse lender an Approved Payee. Any funds disbursed by Buyer to Seller or
its Approved Payee shall be subject to all applicable federal, state and local
laws, including, without limitation, regulations and policies of the Board of
Governors of the Federal Reserve System on Reduction of Payments System Risk.
Seller acknowledges that as a result of such applicable laws, regulations and
policies, equipment malfunction, Buyer’s approval procedures or circumstances
beyond the reasonable control of Buyer, the payment of a Purchase Price may be
delayed. Buyer shall not be liable to Seller for any costs, losses or damages
arising from or relating to any such delays, or

 

(ii)Notwithstanding the foregoing, where a Purchased Asset is the subject of
third party financing, Buyer may pay all or any portion of the Purchase Price
directly to the warehouse lender or other lender that has a security interest in
such Purchased Asset to satisfy the related indebtedness and obtain a release of
such security interest.

 

(c)Transaction Limitations and Other Restrictions Relating to Closing Agents.
Notwithstanding that a particular Transaction request will not exceed the
Aggregate Transaction Limit or applicable Type Sublimit, if the payment of the
Purchase Price for such Transaction to the related Closing Agent will violate
Buyer’s applicable policies and procedures (as contained in the Handbook or
otherwise) regarding payments to Closing Agents, Buyer may refuse to pay the
Purchase Price to such Closing Agent.

 

(d)Return of Purchase Price. If a Wet Mortgage Loan subject to a Transaction is
not closed on the same day on which the Purchase Price was funded, Seller shall
immediately return, or cause to be immediately returned (but in any event within
forty-eight (48) hours), the Purchase Price (or such greater amount that shall
have been remitted by Buyer, if applicable) with respect to such Wet Mortgage
Loan to Buyer by wire transfer in accordance with Buyer’s wire instructions set
forth on Exhibit B. Further, Seller shall pay Buyer all fees and expenses
incurred by Buyer in connection with the funding of the Purchase Price for such
Wet Mortgage Loan and, from the date of such funding up to but excluding the
date such Purchase Price is returned to Buyer, Seller shall also pay Buyer any
Price Differential accrued on such Purchase Price immediately upon notification
from Buyer; provided, however, that Price Differential shall continue to accrue
until the Purchase Price is returned to Buyer.

 

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3.7Approved Payees.

 

(a)Closing Agents. In order for a Closing Agent to be designated an Approved
Payee with respect to any Purchase Price for new origination Wet Mortgage Loans
or Dry Mortgage Loans as to which the origination funds are being remitted to
the closing table, Seller shall submit to Buyer the following documents:

 

(i)if the title company issuing the title policy that covers the applicable
Mortgage Loan has not issued to Buyer a blanket Closing Protection Letter, which
covers closings conducted by this Closing Agent in the jurisdiction where this
closing will take place:

 

(1)a valid blanket Closing Protection Letter, in a form acceptable to Buyer,
issued to Seller or Buyer by the title company, which is issuing the title
insurance policy that covers the related Mortgage Loan and is an Acceptable
Title Insurance Company, that covers closings conducted by the Closing Agent in
the jurisdiction where this closing will take place and if applicable, an
assignment to Buyer of such Closing Protection Letter, substantially in the form
of Exhibit F hereto; or

 

(2)a valid Closing Protection Letter, in a form acceptable to Buyer, issued to
Seller or Buyer by the title company, which is issuing the title insurance
policy that covers the related Mortgage Loan and is an Acceptable Title
Insurance Company, that covers the closing of this specific Mortgage Loan and if
applicable, an assignment to Buyer of such Closing Protection Letter,
substantially in the form of Exhibit F hereto; or

 

(3)with respect to those jurisdictions outlined in the Handbook for which
Closing Protection Letters are not available or are limited in their
applicability, any other documents Buyer may require, including without
limitation, a duly executed, valid and enforceable assignment to Buyer of
Seller’s rights under its fidelity bond and errors and omissions policy
maintained pursuant to Section 9.9; and

 

(ii)evidence that the Irrevocable Closing Instructions, in the applicable form
and signed by Seller and Buyer, have been delivered to such Closing Agent.

 

(b)Warehouse Lenders. In order for a warehouse lender to be designated an
Approved Payee with respect to any Purchase Price, Seller shall submit to Buyer
a written request, including the name and address of the warehouse lender,
demonstrating a need for such designation. Notwithstanding the foregoing, Buyer
reserves the right to refuse to designate any warehouse lender as an Approved
Payee, or, alternatively, to require additional terms and conditions in order
for Buyer to pay a Purchase Price to a warehouse lender.

 

(c)Approval Process. Buyer shall review the applicable documents and notify
Seller within two (2) Business Days as to whether such Closing Agent or
warehouse lender has been designated by Buyer to be an Approved Payee with
respect to such Purchase Price. Buyer may withdraw its approval of any Closing
Agent or warehouse lender as an Approved Payee if Buyer becomes aware of any
facts or circumstances at any time related to such Closing Agent or warehouse
lender which Buyer determines materially and adversely affects the Closing Agent
or warehouse lender or otherwise makes the Closing Agent or warehouse lender
unacceptable as an Approved Payee.

 

10

 

 

3.8Delivery of Mortgage-Backed Securities. With respect to Purchased Mortgage
Loans that are Pooled Mortgage Loans, Buyer shall release its interests in such
Purchased Mortgage Loans simultaneously with the Settlement Date of a
Mortgage-Backed Security backed by a Pool containing such Purchased Mortgage
Loans. Provided that such Mortgage-Backed Security has been issued to the
Depository in the name of Buyer or Buyer’s nominee, from and after such
Settlement Date, the Mortgage-Backed Security shall replace the related
Purchased Mortgage Loans as the Asset that is subject to the related
Transaction.

 

ARTICLE 4
REPURCHASE

 

4.1Repurchase Price.

 

(a)Payment of Repurchase Price. The Repurchase Price for each Purchased Asset
shall be payable in full and by wire transfer in accordance with Buyer’s wire
instructions set forth on Exhibit B or Exhibit J, as applicable, upon the
earliest to occur of (i) the Repurchase Date of the related Transaction, (ii)
the occurrence of any Repurchase Acceleration Event with respect to such
Purchased Asset, (iii) at Buyer’s sole option, upon the occurrence or during the
continuance of an Event of Default, or (iv) the Expiration Date. Such obligation
to repurchase exists without regard to any prior or intervening liquidation or
foreclosure with respect to any Purchased Asset. While it is anticipated that
Seller will repurchase each Purchased Asset on its related Repurchase Date,
Seller may repurchase any Purchased Asset hereunder on demand without any
prepayment penalty or premium.

 

(b)Effect of Payment of Repurchase Price. On the Repurchase Date (or such other
date on which the Repurchase Price is received in full by Buyer), termination of
the related Transaction will be effected by the repurchase by Seller or its
designee of the Purchased Assets and the simultaneous transfer of the Repurchase
Price to an account of Buyer, or transfer of additional Asset(s) (in each case
subject to the provisions of Section 6.5), and all of Buyer’s rights, title and
interests therein shall then be conveyed to Seller or its designee; provided
that, Buyer shall not be deemed to have terminated or conveyed its interests in
such Purchased Assets if an Event of Default shall then be continuing or shall
be caused by such repurchase or if such repurchase gives rise to or perpetuates
a Margin Deficit that is not satisfied in accordance with Section 6.3(b). With
respect to Purchased Assets that are Purchased Mortgage Loans, Seller is
obligated to obtain the related Mortgage Loan Documents from the Custodian at
Seller’s expense on the Repurchase Date.

 

4.2Repurchase Acceleration Events. The occurrence of any of the following events
shall be a Repurchase Acceleration Event with respect to one or more Purchased
Assets, as the case may be:

 

(a)Buyer has determined that the Purchased Asset is a Defective Asset;

 

(b)thirty (30) calendar days elapse from the date the related Mortgage Loan
Documents were delivered to an Approved Investor and such Approved Investor has
not returned such Mortgage Loan Documents or purchased such Purchased Asset,
unless an extension is granted by Buyer;

 

11

 

 

(c)ten (10) Business Days elapse from the date a related Mortgage Loan Document
was delivered to Seller for correction or completion or for servicing purposes,
without being returned to Buyer or its designee;

 

(d)with respect to a Wet Mortgage Loan, Seller fails to deliver to Buyer the
related Mortgage Loan Documents within the Maximum Dwell Time or any Mortgage
Loan Document delivered to Buyer, upon examination by Buyer, is found not to be
in compliance with the requirements of this Agreement or the related Purchase
Commitment and is not corrected within the Maximum Dwell Time;

 

(e)regardless of whether a Purchased Mortgage Loan is a Defective Asset, a
foreclosure or similar type of proceeding is initiated with respect to such
Mortgage Loan;

 

(f)the further sale of a Purchased Asset by Seller to any party other than an
Approved Investor;

 

(g)(1) with respect to any Pooled Mortgage Loan that has been pooled to support
a Mortgage-Backed Security issued by Seller and fully guaranteed by Ginnie Mae
for which Buyer has executed a Form HUD 11711A, the Custodian ceases to hold the
Mortgage Loan File and the related Mortgage Loan Documents in respect thereof
for the sole and exclusive benefit of Buyer at any time prior to the issuance of
the related Mortgage-Backed Security, or (2) with respect to all other Purchased
Mortgage Loans, the Custodian ceases to hold the related Mortgage Loan File and
all Mortgage Loan Documents in respect thereof for the sole and exclusive
benefit of Buyer at any time;

 

(h)with respect to any Pooled Mortgage Loan or Mortgage-Backed Security, if the
Seller has failed to deliver the related Trade Assignment to Buyer in accordance
with the requirements set forth in Section 7.2(b);

 

(i)with respect to any Pooled Mortgage Loan, if the Applicable Agency has not
issued the related Mortgage-Backed Security to the Depository in the name of
Buyer or Buyer’s nominee on the related Settlement Date;

 

(j)with respect to any Mortgage-Backed Security that is subject to a Transaction
pursuant to Section 3.8, if Buyer has not received the related Takeout Price
from the Approved Investor on the related Settlement Date; or

 

(k)following the termination of a Temporary Increase, the Aggregate Outstanding
Purchase Price exceeds the Aggregate Transaction Limit (as reduced by the
termination of such Temporary Increase).

 

4.3Reduction of Asset Value as Alternative Remedy. In lieu of requiring full
repayment of the Repurchase Price upon the occurrence of a Repurchase
Acceleration Event, Buyer may elect to reduce the Asset Value of the related
Purchased Asset (to as low as zero) and accordingly require a full or partial
repayment of such Repurchase Price or the delivery of other funds or collateral,
which additional assets shall be “margin payments” or “settlement payments” as
such terms are defined in Bankruptcy Code Sections 741(5) and (8), respectively.

 

4.4Designation as Noncompliant Asset as Alternative Remedy. In lieu of requiring
full repayment of the Repurchase Price upon the occurrence of a Repurchase
Acceleration Event, Buyer may elect to deem the related Purchased Asset a
Noncompliant Asset, provided that (a) after such Purchased Asset is deemed to be
a Noncompliant Asset, the aggregate original Asset Value of all Noncompliant
Assets does not exceed the Type Sublimit for Noncompliant Assets; (b) the Asset
Value of the Noncompliant Asset is greater than the Repurchase Price or Seller
provides Additional Purchased Assets or repays part of the Repurchase Price as
provided in Section 6.3 in each case as a “margin payment” as such term is
defined in Bankruptcy Code Section 741(5); and (c) Seller delivers to Buyer all
documentation relating to the Purchased Asset reasonably requested by Buyer.

 

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4.5Illegality. Notwithstanding anything to the contrary in this Agreement, if
Buyer determines that any law, regulation, treaty or directive or any change
therein or in the interpretation or application thereof, or any circumstance
materially and adversely affecting the London interbank market, the repurchase
market for mortgage loans or mortgage-backed securities or the source or cost of
Buyer’s funds, shall make it unlawful or commercially unreasonable for Buyer to
enter into or maintain Transactions as contemplated by this Agreement, (a) the
commitment of Buyer hereunder to enter into or to continue to maintain
Transactions shall be cancelled and (b) the Repurchase Price for each
Transaction then outstanding shall be due and payable upon the earlier to occur
of (i) the date required by any financial institution providing funds to Buyer,
(ii) sale of the Purchased Assets in accordance with the terms of this
Agreement, and (iii) the date as of which Buyer determines that such
Transactions are unlawful or commercially unreasonable to maintain; provided,
that Buyer shall not be liable to Seller for any costs, losses or damages
arising from or relating from any actions taken by Buyer pursuant to this
Section 4.5.

 

4.6Increased Costs.

 

(a)Notwithstanding anything to the contrary in this Agreement, if Buyer
determines that if any change in any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority or any
change in the interpretation or application thereof or compliance by Buyer with
any request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority made subsequent to the date hereof
(i) subjects Buyer to any tax of any kind whatsoever with respect to this
Agreement or any Purchased Assets (excluding Excluded Taxes) or changes the
basis of taxation of payments to Buyer in respect thereof, (ii) imposes,
modifies or holds applicable any reserve, special deposit, compulsory advance or
similar requirement against assets held by deposits or other liabilities in or
for the account of Transactions or extensions of credit by, or any other
acquisition of funds by any office of Buyer which is not otherwise included in
the determination of the Applicable Pricing Rate hereunder, or (iii) imposes on
Buyer any other condition, the result of which is to increase the cost to Buyer,
by an amount which Buyer deems to be material, of effecting or maintaining
purchases hereunder, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, Seller shall promptly pay Buyer such additional
amount or amounts as will compensate Buyer for such increased cost or reduced
amount receivable thereafter incurred.

 

(b)If Buyer has determined that the adoption of or any change in any law,
treaty, rule or regulation or determination of an arbitrator or a court or other
Governmental Authority regarding capital adequacy or in the interpretation or
application thereof or compliance by Buyer or any corporation that provides
capital or funds to Buyer with any request or directive regarding capital
adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof has the effect of reducing the rate
of return on Buyer’s or such corporation’s capital as a consequence of its
obligations hereunder to a level below that which Buyer or such corporation but
for such adoption, change or compliance (taking into consideration Buyer’s or
such corporation’s policies with respect to capital adequacy) by an amount
deemed by Buyer to be material, then from time to time, Seller shall promptly
pay to Buyer such additional amount or amounts as will thereafter compensate
Buyer for such reduction.

 

13

 

 

If Buyer becomes entitled to claim any additional amounts pursuant to this
Section 4.6, it shall promptly notify Seller of the event by reason of which it
has become so entitled. A certificate as to any additional amounts payable
pursuant to this subsection submitted by Buyer to Seller shall be conclusive in
the absence of manifest error.

 

4.7Payments Pursuant to Sale to Approved Investors. Seller shall direct each
Approved Investor purchasing a Purchased Asset to pay directly to Buyer, by wire
transfer of immediately available funds, the applicable Takeout Price in full
and without set-off on the date set forth in the applicable Purchase Commitment.
In addition, Seller shall provide Buyer with a Purchase Advice relating to such
payment. Seller shall not direct the Approved Investor to pay to Buyer an amount
less than the full Takeout Price or modify or otherwise change the wire
instructions for payment of the Takeout Price provided to Approved Investor by
Buyer. Buyer shall apply all amounts received from an Approved Investor for the
account of Seller in accordance with Section 4.8 below and credit all amounts
due Seller to the Over/Under Account in accordance with Section 3.5(b)(ii)
above. Buyer may reject any amount received from an Approved Investor and not
release the related Purchased Asset if (a) Buyer does not receive a Purchase
Advice in respect of any wire transfer, (b) Buyer does not receive the full
Takeout Price, without set-off or (c) the amount received is not sufficient to
pay the related Repurchase Price in full. Alternatively, in lieu of rejecting an
amount received by Buyer from an Approved Investor, at Buyer’s option, if the
amount received from the Approved Investor does not equal or exceed the related
Repurchase Price, Buyer may accept the amount received from the Approved
Investor and deduct the remaining amounts owed by Seller from the Over/Under
Account or demand payment of such remaining amount from Seller. If Seller
receives any funds intended for Buyer, Seller shall segregate and hold such
funds in trust for Buyer and immediately pay to Buyer all such amounts by wire
transfer of immediately available funds together with providing Buyer with a
settlement statement for the transaction.

 

4.8Application of Payments from Seller or Approved Investors. Unless Buyer
determines otherwise, payments made directly by Seller or an Approved Investor
to Buyer shall be applied in the following order of priority:

 

(a)first, to any amounts due and owing to Buyer pursuant to Section 6.3;

 

(b)second, to all costs, expenses and fees incurred or charged by Buyer under
this Agreement that are due and owing and related to the Transaction in
connection with which the payment is made;

 

(c)third, to all costs, expenses and fees incurred or charged by Buyer under
this Agreement that are due and owing and not related to a specific Transaction;

 

(d)fourth, to the Price Differential then due and owing and the outstanding
Purchase Price, in each case, on the Purchased Asset in connection with which
the payment is made;

 

(e)fifth, to the Price Differential then due and owing and the outstanding
Purchase Prices, in each case, on any other Purchased Assets; and

 

(f)sixth, to the amount of all other obligations then due and owing by Seller to
Buyer under this Agreement and the other Principal Agreements.

 

14

 

 

Buyer and Seller intend and agree that all such payments shall be “settlement
payments” as such term is defined in Bankruptcy Code Section 741(8). After the
settlement payments have been applied as set forth above, Buyer shall deposit in
the Over/Under Account any amounts that remain.

 

4.9Method of Payment. Except as otherwise specifically provided herein, all
payments hereunder must be received by Buyer on the date when due and shall be
made in United States dollars by wire transfer of immediately available funds in
accordance with Buyer’s wire instructions set forth on Exhibit B or Exhibit J,
as applicable. Whenever any payment to be made hereunder shall be stated to be
due on a day that is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day, and with respect to payments of the
Purchase Price, the Price Differential thereon shall be payable at the
Applicable Pricing Rate during such extension. All payments made by or on behalf
of Seller with respect to any Transaction shall be applied to Seller’s account
in accordance with Section 3.5(b)(ii) and Section 4.8 above and shall be made in
such amounts as may be necessary in order that all such payments after
withholding for or on account of any present or future Taxes imposed by any
Governmental Authority, other than any Excluded Taxes, compensate Buyer for any
additional cost or reduced amount receivable of making or maintaining
Transactions as a result of such Taxes. All payments to be made by or on behalf
of Seller with respect to any Transaction shall be made without set-off,
counterclaim or other defense.

 

4.10Notification of Payment. Seller shall provide Buyer not fewer than one (1)
Business Day’s prior written notice if Seller or an Approved Investor intends to
remit a payment to Buyer equal to or greater than ten million ($10,000,000)
dollars.

 

4.11Authorization to Debit. In addition to any other authorizations to and
rights of Buyer hereunder, Seller hereby expressly authorizes Buyer to debit any
account maintained by Seller with any depository institution into which any
funds related to the Purchased Assets or related Purchased Items have been
deposited (other than escrow accounts maintained for the benefit of the related
Mortgagors), including without limitation, any operating, settlement or
custodial account, for any and all amounts due Buyer hereunder. For the
avoidance of doubt, the foregoing debit rights of Buyer shall not apply to
Purchased Assets which have been repurchased by Seller pursuant to Section 6.5.

 

4.12Book Account. Buyer and Seller shall maintain an account on their respective
books of all Transactions entered into between Buyer and Seller and for which
the Repurchase Price has not yet been paid. As a courtesy to Seller, Buyer shall
provide such information to Seller via the Internet or by telephone or
facsimile, if Seller is unable to access the information via the Internet.
Notwithstanding the foregoing, Seller shall be responsible for maintaining its
own book account and records of Transactions entered into with Buyer, amounts
due to Buyer in connection with such Transactions and for paying such amounts
when due. Failure of Buyer to provide Seller with information regarding any
Transaction shall not excuse Seller’s timely performance of all obligations
under this Agreement, including, without limitation, payment obligations under
this Agreement.

 

4.13Full Recourse. The obligations of Seller from time to time to pay the
Repurchase Price, Margin Deficit payments, settlement payments and all other
amounts due under this Agreement shall be full recourse obligations of Seller.

 

15

 

 

ARTICLE 5
FEES

 

5.1Payment of Fees. Seller shall pay to Buyer those fees set forth in this
Agreement and the Transactions Terms Letter when they become due and owing.
Without limiting the generality of the foregoing, the Facility Fee shall be paid
on or before the Effective Date and if this Agreement is renewed, thereafter on
or before the anniversary of the Effective Date. Buyer shall be entitled to
withdraw from the Over/Under Account or retain from payments made by Seller or
an Approved Investor, subject to Section 4.6, or set off against any Purchase
Prices to be paid by Buyer any fees permitted under this Agreement that are due
and owing. If such amounts on deposit in the Over/Under Account or payments
received in connection with a Transaction or Purchase Prices to be paid by Buyer
are not sufficient to pay Buyer all fees owed, Buyer shall notify Seller and
Seller shall pay to Buyer, within one (1) Business Day, all unpaid fees.

 

ARTICLE 6
SECURITY; SERVICING; MARGIN ACCOUNT MAINTENANCE; CUSTODY OF MORTGAGE LOAN
DOCUMENTS; REPURCHASE TRANSACTIONS; DUE DILIGENCE

 

6.1Precautionary Grant of Security Interest in Purchased Assets and Purchased
Items. With respect to the Purchased Assets, although the parties intend that
all Transactions hereunder be sales and purchases (other than for accounting and
tax purposes) and not loans, and without prejudice to the provisions of
Section 6.6 and the expressed intent of the parties, if any Transactions are
deemed to be loans, as security for the performance of all of Seller’s
obligations hereunder, Seller hereby pledges, assigns and grants to Buyer a
continuing first priority security interest in and lien upon the Purchased
Assets and other Purchased Items and Buyer shall have all the rights and
remedies of a “secured party” under the Uniform Commercial Code with respect to
the Purchased Assets and other Purchased Items. Possession of any promissory
notes, instruments or documents by the Custodian shall constitute possession on
behalf of Buyer.

 

Seller acknowledges that it has no rights to the Servicing Rights related to any
Purchased Mortgage Loan. Without limiting the generality of the foregoing and
for the avoidance of doubt, if any determination is made that the Servicing
Rights related to any Purchased Mortgage Loan were not sold by Seller to Buyer
or that the Servicing Rights are not an interest in such Purchased Mortgage Loan
and are severable from such Purchased Mortgage Loan despite Buyer’s and Seller’s
express intent herein to treat them as included in the purchase and sale
transaction, Seller hereby pledges, assigns and grants to Buyer a continuing
first priority security interest in and lien upon the Servicing Rights related
to such Purchased Mortgage Loans, and Buyer shall have all the rights and
remedies of a “secured party” under the Uniform Commercial Code with respect
thereto. In addition, Seller further grants, assigns and pledges to Buyer a
first priority security interest in and lien upon (i) all documentation and
rights to receive documentation related to such Servicing Rights and the
servicing of each of the Purchased Mortgage Loans, (ii) all Income related to
the Purchased Assets received by Seller, (iii) all rights to receive such
Income, (iv) all other Purchased Items, and (v) all products, proceeds and
distributions relating to or constituting any or all of the foregoing
(collectively, and together with the pledge of Servicing Rights in the
immediately preceding sentence, the “Related Credit Enhancement”). The Related
Credit Enhancement is hereby pledged as further security for Seller’s
obligations to Buyer hereunder.

 

At any time and from time to time, upon the written request of Buyer, and at the
sole expense of Seller, Seller will promptly and duly execute and deliver, or
will promptly cause to be executed and delivered, such further instruments and
documents and take such further action as Buyer may request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the Purchased Assets and related Purchased
Items and the liens created hereby. Seller also hereby authorizes Buyer to file
any such financing or continuation statement in a manner consistent with this
Agreement to the extent permitted by applicable law. For purposes of the Uniform
Commercial Code and all other relevant purposes, this Agreement shall constitute
a security agreement.

 

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6.2Servicing.

 

(a)Servicing Rights for Servicing Released Mortgage Loans Owned by Buyer;
Buyer’s Right to Appoint Servicer. In recognition that each Servicing Released
Mortgage Loan is sold by Seller to Buyer on a servicing released basis and Buyer
is the owner of the Servicing Rights related to such Servicing Released Mortgage
Loan, Buyer shall have the sole right to appoint the Servicer for each Purchased
Mortgage Loan.

 

(b)Appointment of Servicer. Subject to Buyer’s right to appoint a successor
Servicer at its discretion, Buyer hereby appoints Seller or the Servicer, as
applicable, to subservice the Servicing Released Mortgage Loans on behalf of
Buyer as agent for Buyer for the period between the Purchase Date and the
Repurchase Date of the Servicing Released Mortgage Loans. The right of Seller or
the Servicer, as applicable, to service the Servicing Released Mortgage Loans is
on an interim basis only and does not provide or confer a contractual, ownership
or other right for Seller or the Servicer, as applicable, to service the
Servicing Released Mortgage Loans, it being understood that upon payment of the
Purchase Price, Buyer owns the Servicing Rights and may assume servicing or
appoint a Successor Servicer (i) sixty (60) days’ after the related Purchase
Date or (ii) upon an Event of Default. Further, the fact that Seller or the
Servicer may be entitled to a servicing fee for interim servicing of the
Servicing Released Mortgage Loans or that Buyer may provide a separate notice of
default to Seller or the Servicer regarding the servicing of the Servicing
Released Mortgage Loans shall not affect or otherwise change Buyer’s ownership
of the Servicing Rights related to the Servicing Released Mortgage Loans.

 

(c)Interim Servicing Period; No Servicing Fee or Income. For each Transaction,
Seller’s or the Servicer’s, as applicable, right to interim service a Servicing
Released Mortgage Loan shall commence on the related Purchase Date and shall
automatically terminate without notice on the earlier of (i) sixty (60) days
after the related Purchase Date or (ii) the Repurchase Date. If the interim
servicing period expires with respect to any Servicing Released Mortgage Loan
for any reason other than Seller repurchasing such Servicing Released Mortgage
Loan, then such interim servicing period shall automatically terminate if not
renewed by Buyer. In connection with any such renewal, Seller or the Servicer,
as applicable, shall continue to interim service the Servicing Released Mortgage
Loan for a thirty (30) day extension period. Absent any such extension of the
interim servicing period, Seller or the Servicer, as applicable, shall transfer
servicing of the Servicing Released Mortgage Loan (which shall include the
delivery of all Servicing Records related to such Servicing Released Mortgage
Loan) to Buyer or its designee in accordance with the instructions of Buyer and
any other applicable requirements of this Agreement. For the avoidance of doubt,
upon expiration of the interim servicing period (including the expiration of any
extension period) with respect to any Servicing Released Mortgage Loan, Seller
shall have no right to service the related Servicing Released Mortgage Loan nor
shall Buyer have any obligation to extend the interim servicing period (or
continue to extend the interim servicing period), it being understood that upon
such expiration, Seller shall promptly transfer the servicing of the related
Servicing Released Mortgage Loan to Buyer or its designee in accordance with the
instructions of Buyer and any other applicable requirements of this Agreement.
Buyer shall have no obligation to pay Seller or the Servicer, as applicable, nor
shall Seller or the Servicer, as applicable, have any right to deduct or retain,
any servicing fee or similar compensation in connection with the interim
servicing of a Servicing Released Mortgage Loan.

 

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(d)Servicing Agreement. If there is a Servicer of the Purchased Mortgage Loans
other than Seller, Buyer or an Affiliate of Buyer, Seller shall enter into a
Servicing Agreement with the Servicer. Such Servicing Agreement shall be on
terms acceptable to Buyer in its discretion, and shall include, at a minimum,
(i) a recognition by the Servicer of Buyer’s interests and rights to the
Purchased Mortgage Loans as provided under this Agreement (including, without
limitation, Buyer’s ownership of the Servicing Rights related to any Servicing
Released Mortgage Loans, if applicable); (ii) an obligation for the Servicer to
subservice the Servicing Released Mortgage Loans or service the Servicing
Retained Mortgage Loans, as applicable, consistent with the degree of skill and
care that the Servicer customarily requires with respect to similar Mortgage
Loans owned or managed by it but in no event no less than in accordance with
Accepted Servicing Practices; (iii) an obligation to comply with all applicable
federal, state and local laws and regulations; (iv) an obligation to maintain
all state and federal licenses necessary for it to perform its subservicing
responsibilities; (v) an obligation not to impair the rights of Buyer in any
Purchased Mortgage Loans or any payment thereto, and (vi) an obligation to
collect all Income in respect of the Purchased Mortgage Loans for the benefit of
Buyer, in trust, in segregated custodial accounts and remit such Income to the
Custodial Account within two (2) Business Days of receipt. Further, such
Servicing Agreement shall contain express reporting requirements and other
rights to allow Buyer to inspect the records of the Servicer with respect to the
Purchased Mortgage Loans. Buyer may terminate the servicing or subservicing of
any Servicing Retained Mortgage Loan or Servicing Released Mortgage Loan,
respectively, with the then existing Servicer in accordance with either Section
6.2(f) or Section 6.2(n).

 

(e)Servicing Obligations of Seller. To the extent Seller shall subservice any
Servicing Released Mortgage Loan on behalf of Buyer, Seller shall:

 

(i)Subservice and administer the Purchased Mortgage Loans on behalf of Buyer in
accordance with prudent mortgage loan servicing standards and procedures
generally accepted in the mortgage banking industry and in accordance with the
degree of care and servicing standards generally prevailing in the industry,
including all applicable requirements of the Agency Guides, applicable law, FHA
Regulations and VA Regulations, the requirements of any Insurer, as applicable,
and the requirements of any applicable Purchase Commitment and the related
Approved Investor, so that neither the eligibility of the Purchased Mortgage
Loan and any related Mortgage-Backed Security for purchase under such Purchase
Commitment nor the FHA Mortgage Insurance, VA Loan Guaranty Agreement or any
other applicable insurance or guarantee in respect of any such Purchased
Mortgage Loan, if any, is voided or reduced by such servicing and
administration;

 

(ii)Subject to Section 6.2(f), and to the extent not otherwise held by the
Custodian, Seller shall at all times maintain and safeguard the Mortgage Loan
File for the Purchased Mortgage Loan in accordance with applicable law and
lending industry custom and practice and shall hold such Mortgage Loan File in
trust for Buyer, and in any event shall maintain and safeguard photocopies of
the documents delivered to Buyer pursuant to Section 3.3, and accurate and
complete records of its servicing of the Purchased Mortgage Loan; Seller’s
possession of such Mortgage Loan File is for the sole purpose of subservicing
such Purchased Mortgage Loan and such retention and possession by Seller is in a
custodial capacity only;

 

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(iii)Buyer may, at any time during Seller’s business hours on reasonable notice,
examine and make copies of such documents and records, or require delivery of
the originals of such documents and records to Buyer or its designee;

 

(iv)Seller shall deliver to Buyer all such reports with respect to the Purchased
Mortgage Loans required in the Transactions Terms Letter and herein at the times
and on the dates set forth therein and herein. In addition, at Buyer’s request,
Seller shall promptly deliver to Buyer reports regarding the status of any
Purchased Mortgage Loan being subserviced by it, which reports shall include,
but shall not be limited to, a description of any default thereunder for more
than thirty (30) days or such other circumstances that could reasonably be
expected to cause a material adverse effect with respect to such Purchased
Mortgage Loan, Buyer’s title to such Purchased Mortgage Loan or the collateral
securing such Purchased Mortgage Loan; Seller is required to deliver such
reports until the repurchase of the Purchased Mortgage Loan by Seller; and

 

(v)Seller shall immediately notify Buyer if Seller becomes aware of any payment
default that occurs under a Purchased Asset.

 

(f)Sale or Transfer of Servicing Rights by Buyer. Buyer may sell or transfer any
rights to service a Servicing Released Mortgage Loan without the prior written
consent of Seller or any Servicer.

 

(g)Release of Mortgage Loan Files. Seller shall release its custody of the
contents of any Mortgage Loan File only in accordance with the written
instructions of Buyer, except when such release is required (1) as incidental to
Seller’s subservicing of the related Purchased Mortgage Loan, (2) to complete
the Purchase Commitment, or (3) by law.

 

(h)Right to Appoint Successor Servicer. Buyer reserves the right, in its
discretion, to appoint a successor servicer to subservice any Servicing Released
Mortgage Loan (each a “Successor Servicer”). In the event of such an
appointment, Seller or the Servicer, as applicable, shall perform all acts and
take all action so that any part of the Mortgage Loan File and related Servicing
Records held by Seller or the Servicer, together with all funds in the Custodial
Account and other receipts relating to such Purchased Mortgage Loan, are
promptly delivered to the Successor Servicer. Seller shall have no claim for
servicing fees, lost profits or other damages if Buyer appoints a Successor
Servicer hereunder.

 

(i)Custodial Account.

 

(i)Seller shall establish and maintain a segregated time or demand deposit
account for the benefit of Buyer (the “Custodial Account”) with an Eligible Bank
and shall promptly deposit (but in no event later than twenty-four (24) hours
after receipt) into the Custodial Account all Income received with respect to
each Purchased Asset sold hereunder. The Custodial Account may not be a deposit
account that is established to serve as a custodial account for mortgage loans
that Seller services for other parties. Under no circumstances shall Seller
deposit any of its own funds into the Custodial Account or otherwise commingle
its own funds with funds belonging to Buyer as owner of any Purchased Asset. If
Seller fails to segregate any funds and commingles them with any source in
breach of this Agreement, Seller agrees that its share of the commingled funds
are assumed to have been spent first with any remaining balance to be deemed to
belong to Buyer.

 

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(ii)Seller hereby grants to Buyer a continuing first-priority security interest
in all right, title, and interest in and to the Custodial Account. Seller shall,
as a condition precedent to Buyer’s obligation to enter into any Transaction
hereunder, perfect Buyer’s security interest in the Custodial Account, and
either (A) cause the Eligible Bank to agree to comply at any time with
instructions from Buyer to such Eligible Bank directing the disposition of funds
from time to time credited to such Custodial Account, without further consent of
Seller or any other Person, pursuant to an agreement in form and substance
satisfactory to Buyer or (B) arrange for Buyer to become the customer of the
Eligible Bank with respect to the Custodial Account, with Seller being permitted
to exercise rights to withdraw funds from such Custodial Account as set forth in
Section 6.2(i)(iii)(3) below (together, the “Control Agreement”).

 

(iii)Any Income received with respect to a Purchased Asset purchased hereunder
(but not any interest accrued on such Purchased Asset up to but not including
the Purchase Date for such Purchased Asset), shall be segregated as described
above and held in trust for the exclusive benefit of Buyer as the owner of such
Purchased Asset and shall be released only as follows:

 

(1)after the Repurchase Price for such Purchased Asset has been paid in full to
Buyer, all amounts previously deposited in the Custodial Account with respect to
such Purchased Asset and then in the Custodial Account shall be released by
Buyer to Seller or transferred to the Approved Investor or its designee if
authorized by Seller;

 

(2)if a Successor Servicer is appointed by Buyer, all amounts deposited in the
Custodial Account with respect to Purchased Mortgage Loans to be so subserviced
shall be transferred into an account established by the Successor Servicer
pursuant to its agreement with Buyer; or

 

(3)upon instruction by Buyer.

 

(j)Location of Custodial Account. Seller shall not change the identity or
location of a Custodial Account without thirty (30) days prior notice to Buyer.
Seller shall from time to time, at its own cost and expense, execute such
directions to the depository Eligible Bank, and other papers, documents or
instruments as may be reasonably requested by Buyer to reflect Buyer’s ownership
interest in each Custodial Account.

 

(k)Accounting of Custodial Account. If Buyer so requests, Seller shall promptly
notify Buyer of each deposit in the Custodial Account, and each withdrawal from
the Custodial Account, made by it with respect to the Purchased Assets. Seller
shall promptly deliver to Buyer photocopies of all periodic bank statements and
other records relating to any Custodial Account as Buyer may from time to time
request.

 

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(l)Servicer Notice. As a condition precedent to Buyer funding the Purchase Price
for any Purchased Mortgage Loan serviced or subserviced by a Servicer other than
Seller, Buyer, or an Affiliate of Buyer, Seller shall provide to Buyer a
Servicer Notice addressed to and agreed to by the Servicer, advising the
Servicer of such matters as Buyer may reasonably request, including, without
limitation, recognition by the Servicer of Buyer’s interest in such Purchased
Mortgage Loans and, with respect to Servicing Released Mortgage Loans, ownership
of the Servicing Rights related thereto and the Servicer’s agreement that upon
receipt of notice of an Event of Default from Buyer, it will follow the
instructions of Buyer with respect to the servicing or subservicing of the
related Purchased Mortgage Loans.

 

(m)Notification of Servicer Defaults. If Seller should discover that, for any
reason whatsoever, any entity responsible to Seller by contract for managing or
servicing any such Purchased Asset has failed to perform fully Seller’s
obligations with respect to the management or servicing of such Purchased
Mortgage Loan as required under this Agreement or any of the obligations of such
entities with respect to the Purchased Asset as delegated by such Seller
pursuant to any Servicing Agreement, Seller shall promptly notify Buyer.

 

(n)Termination. Buyer shall have the right at any time to immediately terminate
the Seller’s or any Servicer’s (as applicable) right to service the Purchased
Mortgage Loans due to a Servicer Termination Event, or solely with respect to
Servicing Released Mortgage Loans, for any other reason, in each case, without
payment of any penalty or termination fee. Seller shall cooperate, or cause the
Servicer to cooperate, in transferring the servicing of the Purchased Mortgage
Loans to a successor servicer appointed by Buyer. For the avoidance of doubt any
termination of the Servicer’s rights to service by the Buyer as a result of a
Servicer Termination Event or an Event of Default shall be deemed part of an
exercise of the Buyer’s rights to cause the liquidation, termination or
acceleration of this Agreement.

 

(o)Buyer’s Right to Service. Buyer or its designee, at the Buyer’s discretion,
shall be entitled to service some or all of the Purchased Assets that are
Servicing Released Mortgage Loans, including, without limitation, receiving and
collecting all sums payable in respect of same. Upon Buyer’s determination and
written notice to Seller or the Servicer, as applicable, that Buyer desires to
service some or all of the Servicing Released Mortgage Loans, Seller shall
promptly cooperate, or shall cause the Servicer to promptly cooperate, with all
instructions of Buyer and do or accomplish all acts or things necessary to
effect the transfer of the servicing to Buyer or its designee, at Seller’s sole
expense. Upon Buyer’s or its designee’s servicing of the Servicing Released
Mortgage Loans, (i) Buyer may, in its own name or in the name of Seller or
otherwise, demand, sue for, collect or receive any money or property at any time
payable or receivable on account of or in exchange for such Purchased Mortgage
Loan(s), but shall be under no obligation to do so; (ii) Seller shall, if Buyer
so requests, pay to Buyer all amounts received by Seller upon or in respect of
such Purchased Mortgage Loan(s) or other Purchased Assets, advising Buyer as to
the source of such funds; and (iii) all amounts so received and collected by
Buyer shall be held by it as part of the Purchased Assets or applied against any
outstanding Repurchase Price owed Buyer.

 

6.3Margin Account Maintenance.

 

(a)Asset Value. Buyer shall have the right to determine the Asset Value of each
Purchased Asset at any time.

 

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(b)Margin Deficit and Margin Call. If Buyer shall determine at any time that (x)
the Asset Value of a Purchased Asset subject to a Transaction is less than the
related Purchase Price for such Purchased Asset, (y) the aggregate Asset Value
of all Purchased Assets subject to each Transaction is less than the Aggregate
Outstanding Purchase Price for such Transactions, or (z) the aggregate Asset
Value of all Purchased Assets subject to all Transactions is less than the
Aggregate Outstanding Purchase Price for such Transactions (in any such case, a
“Margin Deficit”), then Buyer may, at its sole option and by notice to Seller
(as such notice is more particularly set forth below, a “Margin Call”), require
Seller to either:

 

(i)transfer to Buyer or its designee cash or, at Buyer’s sole option, Eligible
Assets approved by Buyer (“Additional Purchased Assets”) so that (x) the
individual Asset Value of the Purchased Asset, (y) the aggregate Asset Value of
all Purchased Assets subject to each Transaction, or (z) the aggregate Asset
Value of all Purchased Assets subject to Transactions, as the case may be,
including any such cash or Additional Purchased Assets tendered by the Seller,
will thereupon equal or exceed the individual or Aggregate Outstanding Purchase
Price(s) as applicable; or

 

(ii)pay one or more Repurchase Prices, as applicable, in an amount sufficient to
reduce the related Purchase Price so that the related Purchase Price (or the
related aggregate Purchase Price) is less than or equal to the Asset Value of
the Purchased Asset (or the aggregate Asset Value of the Purchased Assets, as
applicable).

 

If Buyer delivers a Margin Call to Seller on or prior to 12:00 p.m. (New York
City time) on any Business Day, then Seller shall transfer cash or Additional
Purchased Assets, as applicable, to Buyer no later than 5:00 p.m. (New York City
time) that same day. If Buyer delivers a Margin Call to Seller after 12:00 p.m.
(New York City time) on any Business Day, Seller shall be required to transfer
cash or Additional Purchased Assets no later than 5:00 p.m. (New York City time)
on the next subsequent Business Day. Notice of a Margin Call may be provided by
Buyer to Seller electronically or in writing, such as via electronic mail or
posting such notice on Buyer’s customer website(s).

 

(c)Buyer’s Discretion. Buyer’s election not to make a Margin Call at any time
there is a Margin Deficit shall not in any way limit or impair its right to make
a Margin Call at any time a Margin Deficit exists.

 

(d)Over/Under Account. Buyer may withdraw from the Over/Under Account amounts
equal to any Margin Deficit which is not otherwise satisfied by Seller within
the time frames provided in this Section 6.3.

 

(e)Credit to Repurchase Price. Any cash transferred to Buyer pursuant to this
Section 6.3 shall be credited to the Repurchase Price of the related
Transaction(s).

 

6.4Custody of Mortgage Loan Documents.

 

(a)Custodial Arrangements. With respect to Purchased Mortgage Loans, Buyer may
appoint any Person to act as the Custodian to hold possession of the Mortgage
Loan Documents and the Agency Documents (or a portion thereof) and to take
actions at the direction of Buyer. If any Person other than Buyer is appointed
as Custodian, it shall be a condition precedent to Buyer entering into any
Transactions hereunder that Seller, Buyer and Custodian enter into a Custodial
Agreement acceptable to Buyer. Seller hereby consents to any and all such
appointments and agrees to deliver the Mortgage Loan Documents and certain of
the Agency Documents to the Custodian upon the direction of Buyer. Seller
further agrees that (i) the Custodian shall be exclusively the agent, bailee
and/or custodian of Buyer; (ii) receipt of the Mortgage Loan Documents or the
Agency Documents by the Custodian shall be constructive receipt by Buyer of such
documents; (iii) Seller shall not have and shall not attempt to exercise any
degree of control over the Custodian or any Mortgage Loan Document or Agency
Document held by the Custodian; and (iv) Buyer shall not be liable for any act
or omission by the Custodian selected by Buyer with reasonable care.

 

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(b)Temporary Withdrawal of Mortgage Loan Documents for Correction. Buyer may
permit Seller to withdraw, for a period not to exceed ten (10) Business Days,
specified Mortgage Loan Documents for the purpose of correcting or completing
such documents or servicing the related Purchased Mortgage Loan; provided,
however, that unless otherwise agreed to by Buyer in writing, in no event shall
more than fifteen (15) Mortgage Loan Files (or Mortgage Loan Documents from more
than fifteen (15) Mortgage Loan Files) shall be released from Custodian’s
possession at any one time; provided further, that any Mortgage Loan Documents
that are withdrawn by or at the request of Seller and delivered to a Person
other than Seller shall at all times be covered by one or more Bailee
Agreements, true and complete and fully executed copies of which shall be
delivered to Buyer. Notwithstanding the foregoing, Buyer shall be deemed to be
in possession of any Mortgage Loan Documents released pursuant to this Section
6.4(b), and the interest of Buyer in the related Purchased Mortgage Loan shall
continue unimpaired until the Mortgage Loan Documents are returned to, or the
Repurchase Prices with respect thereto are received by, Buyer.

 

(c)Delivery of Mortgage Loan Documents to Approved Investors. Provided that no
Potential Default or Event of Default has occurred and is continuing, upon the
written request of Seller, Buyer may, at its option, deliver to an Approved
Investor set forth in the related Purchase Commitment, or its custodian, the
Mortgage Loan Documents relating to a specified Purchased Mortgage Loan. All
such Purchased Mortgage Loans and the related Mortgage Loan Documents shall at
all times be covered by one or more Bailee Agreements, and Buyer or its designee
will not release Mortgage Loan Documents to an Approved Investor unless Buyer or
its Custodian has received a true and complete and fully executed Bailee
Agreement from the Approved Investor. Notwithstanding the foregoing, Buyer shall
be deemed to be in possession of any Mortgage Loan Documents released pursuant
to this Section 6.4(c), and the interest of Buyer in the related Purchased
Mortgage Loan shall continue unimpaired until the Mortgage Loan Documents are
returned to, or the Repurchase Prices with respect thereto are received by,
Buyer. If the Approved Investor does not purchase a Purchased Mortgage Loan as
contemplated by the related Purchase Commitment, Seller shall, upon the request
of Buyer, assist Buyer in the recovery of any Mortgage Loan Documents not
returned by the Approved Investor to Buyer.

 

(d)Delivery of Mortgage Loan Documents Relating to Mortgage-Backed Securities.
Upon the written request of Seller, Buyer may, at its option, deliver to the
certifying custodian or permit the delivery to the certifying custodian of the
Mortgage Loan Documents relating to those Purchased Mortgage Loans that are or
will be Pooled Mortgage Loans. All such Purchased Mortgage Loans and the related
Mortgage Loan Documents shall at all times be covered by a Bailee Agreement, and
Buyer or its designee will not release Mortgage Loan Documents to a certifying
custodian unless Buyer or its designee has received a signed tri-party custodial
agreement from such custodian, in a form acceptable to Buyer. Buyer shall have
no obligation to release or permit the release of any Mortgage Loan Documents to
any certifying custodian that will not sign a custodial agreement.
Notwithstanding the foregoing, Buyer shall be deemed to be in possession of any
Mortgage Loan Documents released pursuant to this Section 6.4(d), and the
interest of Buyer in the related Purchased Mortgage Loans shall continue
unimpaired until the Mortgage Loan Documents are returned to, or proceeds
thereof are received by, Buyer. Seller shall pay for all costs of the certifying
custodian and use its best efforts to ensure that the issuer delivers the
Mortgage-Backed Securities to the Depository in the name of Buyer or Buyer’s
nominee on the related Settlement Date.

 

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6.5Repurchase and Release of Purchased Assets. Provided that no Event of Default
or Potential Default has occurred and is continuing, Seller may repurchase a
Purchased Asset by either:

 

(a)paying, or causing an Approved Investor to pay, to Buyer, subject to Sections
4.7 and 4.8 above, the Repurchase Price; or

 

(b)transferring to Buyer additional Assets satisfactory to Buyer and/or cash, in
aggregate amounts sufficient to cover the amount by which the aggregate amount
of Transactions then outstanding hereunder (plus accrued interest and accrued
fees with respect thereto) exceeds the Asset Value of the existing Purchased
Assets, excluding the Purchased Assets to be released; provided that (i) such
additional Assets shall be deemed part of a new Transaction, (ii) the conditions
precedent in Section 7.2 shall be satisfied prior to any such transfer, and
(iii) any such transfer shall only relate to repurchases of Purchased Assets
with respect to the Committed Amount.

 

Upon receipt of the applicable amount, as set forth above, Buyer shall (i) with
respect to Purchased Mortgage Loans, deliver or shall cause the Custodian to
deliver the related Mortgage Loan Documents to Seller or Seller’s designee, if
such documents have not already been delivered pursuant to a Bailee Agreement
and (ii) with respect to related Mortgage-Backed Securities, deliver the
Mortgage-Backed Security to Seller or Approved Investor, as applicable, on a
delivery versus payment basis. If any such release gives rise to or perpetuates
a Margin Deficit, Buyer shall notify Seller of the amount thereof and Seller
shall thereupon satisfy the Margin Call in the manner specified in Section
6.3(b). Buyer shall have no obligation to release a repurchased Purchased Asset
or terminate its security interest in such Purchased Asset until such Margin
Call is satisfied.

 

6.6Repurchase Transactions. Beginning on the related Purchase Date and prior to
the related Repurchase Date for a Transaction, Buyer shall have free and
unrestricted use of all related Purchased Assets and may in its discretion and
without notice to Seller engage in repurchase transactions with respect to any
or all of such Purchased Assets or otherwise pledge, hypothecate, assign,
transfer or convey any or all of such Purchased Assets (such transactions,
“Repurchase Transactions”). Nothing contained in this Agreement shall obligate
Buyer to segregate any Purchased Asset or Purchased Item delivered to Buyer by
Seller. Seller shall not be responsible for any additional obligations, costs or
fees in connection with such Repurchase Transactions. Seller shall not take any
action inconsistent with Buyer’s ownership of a Purchased Asset and shall not
claim any legal, beneficial or other interest in such a Purchased Asset other
than the limited right and obligations to provide servicing of such Purchased
Mortgage Loans where Buyer designates Seller as servicer as provided in Section
6.2.

 

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6.7Periodic Due Diligence. Seller acknowledges that Buyer has the right at any
time during the term of this Agreement to perform continuing due diligence
reviews with respect to the Purchased Assets, for purposes of verifying
compliance with the representations, warranties, covenants and specifications
made hereunder or under any other Principal Agreement, or otherwise, and Seller
agrees that upon reasonable (but no less than one (1) Business Day’s) prior
notice to Seller (provided that upon the occurrence of a Potential Default or an
Event of Default, no such prior notice shall be required), Buyer or its
authorized representatives will be permitted during normal business hours to
examine, inspect, make copies of, and make extracts of, the Mortgage Loan Files,
the Servicing Records and any and all documents, records, agreements,
instruments or information relating to such Purchased Assets in the possession,
or under the control, of Seller, Custodian or Servicer. Further, Seller will
make available to Buyer a knowledgeable financial or accounting officer and will
instruct such officer to answer candidly and fully, at no cost to Buyer, any and
all questions that any authorized representative of Buyer may address to them in
reference to the Mortgage Loan Files and Purchased Assets. Without limiting the
generality of the foregoing, Seller acknowledges that Buyer shall purchase
Assets from Seller based solely upon the information provided by Seller to Buyer
in the Asset Data Records and the representations, warranties and covenants
contained herein, and that Buyer, at its option, has the right, at any time to
re-underwrite any of the Purchased Assets itself or engage a third party
underwriter to perform such re-underwriting. Seller agrees to cooperate with
Buyer and any third party underwriter in connection with such re-underwriting,
including, but not limited to, providing Buyer and any third party underwriter
with access to any and all documents, records, agreements, instruments or
information relating to such Purchased Assets in the possession, or under the
control, of Seller. Seller and Buyer further agree that all out-of-pocket costs
and expenses incurred by Buyer in connection with Buyer’s activities pursuant to
this Section 6.7 shall be paid by Seller.

 

ARTICLE 7
CONDITIONS PRECEDENT

 

7.1Initial Transaction. As conditions precedent to Buyer considering whether to
enter into the initial Transaction hereunder:

 

(a)Seller shall have delivered to Buyer, in form and substance satisfactory to
Buyer:

 

(i)each of the Principal Agreements duly executed by each party thereto and in
full force and effect, free of any modification, breach or waiver;

 

(ii)an opinion of Seller’s counsel as to such matters as Buyer may reasonably
request, including, without limitation, with respect to Buyer’s first priority
lien on and perfected security interest in the Purchased Assets and Purchased
Items; a non-contravention, enforceability and corporate opinion with respect to
Seller and each Guarantor, if any; an opinion with respect to the
inapplicability of the Investment Company Act of 1940 to Seller and each
Guarantor, if any; and a Bankruptcy Code opinion with respect to the matters
outlined in Section 14.19, each in form and substance acceptable to Buyer;

 

(iii)a Power of Attorney duly executed by Seller and notarized;

 

(iv)a certified copy of Seller’s articles or certificate of incorporation and
bylaws (or corresponding organizational documents if Seller is not a
corporation) and, if required by Buyer, a certificate of good standing issued by
the appropriate official in Seller’s jurisdiction of organization, in each case,
dated no less recently than fourteen (14) days prior to the Effective Date;

 

(v)a certificate of Seller’s corporate secretary, substantially in the form of
Exhibit C hereto, dated as of the Effective Date, as to the incumbency and
authenticity of the signatures of the officers of Seller executing the Principal
Agreements and the resolutions of the board of directors of Seller (or its
equivalent governing body or Person), substantially in the form of Exhibit D
hereto;

 

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(vi)independently audited financial statements of Seller (and its Subsidiaries,
on a consolidated basis) for each of the two (2) fiscal years most recently
ended (if available), containing a balance sheet and related statements of
income, stockholders’ equity and cash flows, all prepared in accordance with
GAAP, applied on a basis consistent with prior periods, and otherwise acceptable
to Buyer, together with an auditor’s opinion that is unqualified or otherwise is
consented to in writing by Buyer;

 

(vii)if more than six (6) months has passed since the close of the most recently
ended fiscal year, interim financial statements of Seller covering the period
from the first day of the current fiscal year to the last day of the most
recently ended month;

 

(viii)financial statements of each of the Guarantor, if any, signed by them,
dated no less recently than three (3) months prior to the date of the initial
Transaction;

 

(ix)copies of Seller’s errors and omissions insurance policy or mortgage
impairment insurance policy and blanket bond coverage policy or certificates of
insurance for such policies, all in form and content satisfactory to Buyer,
showing compliance by Seller with Section 9.9 below;

 

(x)if required by Buyer, a subordination agreement, in form and substance
satisfactory to Buyer, executed by any Person which is, as of the Effective
Date, a creditor of Seller, including Guarantor and each Affiliate of Seller
that is a creditor of Seller;

 

(xi)an Acknowledgement of Confidentiality of Password Agreement in the form of
Exhibit I hereto;

 

(xii)the Facility Fee and any other fees then due and owing under the
Transactions Terms Letter;

 

(xiii)[reserved];

 

(xiv)a copy of Seller’s acquisition guidelines for Mortgage Loans in form and
substance acceptable to Buyer in its sole discretion, as amended from time to
time; and

 

(xv)such other documents as Buyer or its counsel may reasonably request.

 

(b)Buyer shall have determined that it has received satisfactory evidence that
the appropriate Uniform Commercial Code Financial Statements (UCC-1) and/or such
other instruments as may be necessary in order to create in favor of Buyer, a
perfected first- priority security interest in the Purchased Assets and related
Purchased Items should any of the Transactions be deemed to be loans, and same
shall have been duly executed and appropriately filed or recorded in each office
of each jurisdiction in which such filings and recordation’s are required to
perfect such first-priority security interest.

 

(c)Buyer shall have determined that it has satisfactorily completed its due
diligence review of Seller’s operations, business, financial condition and
acquisition of Mortgage Loans.

 

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(d)To the extent previously approved, Seller shall have provided evidence,
satisfactory to Buyer that Seller has all Approvals and such Approvals are in
good standing.

 

7.2All Transactions. As conditions precedent to Buyer (or the Custodian if set
forth below) considering whether to enter into any Transaction hereunder
(including the initial Transaction), or whether to continue a Transaction, in
the case of a Transaction in respect of Mortgage Loans which convert to Pooled
Mortgage Loans on the related Pooling Date or a Transaction in respect of Pooled
Mortgage Loans which convert to a Mortgage-Backed Security on the related
Settlement Date, as applicable:

 

(a)Seller shall have delivered to Buyer, in form and substance satisfactory to
Buyer and not later than 4:00 p.m. (New York City time):

 

(i)an Asset Data Record for the Assets subject to the proposed Transaction,
which Asset Data Record may be an individual record or part of a group report
and shall be authenticated by Seller with the PIN or the handwritten signature
of an authorized officer of Seller;

 

(ii)to the Custodian, a complete Mortgage Loan File for each Mortgage Loan
subject to the proposed Transaction, unless such Mortgage Loan is a Wet Mortgage
Loan;

 

(iii)[reserved];

 

(iv)for each Mortgage Loan that is subject to the proposed Transaction that is
also subject to a security interest (including any precautionary security
interest) immediately prior to the Purchase Date, a Warehouse Lender’s Release,
bailee letter or Seller’s Release, as applicable for such Mortgage Loan. The
secured party shall have filed Uniform Commercial Code termination statements in
respect of any Uniform Commercial Code filings made in respect of such Loan, and
each such release and Uniform Commercial Code termination statement has been
delivered to Buyer prior to each Transaction and to the Custodian as part of the
Mortgage Loan File;

 

(v)a schedule identifying each Asset subject to the proposed Transaction as
either a Safe Harbor Qualified Mortgage or a Rebuttable Presumption Qualified
Mortgage, as applicable; and

 

(vi)such other documents pertaining to the Transaction as Buyer may reasonably
request, from time to time;

 

(b)Seller hereby acknowledges that, in order for Buyer to satisfy the “good
delivery standards” of the Securities Industry and Financial Markets Association
(“SIFMA”) as set forth in the SIFMA Uniform Practices Manual and SIFMA’s Uniform
Practices for the Clearance and Settlement of Mortgage Backed Securities and
other Related Securities, in each case, as amended from time to time, Buyer must
deliver each Trade Assignment in respect of Pooled Mortgage Loans or
Mortgage-Backed Securities to the related Approved Investor no later than
seventy-two (72) hours prior to settlement of the related Mortgage-Backed
Security. Seller hereby acknowledges and agrees to deliver to Buyer, in form and
substance satisfactory to Buyer and not later than 1:00 p.m. (New York City
time) on the date on which such seventy-two (72) hour period commences, each
related Trade Assignment (solely to the extent such Pooled Mortgage Loan is not
pooled with Mortgage Loans financed by a third party pursuant to a joint pooling
arrangement) executed by Seller, together with a true and complete copy of the
related Purchase Commitment for any Assets subject to the proposed Transaction
that are subject to a Purchase Commitment;

 

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(c)for Mortgage Loans proposed to be sold under such Transaction with respect to
which the related Purchase Price is to be paid to one or more Approved Payees on
behalf of Seller, an amount equal to the related Haircut (if any) plus the
Minimum Over/Under Account Balance, as set forth in Section 3.5(a), shall be on
deposit in the Over/Under Account;

 

(d)for all new origination Wet Mortgage Loans or Dry Mortgage Loans as to which
the origination funds are being remitted to the closing table that are proposed
to be sold under such Transaction, Seller shall have delivered to (i) the
applicable Closing Agent (with a copy to Buyer) the Irrevocable Closing
Instructions and final closing instructions and, if applicable, (ii) to Buyer a
copy of the blanket or individual Closing Protection Letter and the related
Assignment of Closing Protection Letter duly executed and naming Buyer as the
assignee, each in accordance with Section 9.10;

 

(e)on or prior to the Pooling Date for any Pooled Mortgage Loan, Seller shall
deliver or cause to be delivered (A) to Buyer, an executed trust receipt from
the Custodian relating to such Mortgage Loan in form and substance satisfactory
to Buyer, (B) to the Custodian (or otherwise made available to the Custodian),
all documents, schedules and forms required by and in accordance with the
Custodial Agreement, (C) to Buyer, a copy of each of the applicable Agency
Documents, and (D) to Buyer, a Trade Assignment executed by such Seller that
satisfies the requirements set forth in Section 7.2(b);

 

(f)on or prior to the related Settlement Date for any Mortgage-Backed Security
relating to a Purchased Mortgage Loan, Seller shall have provided Buyer with the
CUSIP number for such Mortgage-Backed Security;

 

(g)Seller shall have paid all fees (including Facility Fees and Unused Facility
Fees), expenses, indemnity payments and other amounts that are then due and
owing under the Principal Agreements;

 

(h)No rescission notice and/or notice of right to cancel shall have been
improperly delivered to the Mortgagor in respect of any Eligible Mortgage Loan,
and the rescission period related to such Eligible Mortgage Loan shall have
expired;

 

(i)Seller shall have designated one or more Approved Payees, if applicable, to
whom the related Haircut (if any) and Purchase Price shall be delivered;

 

(j)the representations and warranties of Seller set forth in Article 8 hereof
shall be true and correct in all material respects as if made on and as of the
date of each Transaction. At the request of Buyer, Buyer shall have received an
officer’s certificate signed by a responsible officer of Seller certifying as to
the truth and accuracy of same;

 

(k)if required by Buyer, Seller and Guarantor shall have performed all
agreements to be performed by them hereunder and under the Guarantee,
respectively, and after giving effect to the requested Transaction, there shall
exist no Event of Default or Potential Default hereunder;

 

(l)no Potential Default, Event of Default or a Material Adverse Effect shall
have occurred and be continuing;

 

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(m)if applicable, a Servicing Agreement duly executed by the Servicer and Seller
and a Servicer Notice duly executed by the Servicer shall have been delivered to
Buyer;

 

(n)Buyer shall have received a copy of any amendments or updates to Seller’s
acquisition guidelines certified by Seller to be a true and complete copy (to
the extent not already delivered to Buyer) that clearly identifies the changes
to the acquisition guidelines, and Buyer shall have approved such amendments;

 

(o)Buyer shall have received for each Purchased Asset subject to a Purchase
Commitment or other hedging arrangement, an assignment of such Purchase
Commitment or hedging arrangement duly executed by Seller and the related
Approved Investor or hedging party, as applicable, and in favor of Buyer;

 

(p)Seller shall have deposited all amounts required under Section 6.2(i) into
the Custodial Account; and

 

(q)Buyer shall have received a security release certification for each Purchased
Mortgage Loan that is subject to a security interest (including any
precautionary security interest) immediately prior to the Purchase Date that is
duly executed by the related secured party and Seller and in form and substance
satisfactory to Buyer, and such secured party shall have filed Uniform
Commercial Code termination statements in respect of any Uniform Commercial Code
filings made in respect of such Purchased Mortgage Loan, and each such release
and Uniform Commercial Code termination statement has been delivered to Buyer
prior to each Transaction and to the Custodian as part of the Mortgage Loan
File.

 

For the avoidance of doubt, notwithstanding that foregoing conditions may be
satisfied with respect to any Transaction request, Buyer shall be under no
obligation to enter into any Transaction with respect to the Uncommitted Amount
and whether the Buyer enters into any Transaction with respect to the
Uncommitted Amount shall be at the discretion of Buyer.

 

7.3Reserved.

 

7.4Satisfaction of Conditions. The entering into of any Transaction prior to or
without the fulfillment by Seller of all the conditions precedent thereto,
whether or not known to Buyer, shall not constitute a waiver by Buyer of the
requirements that all conditions, including the non- performed conditions, shall
be required to be satisfied with respect to all Transactions. All conditions
precedent hereunder are imposed solely and exclusively for the benefit of Buyer
and may be freely waived or modified in whole or in part by Buyer. Any waiver or
modification asserted by Seller to have been agreed by Buyer must be in writing.
Buyer shall not be liable to Seller for any costs, losses or damages arising
from Buyer’s determination that Seller has not satisfactorily complied with any
applicable condition precedent.

 

ARTICLE 8
REPRESENTATIONS AND WARRANTIES

 

8.1Representations and Warranties Concerning Seller. Seller represents and
warrants to and covenants with Buyer that the following representations and
warranties are true and correct as of the Effective Date through and until the
date on which all obligations of Seller under this Agreement are fully
satisfied.

 

(a)Due Formation and Good Standing. Seller is (i) duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has the full legal power and authority and has all
governmental licenses, authorizations, consents and approvals, necessary to own
its property and to carry on its business as currently conducted, and (iii) is
duly qualified to do business and is in good standing in each jurisdiction in
which the transaction of its business makes such qualification necessary.

 

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(b)Authorization. The execution, delivery and performance by Seller of the
Principal Agreements and all other documents and transactions contemplated
thereby, are within Seller’s corporate powers, have been duly authorized by all
necessary corporate action and do not constitute or will not result in (i) a
breach of any of the terms, conditions or provisions of Seller’s articles or
certificate of incorporation or bylaws (or corresponding organizational
documents if Seller is not a corporation); (ii) a material breach of any legal
restriction or any agreement or instrument to which Seller is now a party or by
which it is bound; (iii) a material default or an acceleration under any of the
foregoing; or (iv) the violation of any law, rule, regulation, order, judgment
or decree to which Seller or its property is subject.

 

(c)Enforceable Obligation. The Principal Agreements and all other documents
contemplated thereby constitute legal, binding and valid obligations of Seller,
enforceable against Seller in accordance with their respective terms, except as
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditor’s rights.

 

(d)Approvals. The execution and delivery of the Principal Agreements and all
other documents contemplated thereby and the performance of Seller’s obligations
thereunder do not require any license, consent, approval, authorization or other
action of any Governmental Authority or any other Person, or if required, such
license, consent, approval, authorization or other action has been obtained
prior to the Effective Date.

 

(e)Compliance with Laws. Seller is not in violation of any of its articles or
certificate of incorporation or bylaws (or corresponding organizational
documents if Seller is not a corporation), of any provision of any applicable
law, or of any judgment, award, rule, regulation, order, decree, writ or
injunction of any court or public regulatory body or authority that might have a
Material Adverse Effect with respect to Seller.

 

(f)Financial Condition. All financial statements of Seller and each Guarantor
delivered to Buyer fairly and accurately present the financial condition of the
parties for whom such statements are submitted. The financial statements of
Seller have been prepared in accordance with GAAP consistently applied
throughout the periods involved, and there are no contingent liabilities not
disclosed thereby that would adversely affect the financial condition of Seller.
Since the close of the period covered by the latest financial statement
delivered to Buyer with respect to Seller, there has been no material adverse
change in the assets, liabilities or financial condition of Seller nor is Seller
aware of any facts that, with or without notice or lapse of time or both, would
or could result in any such material adverse change. No event has occurred,
including, without limitation, any litigation or administrative proceedings, and
no condition exists or, to the knowledge of Seller, is threatened, that (i)
might render Seller unable to perform its obligations under the Principal
Agreements and all other documents contemplated thereby; (ii) would constitute a
Potential Default or Event of Default; or (iii) might have a Material Adverse
Effect with respect to Seller.

 

(g)Credit Facilities. The only credit facilities, including repurchase
agreements for mortgage loans and mortgage-backed securities, of Seller that are
presently in effect and are secured by mortgage loans or provide for the
purchase, repurchase or early funding of mortgage loan sales, are either (i)
with Persons disclosed to Buyer at the time of application, or thereafter
disclosed to Buyer or (ii) warehouse lenders that are Approved Payees.

 

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(h)Title to Assets. Seller has good, valid, insurable (in the case of real
property) and marketable title to all of its properties and other assets,
whether real or personal, tangible or intangible, reflected on the financial
statements delivered to Buyer with respect to Seller, except for such properties
and other assets that have been disposed of in the ordinary course of business
of Seller’s mortgage banking business, and all such properties and other assets
are free and clear of all liens except as disclosed in such financial
statements.

 

(i)Litigation. There are no actions, claims, suits, investigations or
proceedings pending, or to the knowledge of Seller, threatened or reasonably
anticipated against or affecting Seller or any of its Subsidiaries or Affiliates
or any of the property thereof in any court or before or by any arbitrator,
government commission, board, bureau or other administrative agency that, if
adversely determined, may reasonably be expected to result in a Material Adverse
Effect.

 

(j)Payment of Taxes. Seller has timely filed all Tax returns and reports
required to be filed and has paid all taxes, assessments, fees and other
governmental charges levied upon it or its property or income (whether or not
shown on such Tax returns) that are due and payable, including interest and
penalties, or has provided adequate reserves for the payment thereof in
accordance with GAAP. Any Taxes, fees and other governmental charges payable by
Seller in connection with a Transaction and the execution and delivery of the
Principal Agreements have been paid.

 

(k)No Defaults. Seller is not in default under any indenture, mortgage, deed of
trust, agreement or other instrument or contractual or legal obligation to which
it is a party or by which it is bound in any respect that may reasonably be
expected to result in a Material Adverse Effect.

 

(l)ERISA. Seller and each Plan is in compliance in all material respects with
the requirements of ERISA and the Code, and no Reportable Event has occurred
with respect to any Plan maintained by Seller or any of its ERISA Affiliates.
The present value of all accumulated benefit obligations under each Plan subject
to Title IV of ERISA or Section 412 of the Code (based on the assumptions used
for purposes of Accounting Standards Codification (ASC) 715) did not, as of the
date of the most recent financial statements reflecting such amounts, exceed the
fair market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all Plans (based on the assumptions used for
purposes of ASC 715) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed the fair market value of the assets
of all such Plans. Seller and its Subsidiaries and their ERISA Affiliates do not
provide any material medical or health benefits to former employees other than
as required by the Consolidated Omnibus Budget Reconciliation Act, as amended,
or similar state or local law (collectively, “COBRA”) at no cost to the
employer. The assets of Seller are not “plan assets” within the meaning of 29
CFR 2510.3-101 as modified by section 3(42) of ERISA.

 

(m)Approved Mortgagee. To the extent previously approved, Seller is an approved
FHA, VA, Ginnie Mae, Fannie Mae and/or Freddie Mac seller, issuer, mortgagee
and/or servicer and is in good standing with these agencies.

 

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(n)True and Complete Disclosure. The information, reports, financial statements,
exhibits and schedules furnished in writing by or on behalf of Seller or any of
its Subsidiaries to Buyer in connection with the negotiation, preparation or
delivery of this Agreement and the other Principal Agreements or included herein
or therein or delivered pursuant hereto or thereto, when taken as a whole, do
not contain any untrue statement of material fact or omit to state any material
fact necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. All written
information furnished after the date hereof by or on behalf of Seller or any of
its Subsidiaries to Buyer in connection with this Agreement and the other
Principal Agreements and the transactions contemplated hereby and thereby will
be true, complete and accurate in every material respect, or (in the case of
projections) based on reasonable estimates, on the date as of which such
information is stated or certified. There is no fact known to Seller that, after
due inquiry, could reasonably be expected to have a Material Adverse Effect that
has not been disclosed herein, in the other Principal Agreements or in a report,
financial statement, exhibit, schedule, disclosure letter or other writing
furnished to Buyer for use in connection with the transactions contemplated
hereby or thereby.

 

(o)Ownership; Priority of Liens. Seller owns all Assets identified in the
Transactions Terms Letter that are to become Purchased Assets, and any
Transaction shall convey all of Seller’s right, title and interest in and to the
related Purchased Assets and other Purchased Items to Buyer, including with
respect to each Purchased Mortgage Loan, the Servicing Rights related thereto.
This Agreement creates in favor of Buyer, a valid, enforceable first priority
lien and security interest in the Purchased Assets and other Purchased Items,
prior to the rights of all third Persons and subject to no other liens.

 

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

 

(q)Filing Jurisdictions; Relevant States. Schedule 1 hereto sets forth all of
the jurisdictions and filing offices in which a financing statement should be
filed in order for Buyer to perfect its security interest in the Purchased
Assets and other Purchased Items. Schedule 2 hereto sets forth all of the states
or other jurisdictions in which Seller originates or has originated Mortgage
Loans in its own name or through brokers on or prior to the date of this
Agreement.

 

(r)Seller Solvent; Fraudulent Conveyance. As of the date hereof and immediately
after giving effect to each Transaction, the fair value of the assets of Seller
is greater than the fair value of the liabilities (including, without
limitation, contingent liabilities if and to the extent required to be recorded
as a liability on the financial statements of Seller in accordance with GAAP) of
Seller and Seller is and will be solvent, is and will be able to pay its debts
as they mature and does not and will not have an unreasonably small capital to
engage in the business in which it is engaged and proposes to engage. Seller
does not intend to incur, or believe that it has incurred, debts beyond its
ability to pay such debts as they mature. Seller is not contemplating the
commencement of insolvency, bankruptcy, liquidation or consolidation proceedings
or the appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of Seller or any of its assets. Seller is not transferring
any Assets with any intent to hinder, delay or defraud any of its creditors.

 

(s)Custodial Account. All funds required to be segregated and deposited into the
Custodial Account have been so segregated and deposited.

 

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(t)Chief Executive Office. Seller’s chief executive office is located at c/o Oak
Circle Capital Partners LLC, 540 Madison Avenue, 19th Floor, New York, New York
10022.

 

(u)True Sales. For each Purchased Asset with respect to which the originator,
issuer or prior owner is an Affiliate of Seller, any and all interest of such
originator, issuer or prior owner has been sold, transferred, conveyed and
assigned to Seller pursuant to a legal and true sale and such originator, issuer
or prior owner retains no interest in such Purchased Asset, and if so requested
by Buyer, such sale is covered by an opinion of counsel to that effect in form
and substance acceptable to Buyer.

 

(v)No Adverse Selection. Seller used no selection procedures that identified
Assets offered for sale to Buyer hereunder as being less desirable or valuable
than other comparable Assets owned by Seller.

 

(w)No Broker. Seller has not dealt with any broker, investment banker, agent, or
other person, except for Buyer, who may be entitled to any commission or
compensation in connection with the sale of Purchased Assets pursuant to this
Agreement; provided, that if Seller has dealt with any broker, investment
banker, agent, or other person, except for Buyer, who may be entitled to any
commission or compensation in connection with the sale of Purchased Assets
pursuant to this Agreement, such commission or compensation shall have been paid
in full by Seller.

 

(x)MERS. Seller is a member of MERS in good standing.

 

(y)Agency Approvals. To the extent previously approved, Seller has all requisite
Approvals and is in good standing with each Agency, with no event having
occurred or Seller having any reason whatsoever to believe or suspect will
occur, including, without limitation, a change in insurance coverage which would
either make the Seller unable to comply with the eligibility requirements for
maintaining all such applicable approvals or require notification to the
relevant Agency or to HUD, FHA or VA.

 

(z)Custodian. If the Custodian is a Person other than Buyer, such Custodian is
an eligible custodian under each applicable Agency Guide and Agency Program, and
is not an Affiliate of Seller.

 

(aa)No Adverse Actions. To the extent previously approved, Seller has not
received from any Agency, HUD, FHA or VA a notice of extinguishment or a notice
indicating material breach, default or material non-compliance which Buyer
reasonably determines may entitle such Agency or HUD, FHA or VA to terminate,
suspend, sanction or levy penalties against Seller, or a notice from any Agency,
HUD, FHA or VA indicating any adverse fact or circumstance in respect of Seller
which Buyer reasonably determines may entitle such Agency or HUD, FHA or VA, as
the case may be, to revoke any Approval or otherwise terminate, suspend Seller
as an approved issuer, seller or servicer, as applicable, or with respect to
which such adverse fact or circumstance has caused any Agency, HUD, FHA or VA to
terminate Seller.

 

(bb)Accuracy of Wire Instructions. With respect to each Purchased Mortgage Loan
subject to a Purchase Commitment by an Agency, as applicable, (1) either the
wire transfer instructions as set forth on the applicable Agency Documents are
identical to Buyer’s designated wire instructions or the Buyer has approved such
wire transfer instructions in writing in its sole discretion, or (2) either the
payee number set forth on the applicable Agency Documents is identical to the
payee number that has been identified by Buyer in writing as Buyer’s payee
number or the Buyer has approved the related payee number in writing in its sole
discretion. With respect each Pooled Mortgage Loan, the applicable Agency
Documents are duly executed by Seller and designate Buyer as the party
authorized to receive the related Mortgage-Backed Securities.

 

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8.2Representations and Warranties Concerning Purchased Assets. Seller represents
and warrants to and covenants with Buyer that the representations and warranties
contained on Exhibit L hereto are true and correct with respect to each
Purchased Asset as of the related Purchase Date through and until the related
Repurchase Date.

 

8.3Continuing Representations and Warranties. By submitting an Asset Data Record
hereunder, Seller shall be deemed to have represented and warranted the
truthfulness and completeness of the representations and warranties set forth in
Exhibit L hereto.

 

8.4Amendment of Representations and Warranties. From time to time as determined
necessary by Buyer and with forty-five (45) days’ prior notice, Buyer may amend
the representations and warranties set forth in Exhibit L hereto. Any such
amendment shall not apply to Transactions entered into prior to the effective
date of the amendment and in no event shall the amendment apply to any
Transaction on a retroactive basis.

 

ARTICLE 9
AFFIRMATIVE COVENANTS

 

Seller hereby covenants and agrees with Buyer that during the term of this
Agreement and for so long as there remain any obligations of Seller to be paid
or performed under the Principal Agreements:

 

9.1Financial Statements and Other Reports.

 

(a)Interim Statements. Within forty-five (45) days after the end of each
calendar quarter or thirty (30) days after the end of each calendar month that
is not the end of a calendar quarter, Seller shall deliver to Buyer financial
statements of Seller and Guarantor, including statements of income and changes
in shareholders’ equity (or its equivalent) for the period from the beginning of
such fiscal year to the end of such month, and the related balance sheet as of
the end of such month, all in reasonable detail and certified by the chief
financial officer of Seller and Guarantor, as applicable, subject, however, to
year-end audit adjustments.

 

(b)Annual Statements. Within ninety (90) days following the end of Seller’s and
Guarantor’s fiscal year, Seller shall deliver to Buyer audited financial
statements of Seller and Guarantor, including statements of income and changes
in shareholders’ equity (or its equivalent) for such fiscal year and the related
balance sheet as at the end of such fiscal year, all in reasonable detail and
accompanied by an opinion of a certified public accounting firm reasonably
satisfactory to Buyer including a management representation letter signed by the
chief financial officer of Seller and Guarantor, as applicable, stating that the
financial statements fairly present the financial condition and results of
operations of Seller as of the end of, and for, such year.

 

(c)Officer’s Certificate. Together with the financial statements required to be
delivered pursuant to Sections 9.1(a) and (b), Seller shall deliver to Buyer an
officer’s certificate substantially in a form to be provided by Buyer which
shall include funding and production volume reports for the previous month and
evidence of compliance with all financial covenants.

 

(d)Reserved.

 

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(e)Reserved.

 

(f)Reserved.

 

(g)Hedging Reports. Seller shall deliver to Buyer, or cause to be delivered to
Buyer, once per calendar month, or as reasonably requested by Buyer, (i) a
reconciliation report, in a form reasonably satisfactory to Buyer, including,
without limitation, a report of all outstanding Transactions and their related
Purchase Commitments, availability under unused Purchase Commitments and all
amounts outstanding and available under other warehouse lines of credit,
repurchase agreements and similar credit facilities, and (ii) a loan and rate
lock position report and hedge report containing product level pricing and
interest rate sensitivity analysis (shocks) or as requested by Buyer (data
elements to be agreed upon). To the extent Seller retains any Person(s) to
perform hedging services on behalf of Seller, Seller hereby grants Buyer
authority to contact, request and receive hedging reports directly from such
Person(s) at no cost to Buyer. Further, Seller shall instruct such Person(s),
upon reasonable notice from Buyer and during normal business hours, to answer
candidly and fully, at no cost to Buyer, any and all questions that Buyer may
address to them in reference to the hedging reports of Seller. Seller may have
its representatives in attendance at any meetings between Buyer and such
Person(s) held in accordance with this authorization.

 

(h)Reports and Information Regarding Purchased Assets. Seller shall deliver to
Buyer, with reasonable promptness upon Buyer’s request: (i) copies of any
reports related to the Purchased Assets, (ii) copies of all documentation in
connection with the origination and acquisition of any Purchased Asset that
evidences compliance with, (x) with respect to all Purchased Assets, the Ability
to Repay Rule and, (y) with respect to all Purchased Assets, the QM Rule, as
applicable, and (iii) any other information in Seller’s possession related to
the Purchased Assets.

 

(i)Monthly Collateral Tape. Seller shall, or shall cause Servicer to, deliver
within five (5) days after the end of each month, (i) a collateral tape
including the data fields (to be determined) representing the Purchased Mortgage
Loans subject to Transactions hereunder as of the end of such month, acceptable
to the Buyer in its discretion, and (ii) any additional information as
reasonably requested.

 

(j)Other Reports. As may be reasonably requested by Buyer from time to time,
Seller shall deliver to Buyer, within thirty (30) days of filing or receipt (i)
copies of all regular or periodic financial or other reports, if any, that
Seller files with any governmental, regulatory or other agency and (ii) copies
of all audits, examinations and reports concerning the operations of Seller from
any Approved Investor, Insurer or licensing authority. Seller shall also deliver
to Buyer, with reasonable promptness, (x) if requested by Buyer, a detailed
aging report of all outstanding loans on warehouse/ purchase/ repurchase
facilities, and detail of all uninsured government loans in a form reasonably
acceptable to Buyer and (y) such further information reasonably related to the
business, operations, properties or financial condition of Seller, in such
detail and at such times as Buyer may request. Seller understands and agrees
that all reports and information provided to Buyer by or relating to Seller may
be disclosed to Buyer’s Affiliates.

 

9.2Inspection of Properties and Books. At no cost to Buyer, Seller shall permit
authorized representatives of Buyer to discuss the business, operations, assets
and financial condition of Seller and its Affiliates and Subsidiaries with its
officers and employees and to examine its books of account and make copies
and/or extracts thereof, upon reasonable notice to Seller at Seller’s place of
business during normal business hours. Further, Seller will provide its
accountants with a copy of this Agreement promptly after the execution hereof
and will instruct its accountants to answer candidly and fully, at no cost to
Buyer, any and all questions that any authorized representative of Buyer may
address to them in reference to the financial condition or affairs of Seller and
its Affiliates and Subsidiaries. Seller may have its representatives in
attendance at any meetings between the officers or other representatives of
Buyer and Seller’s accountants held in accordance with this authorization.

 

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9.3Notice. Seller shall give Buyer prompt (but in no event later than three (3)
Business Days after becoming aware, except for clause (r), with respect to which
notice shall be provided immediately upon becoming aware) written notice, in
reasonable detail, of:

 

(a)any and all material changes to the information set forth in the Application;

 

(b)any action, suit or proceeding instituted by or against Seller in any federal
or state court or before any commission or other regulatory body (federal, state
or local, foreign or domestic), or any such action, suit or proceeding
threatened against Seller, in any case, if such action, suit or proceeding, or
any such action, suit or proceeding threatened against Seller, (i) involves a
potential liability, on an individual or aggregate basis, equal to or greater
than ten percent (10%) of Seller’s Tangible Net Worth, (ii) is reasonably likely
to result in a Material Adverse Effect if determined adversely, (iii) questions
or challenges the validity or enforceability of any of the Principal Agreements
or (iv) questions or challenges compliance of any Purchased Asset with, (x) with
respect to any Purchased Asset, the Ability to Repay Rule or, (y) with respect
to any Purchased Asset, the QM Rule;

 

(c)the filing, recording or assessment of any federal, state or local tax lien
against it, or any of its assets;

 

(d)the occurrence of any Potential Default or Event of Default;

 

(e)the actual or threatened suspension, revocation or termination of Seller’s
licensing or eligibility, in any respect, as an approved, licensed lender,
seller, mortgagee or servicer;

 

(f)the suspension, revocation or termination of any existing credit or investor
relationship to facilitate the sale and/or origination of residential mortgage
loans or residential mortgage-backed securities;

 

(g)any demand(s), whether on an individual or in the aggregate, on a rolling
six-month basis, by an Approved Investor or Insurer for (i) the repurchase of a
mortgage loan(s) if the unpaid principal balance of the mortgage loan(s) subject
to such demand(s) is equal to or greater than two hundred and fifty thousand
($250,000) dollars or (ii) indemnification if the demanded indemnification
amount(s) is equal to or greater than fifty thousand ($50,000) dollars;

 

(h)any potential or existing Purchased Mortgage Loan where a director, officer,
shareholder, member, partner or owner of Seller is the Mortgagor or guarantor or
where the related Mortgaged Property is being sold by a director, officer,
shareholder, member, partner or owner of Seller;

 

(i)any Purchased Asset ceases to be an Eligible Asset;

 

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(j)any Approved Investor that threatens to set-off amounts owed by Seller to
such Approved Investor against the purchase proceeds owed by the Approved
Investor to Seller for the Purchased Assets (excluding amounts owed by Seller to
the Approved Investor which are directly related to Purchased Assets and which
are expressly allowed to be set-off by the Approved Investor pursuant to the
Bailee Agreement);

 

(k)any change in the Executive Management of Seller;

 

(l)any other action, event or condition of any nature that may reasonably be
expected to lead to or result in a Material Adverse Effect with respect to
Seller or that, without notice or lapse of time or both, would constitute a
default under any material agreement, instrument or indenture to which Seller is
a party or to which Seller, its properties or assets may be subject;

 

(m)any (i) change to the location of its chief executive office/chief place of
business from that specified in Section 8.1(t), (ii) change in the name,
identity or corporate structure (or the equivalent) or change in the location
where Seller maintains its records with respect to the Purchased Assets or any
Purchased Items, or (iii) reincorporation or reorganization of Seller under the
laws of another jurisdiction;

 

(n)upon Seller becoming aware of any penalties, sanctions or charges levied, or
threatened to be levied, against Seller or any change or threatened change in
Approval status (solely to the extent previously approved), or the commencement
of any Agency Audit, investigation, or the institution of any action or the
threat of institution of any action against Seller by any Agency, HUD, FHA or VA
or any other agency, or any supervisory or regulatory Governmental Authority
supervising or regulating the origination or servicing of mortgage loans by, or
the issuer or seller status of, Seller;

 

(o)with respect to a Purchased Mortgage Loan that is a Government Mortgage Loan,
upon Seller becoming aware of any fact or circumstance which would cause (a)
such Mortgage Loan to be ineligible for FHA Mortgage Insurance or a VA loan
guaranty, as applicable, (b) the FHA or VA to deny or reject a Mortgagor’s
application for FHA Mortgage Insurance or a VA loan guaranty, respectively, or
(c) the FHA or VA to deny or reject any claim under any FHA Mortgage Insurance
Contract or a VA Loan Guaranty Agreement respectively;

 

(p)upon Seller becoming aware of any termination or threatened termination by
any Agency of the Custodian as an eligible custodian;

 

(q)any change to the date on which Seller’s fiscal year begins from Seller’s
current fiscal year beginning date; and

 

(r)upon the earlier of (i) the certification of any Purchased Mortgage Loan by a
certifying custodian to an Agency that such Purchased Mortgage Loan meets all of
the criteria specified in the related Agency Guide for the securitization
thereof, or (ii) the pooling of any Purchased Mortgage Loan for the purpose of
backing a Mortgage-Backed Security.

 

9.4Existence, Etc. Seller shall (i) preserve and maintain its legal existence
and all of its material rights, privileges, licenses and franchises necessary
for Seller to conduct its business and to perform its obligations under the
Principal Agreements, (ii) comply with the requirements of all applicable laws,
rules, regulations and orders of Governmental Authorities (including, without
limitation, truth in lending, real estate settlement procedures and all
environmental laws) if the failure to comply with such requirements would be
reasonably likely (either individually or in the aggregate) to have a Material
Adverse Effect, (iii) maintain adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently applied, and
(iv) pay and discharge all Taxes, assessments and governmental charges or levies
imposed on it or on its income or profits or on any of its properties prior to
the date on which penalties attach thereto.

 

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9.5Servicing of Mortgage Loans. Subject to Section 6.2 above, Seller shall
subservice all Purchased Mortgage Loans at Seller’s expense and without charge
of any kind to Buyer. Seller may delegate its obligations hereunder to
subservice the Purchased Mortgage Loans (subject to Section 6.2) to an
independent servicer provided that such independent subservicer and the related
Servicing Agreement has been approved by Buyer and such independent subservicer
has executed a Servicing Agreement with Buyer. The failure of Seller to obtain
the prior approval of Buyer regarding the delegation of its subservicing
obligations to an independent subservicer and/or the failure of the independent
subservicer to execute and return to Buyer a Servicing Agreement shall be
considered an Event of Default hereunder. In any event, Seller or its delegate
shall subservice such Purchased Mortgage Loans with the degree of care and in
accordance with the subservicing standards generally prevailing in the industry,
including those required by Fannie Mae, Freddie Mac and Ginnie Mae.

 

9.6Evidence of Purchased Assets. Seller shall indicate on its books and records
(including its computer records) that each Purchased Asset has been included in
the Purchased Items and, at the request of Buyer, place on each of its written
records pertaining to the Purchased Assets a legend, in form and content
satisfactory to Buyer, indicating that such Purchased Asset has been sold to
Buyer.

 

9.7Defense of Title; Protection of Purchased Items. Seller warrants and will
defend the right, title and interest of Buyer in and to all Purchased Items
against all adverse claims and demands of all Persons whomsoever. Seller will
comply with all applicable laws, rules and regulations of any Governmental
Authority applicable to Seller or relating to the Purchased Items and cause the
Purchased Items to comply with all applicable laws, rules and regulations of any
such Governmental Authority. Seller shall allow Buyer (a) to inspect any
Mortgaged Property relating to a Purchased Mortgage Loan; (b) to appear in or
intervene in any proceeding or matter affecting any Purchased Asset or other
Purchased Item or the value thereof; (c) to initiate, commence, appear in and
defend any foreclosure, action, bankruptcy or proceeding which could affect
Buyer’s ownership or security of the Purchased Items or the value thereof, or
the rights and powers of Buyer; (d) to contest by litigation or otherwise any
lien asserted against any Purchased Mortgage Loan (or against the related
Mortgaged Property) or against any other Purchased Item, the improvements, or
the personal property identified therein; and/or (e) to make payments on account
of such encumbrances, charges, or liens and to service any Purchased Mortgage
Loans and take any action it may deem appropriate to collect all amounts due and
owing with respect to any Purchased Items or any part thereof or to enforce any
rights with respect thereto. All reasonable costs and expenses, including
reasonable attorneys’ fees (including, but not limited to, those incurred on
appeal), that Buyer may incur with respect to any of the foregoing and any
expenditures it may make to protect or preserve the Purchased Items or the
rights of Buyer, shall be payable by Seller. Seller shall repay the same to
Buyer upon demand with interest, at the Default Rate, from the date any such
expenditure shall have been made until the day it is repaid.

 

9.8Further Assurances. Seller shall, at its expense, promptly procure, execute
and deliver to Buyer, upon request, all such other and further documents,
agreements and instruments in compliance with or accomplishment of the covenants
and agreements of Seller in this Agreement.

 

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9.9Fidelity Bonds and Insurance. Seller shall maintain an insurance policy, in a
form and substance satisfactory to Buyer, covering against loss or damage
relating to or resulting from any breach of fidelity by Seller, or any officer,
director, employee or agent of Seller, any loss or destruction of documents
(whether written or electronic), fraud, theft, misappropriation and errors and
omissions, such that Buyer shall have the right to pursue any claim for coverage
available to any named insured to the full extent allowed by law. This policy
shall name Buyer as a loss payee with an unlimited right of action and shall
provide coverage in an amount as required by the Fannie Mae Guide. Following
approval by Buyer of a specific insurance policy, Seller shall not amend,
cancel, suspend or otherwise change such policy without the prior written
consent of Buyer.

 

9.10Table-Funded Mortgage Loans. In connection with the funding of each new
origination Wet Mortgage Loan or Dry Mortgage Loan as to which the origination
funds are being remitted to the closing table, Seller shall provide to the
applicable Closing Agent (with a copy to Buyer), (i) the Irrevocable Closing
Instructions and (ii) final closing instructions which shall, without
limitation, make reference to the Irrevocable Closing Instructions and stipulate
the title insurance company that will be issuing the applicable title insurance
policy and Closing Protection Letter, which title insurance company shall be an
Acceptable Title Insurance Company. In no event shall Seller use such final
closing instructions to modify or attempt to modify the terms of the Irrevocable
Closing Instructions unless such modifications are agreed to in advance and in
writing by Buyer. Seller shall not otherwise modify or attempt to modify the
terms of the Irrevocable Closing Instructions without Buyer’s prior written
approval. If the Closing Agent is not an Acceptable Title Insurance Company,
except as otherwise permitted pursuant to Section 3.7(a)(i), Seller shall also
(a) confirm that the closing is covered by a blanket Closing Protection Letter
issued to Buyer by the title insurance company stipulated in the final closing
instructions, and shall provide a copy of such Closing Protection Letter to
Buyer; or (b) provide to Buyer (1) a Closing Protection Letter covering the
closing issued to Seller by the title insurance company stipulated in the final
closing instructions and (2) a duly executed Assignment of Closing Protection
Letter relating to the above referenced Closing Protection Letter naming Buyer
as the assignee.

 

9.11Sharing of Information. Notwithstanding anything herein or in any other
Principal Agreement to the contrary, Seller shall allow Buyer to exchange
information related to Seller, the Transactions hereunder and the terms and
conditions of the Principal Agreements with Persons who are providing or are
contemplating providing credit of any kind to Seller and Seller shall permit
each such Person to share such information with Buyer.

 

9.12ERISA. As soon as reasonably possible, and in any event within fifteen (15)
days after Seller knows or has reason to believe that any of the events or
conditions specified below with respect to any Plan has occurred or exists, a
statement signed by a senior financial officer of Seller setting forth details
respecting such event or condition and the action, if any, that Seller or its
ERISA Affiliate proposes to take with respect thereto (and a copy of any report
or notice required to be filed with or given to PBGC by Seller or an ERISA
Affiliate with respect to such event or condition):

 

(a)any Reportable Event or failure to meet minimum funding standards, provided
that a failure to meet the minimum funding standard of Section 412 of the Code
or Sections 302 or 303 of ERISA, including, without limitation, the failure to
make on or before its due date a required installment under Section 430(j) of
the Code or Section 303(j) of ERISA, shall be a reportable event regardless of
the issuance of any waivers in accordance with Section 412(d) of the Code or any
request for a waiver under Section 412(c) of the Code for any Plan;

 

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(b)the distribution under Section 4041(c) of ERISA of a notice of intent to
terminate any Plan or any action taken by Seller or an ERISA Affiliate to
terminate any Plan;

 

(c)the institution by PBGC of proceedings under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by Seller, any Subsidiary or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by PBGC with respect to such
Multiemployer Plan;

 

(d)the complete or partial withdrawal from a Multiemployer Plan by Seller, any
Subsidiary or any ERISA Affiliate that results in liability under Section 4201
or 4204 of ERISA (including the obligation to satisfy secondary liability as a
result of a purchaser default) or the receipt by Seller, any Subsidiary or any
ERISA Affiliate of notice from a Multiemployer Plan that it is in reorganization
or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA;

 

(e)the institution of a proceeding by a fiduciary of any Multiemployer Plan
against Seller, any Subsidiary or any ERISA Affiliate to enforce Section 515 of
ERISA, which proceeding is not dismissed within 30 days; and

 

(f)the adoption of an amendment to any Plan that, pursuant to Section 401(a)(29)
of the Code, would result in the loss of tax-exempt status of the trust of which
such Plan is a part if Seller, any Subsidiary or an ERISA Affiliate fails to
timely provide security to such Plan in accordance with the provisions of said
Sections.

 

9.13Additional Repurchase or Warehouse Facility. Subject to Section 10.12,
Seller shall maintain throughout the term of this Agreement, with nationally
recognized and established counterparties (other than Buyer) mortgage loan
repurchase or warehouse facilities that, in the aggregate, provide funding in an
amount equal to at least the Aggregate Transaction Limit.

 

9.14MERS. Seller will comply in all material respects with the rules and
procedures of MERS in connection with the servicing of all Purchased Mortgage
Loans that are registered with MERS for as long as such Purchased Mortgage Loans
are so registered.

 

9.15Agency Audit and Approval Maintenance. Seller shall (i) at all times
maintain copies of relevant portions of all Agency Audits in which there are
material adverse findings, including without limitation notices of defaults,
notices of termination of approved status, notices of imposition of supervisory
agreements or interim servicing agreements, and notices of probation,
suspension, or non-renewal, (ii) provide Buyer with copies of such Agency Audits
promptly upon Buyer’s request, and (iii) to the extent previously approved, take
all actions necessary to maintain its respective Approvals.

 

9.16Additional Facilities. Seller shall provide written notification to Buyer
within five (5) Business Days of entering into any mortgage financing facility
(including, without limitation, any warehouse, repurchase, purchase or
off-balance sheet facility).

 

9.17Financial Covenants and Ratios. Seller shall and shall cause the Guarantor
at all times comply with any financial covenants and/or financial ratios set
forth in the Transactions Terms Letter.

 

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ARTICLE 10
NEGATIVE COVENANTS

 

Seller hereby covenants and agrees with Buyer that during the term of this
Agreement and for so long as there remain any obligations of Seller to be paid
or performed under this Agreement, Seller shall comply with the following:

 

10.1Debt Except as set forth in Section 9.16 of this Agreement, Seller shall not
incur any additional material Debt without the prior written consent of Buyer,
other than (i) the Existing Debt, (ii) Debt incurred with Buyer or its
Affiliates, and (iii) usual and customary accounts payable for a mortgage
company.

 

10.2Lines of Business. Seller shall not engage to any substantial extent in any
line or lines of business activity other than the businesses generally carried
on by it as of the Effective Date.

 

10.3Debt and Subordinated Debt. Seller shall not, either directly or indirectly,
without the prior written consent of Buyer, pay any Debt or Subordinated Debt if
such payment shall cause a Potential Default or Event of Default. Further, if a
Potential Default or an Event of Default shall have occurred and for as long as
such is occurring, Seller shall not, either directly or indirectly, without the
prior written consent of Buyer, make any payment of any kind thereafter on such
Debt or Subordinated Debt until all obligations of Seller hereunder have been
paid and performed in full.

 

10.4Loss of Eligibility. Seller shall not, either directly or indirectly,
without the prior written consent of Buyer, take, or fail to take, any action
that would cause Seller to lose all or any part of its status as an eligible
lender, seller, mortgagee or servicer or willfully terminate its status as an
eligible lender, seller, mortgagee or servicer without forty-five (45) days
prior written notice to Buyer.

 

10.5Loans to Officers, Employees and Shareholders. Seller shall not, either
directly or indirectly, without the prior written consent of Buyer, make any
personal loans or advances to any officers, employees, shareholders, members,
partners or owners of Seller in an aggregate amount exceeding ten percent (10%)
of Seller’s Tangible Net Worth; provided, however, that Seller shall be entitled
to make a personal loan or advance to a majority shareholder, member, partner or
owner of Seller without the prior written consent of Buyer provided that (i) a
Potential Default or an Event of Default is not existing and will not occur as a
result thereof, (ii) such Person is also a Guarantor and (iii) such loan or
advance is clearly reflected on Seller’s financial reports provided to Buyer.

 

10.6Liens on Purchased Assets and Purchased Items. Seller acknowledges that with
respect to each Transaction it shall have sold the Purchased Assets and related
Purchased Items and shall have granted to Buyer a first priority security
interest in such assets in the event such Transaction is deemed a loan.
Accordingly, Seller shall not create, incur, assume or suffer to exist any lien
upon the Purchased Assets or the Purchased Items, other than as granted to Buyer
herein.

 

10.7Transactions with Affiliates. Seller shall not, directly or indirectly,
enter into any transaction with its Affiliates, if any, without the prior
written consent of Buyer, including, without limitation, (a) making any loan,
advance, extension of credit or capital contribution to an Affiliate, (b)
transferring, selling, pledging, assigning or otherwise disposing of any of its
assets to or on behalf of an Affiliate, (c) purchasing or acquiring assets from
an Affiliate, or (d) paying management fees to or on behalf of an Affiliate;
provided, however, that Seller may, without the prior written consent of Buyer,
and provided that a Potential Default or an Event of Default is not existing and
will not occur as a result thereof, engage in a transaction(s) with any or all
of its Affiliates if (i) such transaction is in the ordinary course of Seller’s
mortgage banking business, and (ii) such transaction is upon fair and reasonable
terms no less favorable to Seller had Seller entered into a comparable arm
length’s transaction with a Person which is not an Affiliate.

 

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10.8Consolidation, Merger, Sale of Assets and Change of Control. Seller shall
not, directly or indirectly, (a) wind up, liquidate or dissolve its affairs; (b)
enter into any transaction of merger or consolidation with any Person; (c)
convey, sell, lease or otherwise dispose of, or agree to do any of the foregoing
at any future time, all or substantially all of its property or assets; (d) form
or enter into any partnership, joint venture, syndicate or other combination
which could have a Material Adverse Effect; or (e) allow a Change of Control to
occur with respect to Seller, without prior written consent of Buyer; provided,
however, that Seller may, without the prior written consent of Buyer, and
provided that a Potential Default or an Event of Default is not existing and
will not occur as a result thereof: (i) merge or consolidate with any Person if
Seller is the surviving and controlling entity and (ii) in the ordinary course
of Seller’s mortgage banking business, sell equipment that is uneconomic or
obsolete and acquire Mortgage Loans for resale and sell Mortgage Loans.

 

10.9Reserved.

 

10.10Purchased Items. Seller shall not attempt to resell, reassign, retransfer
or otherwise dispose of, or grant any option with respect to, or pledge or
otherwise encumber (except pursuant to this Agreement) any of the Purchased
Assets or other Purchased Items or any interest therein. Seller shall not,
without prior written consent of Buyer, amend or modify, or waive any of the
terms and conditions of, or settle or compromise any claim in respect of, any
Purchased Asset.

 

10.11Secondary Marketing, Underwriting, Third Party Origination and Interest
Rate Risk Management Practices. Seller shall not, without thirty (30) days’
prior written notice to Buyer, change in any material respect any secondary
marketing, underwriting, acquisition, third party origination and interest rate
risk management practices of Seller that exist as of the Effective Date. By way
of example but not limitation, any change to Seller’s hedging strategy, any
change to add a new line of Mortgage Loan products or any change to add third
party origination shall be considered material changes subject to the prior
written approval of Buyer. The fact that Seller may from time to time disclose
to Buyer in writing proposed changes in such practices after the date hereof
shall not be deemed Buyer’s consent to or written approval thereof unless Buyer
has indicated written approval of such changes. It shall be deemed an Event of
Default hereunder if Seller changes any of the foregoing practices without
having obtained such prior written approval from Buyer.

 

ARTICLE 11
DEFAULTS AND REMEDIES

 

11.1Events of Default. The occurrence of any of the following conditions or
events shall be an Event of Default:

 

(a)failure of Seller to transfer the Purchased Assets to Buyer on the applicable
Purchase Date (provided Buyer has tendered the related Purchase Price);

 

(b)failure of Seller to (i) repurchase the Purchased Assets on the applicable
Repurchase Date, (ii) repurchase Purchased Assets pursuant to Section 2.10, or
(iii) perform its obligations under Section 6.3(b);

 

(c)failure of Seller to pay any other amount due under the Principal Agreements
within two (2) Business Days following the applicable due date;

 

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(d)(i) Seller, Guarantor or any of their respective Affiliates or Subsidiaries
shall default under, or fail to perform as required under, or shall otherwise
breach the terms of any instrument, agreement or contract between Seller,
Guarantor or any of their respective Affiliates or Subsidiaries, on the one
hand, and Buyer or any of Buyer’s Affiliates on the other; or (ii) Seller,
Guarantor or any of their respective Affiliates or Subsidiaries shall default
under, or fail to perform as required under, the terms of any repurchase
agreement, loan and security agreement or similar credit facility or agreement
for borrowed funds or any other material agreement entered into by Seller,
Guarantor or any of their respective Affiliates or Subsidiaries, on the one
hand, and any third party on the other, which default or failure entitles any
party to require acceleration or prepayment of any indebtedness thereunder or
shall otherwise fail to pay a matured Debt obligation in excess of $10,000,000;

 

(e)the aggregate original Asset Value of those Purchased Assets that are deemed
to be Noncompliant Assets is greater than or equal to the Type Sublimit for
Noncompliant Assets for more than two (2) consecutive Business Days;

 

(f)the aggregate original Asset Value of those Purchased Assets that are deemed
to be Defective Assets is greater than or equal to ten percent (10%) of the
outstanding Transactions for more than two (2) consecutive Business Days;

 

(g)any representation, warranty or certification made or deemed made herein or
in any other Principal Agreement by Seller or Guarantor or any certificate
furnished to Buyer pursuant to the provisions thereof, shall prove to have been
false or misleading in any material respect as of the time made or furnished and
such occurrence shall not have been remedied within three (3) Business Days
(other than the representations and warranties set forth in Section 8.2 which
shall be considered solely for the purpose of determining the Asset Value of the
Purchased Assets; unless (i) Seller shall have made any such representations and
warranties with knowledge that they were materially false or misleading at the
time made or (ii) any such representations and warranties have been determined
by Buyer to be materially false or misleading on a regular basis, in which case
there shall be no such cure period);

 

(h)(i) the failure of Seller or Guarantor to perform, comply with or observe any
term, covenant or agreement applicable to Seller as contained in Articles 9 and
10 of this Agreement or the Financial Covenants and Payment of Dividends and
Retirement of Stock provisions set forth in the Transactions Terms Letter,
irrespective of any cure period, or (ii) the failure of Seller or Guarantor to
perform, comply with or observe any other term, covenant or agreement applicable
to Seller as contained in this Agreement or the Transactions Terms Letter, as
applicable, and such occurrence shall not have been remedied within the cure
period provided therein;

 

(i)an Insolvency Event shall have occurred with respect to Seller or Guarantor
or any of their respective Affiliates or Subsidiaries; or Seller shall admit in
writing its inability to, or intention not to, perform any of its obligations
under this Agreement or any of the other Principal Agreements; or Buyer shall
have determined in good faith that Seller is unable to meet its financial
commitments as they come due;

 

(j)one or more judgments or decrees shall be entered against Seller, Guarantor
or any of their respective Affiliates or Subsidiaries involving a liability of
$500,000 or more (to the extent that it is, in the reasonable determination of
Buyer, uninsured and provided that any insurance or other credit posted in
connection with an appeal shall not be deemed insurance for these purposes), and
all such judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within thirty (30) days after entry thereof;

 

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(k)any Plan maintained by Seller, any Subsidiary of Seller or any ERISA
Affiliate shall be terminated within the meaning of Title IV of ERISA or a
trustee shall be appointed by an appropriate United States District Court to
administer any Plan, or the Pension Benefit Guaranty Corporation (or any
successor thereto) shall institute proceedings to terminate any Plan or to
appoint a trustee to administer any Plan if as of the date thereof Seller’s
liability, any such Subsidiary’s liability or any ERISA Affiliate’s liability to
the PBGC, the Plan or any other entity on termination under the Plan exceeds the
then current value of assets accumulated in such Plan by more than fifty
thousand ($50,000) dollars (or in the case of a termination involving Seller as
a “substantial employer” (as defined in Section 4001 (a)(2) of ERISA) the
withdrawing employer’s proportionate share of such excess shall exceed such
amount);

 

(l)Seller or any Subsidiary of Seller or any ERISA Affiliate, or Guarantor, in
each case, as employer under a Multiemployer Plan shall have made a complete or
partial withdrawal from such Multiemployer Plan and the plan sponsor of such
Multiemployer Plan shall have notified such withdrawing employer that such
employer has incurred a withdrawal liability in (i) an annual amount exceeding
fifty thousand ($50,000) dollars, or (ii) an aggregate amount exceeding five
hundred thousand ($500,000) dollars;

 

(m)(i) any Person shall engage in any “prohibited transaction” (as defined in
Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) a
determination that a Plan is “at risk” (within the meaning of Section 303 of
ERISA) or any Lien in favor of the PBGC or a Plan shall arise on the assets of
Buyer or any ERISA Affiliate, (iii) a Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Plan, which Reportable
Event or commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of Buyer, likely to result in the termination of such Plan
for purposes of Title IV of ERISA, (iv) Seller or any ERISA Affiliate shall file
an application for a minimum funding waiver under section 302 of ERISA or
section 412 of the Code with respect to any Plan, (v) any obligation for
post-retirement medical costs (other than as required by COBRA) exists, or
(vi) any other event or condition shall occur or exist with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, could reasonably be
expected to have a Material Adverse Effect or (vii) the assets of Seller, any
Subsidiary of Seller, or any ERISA Affiliate become plan assets within the
meaning of 29 CFR 2510.3-101 as modified by section 3(42) of ERISA;

 

(n)any Governmental Authority or any person, agency or entity acting or
purporting to act under governmental authority shall have taken any action to
(i) condemn, seize or appropriate, or to assume custody or control of, all or
any substantial part of the property or assets of Seller, Guarantor or any of
their respective Affiliates or Subsidiaries; (ii) displace the management of
Seller, Guarantor or any of their respective Affiliates or Subsidiaries or to
curtail its authority in the conduct of their respective business; or (iii) to
remove, limit or restrict the approval of Seller, Guarantor or any of their
respective Affiliates or Subsidiaries as an issuer, buyer or a seller/servicer
of Mortgage Loans or securities backed thereby, and any such action provided for
in this subsection (n) shall not have been discontinued or stayed within thirty
(30) days;

 

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(o)Seller shall purport to disavow its obligations hereunder or shall contest
the validity or enforceability of the Principal Agreements or Buyer’s interest
in any Purchased Asset or other Purchased Item;

 

(p)a default shall occur under the Guaranty that continues beyond the expiration
of any applicable grace period or the Guarantor shall otherwise fail to perform
its obligations under the Guaranty or, if an individual, shall be incapable of
performing its obligations thereunder due to death, incapacity or otherwise;

 

(q)a default shall occur and be continuing beyond the expiration of any
applicable grace period under any other Principal Agreement;

 

(r)a Material Adverse Effect shall occur with respect to Seller or Guarantor;

 

(s)[reserved];

 

(t)any Principal Agreement shall for whatever reason (including an event of
default thereunder) be terminated, without the consent of Buyer (other than,
with respect to the Custodial Agreement, due to the resignation of the Custodian
for reasons other than a breach by Seller of the Custodial Agreement), or this
Agreement shall for any reason cease to create a valid, first priority security
interest or ownership interest upon transfer in any of the Purchased Items;

 

(u)(i) a breach of any of Seller’s or Servicer’s subservicing obligations,
including, but not limited to, its failure to deposit any funds required to be
deposited under Section 6.2(g) into the Custodial Account, or (ii) a Servicer
Termination Event shall occur and Seller has not (A) appointed a successor
servicer acceptable to Buyer and (B) delivered a fully executed Servicer Notice
with such successor servicer, in each case within thirty (30) days following the
occurrence of such Servicer Termination Event;

 

(v)Seller’s membership in MERS is terminated for any reason;

 

(w)To the extent previously approved, Seller shall fail to maintain all
requisite Approvals; or

 

(x)a Change of Control shall occur with respect to Seller or Guarantor.

 

With respect to any Event of Default which requires a determination to be made
as to whether such Event of Default has occurred, such determination shall be
made in Buyer’s good faith discretion and Seller hereby agrees to be bound by
and comply with any such determination by Buyer. An Event of Default shall be
deemed to be continuing unless expressly waived by Buyer in writing.

 

11.2Remedies. Upon the occurrence of an Event of Default, Buyer may, by notice
to Seller, declare all or any portion of the Repurchase Prices related to the
outstanding Transactions to be immediately due and payable whereupon the same
shall become immediately due and payable, and the obligation of Buyer to enter
into Transactions shall thereupon terminate; provided that the acceleration of
all Repurchase Prices and termination of Buyer’s obligation to enter into
Transactions shall immediately occur upon the occurrence of an Event of Default
under Section 11.1(i), (n) or (o), notwithstanding that Buyer may not have
provided any such notice to Seller. Further, it is understood and agreed that
upon the occurrence of an Event of Default, Seller shall strictly comply with
the negative covenants contained in Article 10 hereunder and in no event shall
Seller declare and pay any dividends, incur additional Debt or Subordinated
Debt, make payments on existing Debt or Subordinated Debt or otherwise
distribute or transfer any of Seller’s property and assets to any Person without
the prior written consent of Buyer. Upon the occurrence of any Event of Default,
Buyer may also, at its option, exercise any or all of the following rights and
remedies:

 

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(a)enter the office(s) of Seller and take possession of any of the Purchased
Items including any records that pertain to the Purchased Items;

 

(b)communicate with and notify Mortgagors of the Purchased Mortgage Loans and
obligors under other Purchased Assets or on any portion thereof, whether such
communications and notifications are in verbal, written or electronic form,
including, without limitation, communications and notifications that the
Purchased Assets have been assigned to Buyer and that all payments thereon are
to be made directly to Buyer or its designee; settle compromise, or release, in
whole or in part, any amounts owing on the Purchased Assets or other Purchased
Items or any portion of the Purchased Items, on terms acceptable to Buyer;
enforce payment and prosecute any action or proceeding with respect to any and
all Purchased Assets or other Purchased Items; and where any Purchased Asset or
other Purchased Item is in default, foreclose upon and enforce security
interests in, such Purchased Asset or other Item by any available judicial
procedure or without judicial process and sell property acquired as a result of
any such foreclosure;

 

(c)collect payments from Mortgagors and/or assume servicing of, or contract with
a third party to subservice, any or all Purchased Mortgage Loans requiring
servicing and/or perform any obligations required in connection with Purchase
Commitments, with all of any such third party’s fees to be paid by Seller. In
connection with collecting payments from Mortgagors and/or assuming servicing of
any or all Purchased Mortgage Loans, Buyer may take possession of and open any
mail addressed to Seller, remove, collect and apply all payments for Seller,
sign Seller’s name to any receipts, checks, notes, agreements or other
instruments or letters or appoint an agent to exercise and perform any of these
rights. If Buyer so requests, Seller shall promptly forward to Buyer or its
designee, all further mail and all “trailing” documents, such as title insurance
policies, deeds of trust, and other documents, and all loan payment histories,
both in paper and electronic format, in each case, as same relate to the
Purchased Assets;

 

(d)proceed against Seller under this Agreement or against Guarantor under their
respective Guaranty, or both;

 

(e)either (x) sell, without notice or demand of any kind, at a public or private
sale and at such price or prices as Buyer may deem to be commercially reasonable
for cash or for future delivery without assumption of any credit risk, any or
all or portions of the Purchased Assets (A) on a servicing-retained or
servicing-released basis with respect to Servicing Released Mortgage Loans, or
(B) on a servicing-retained basis with respect to Servicing Retained Mortgage
Loans; provided that Buyer may purchase any or all of the Purchased Assets at
any public or private sale; provided further that Seller shall remain liable to
Buyer for any amounts that remain owing to Buyer following any such sale and/or
credit; or (y) in its sole discretion elect, in lieu of selling all or a portion
of such Purchased Assets, to give Seller credit for such Purchased Assets
(including credit for the Servicing Rights in respect of sales on a
servicing-retained basis) in an amount equal to the Market Value of the
Purchased Assets against the aggregate unpaid Repurchase Price and any other
amounts owing by Seller hereunder.  Seller shall remain liable to Buyer for any
amounts that remain owing to Buyer following a sale and/or credit under the
preceding sentence;

 

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(f)enter into one or more hedging arrangements covering all or a portion of the
Purchased Assets; and/or

 

(g)pursue any rights and/or remedies available at law or in equity against
Seller or Guarantor, or both.

 

11.3Treatment of Custodial Account. During the existence of a Potential Default
or an Event of Default, notwithstanding any other provision of this Agreement,
Seller shall have no right to withdraw or release any funds in the Custodial
Account to itself or for its benefit, nor shall it have any right to set-off any
amount owed to it by Buyer against funds held by it for Buyer in the Custodial
Account. During the existence of an Event of Default, Seller shall promptly
remit to or at the direction of Buyer all funds related to the Purchased Assets
in the Custodial Account.

 

11.4Sale of Purchased Assets. With respect to any sale of Purchased Assets
pursuant to Section 11.2(e), Seller acknowledges and agrees that it may not be
possible to purchase or sell all of the Purchased Assets on a particular
Business Day, or in a transaction with the same purchaser, or in the same manner
because the market for such Purchased Assets may not be liquid. Seller further
agrees that in view of the nature of the Purchased Assets, liquidation of a
Transaction or the underlying Purchased Assets does not require a public
purchase or sale. Accordingly, Buyer may elect the time and manner of
liquidating any Purchased Asset and nothing contained herein shall obligate
Buyer to liquidate any Purchased Asset on the occurrence of an Event of Default,
to liquidate all Purchased Assets in the same manner or on the same Business
Day, or constitute a waiver of any right or remedy of Buyer. Seller hereby
waives any claims it may have against Buyer arising by reason of the fact that
the price at which the Purchased Assets may have been sold at such private sale
was less than the price which might have been obtained at a public sale or was
less than the aggregate Repurchase Price amount of the outstanding Transactions,
even if Buyer accepts the first offer received and does not offer the Purchased
Assets, or any part thereof, to more than one offeree. Seller hereby agrees that
the procedures outlined in Section 11.2(e) and this Section 11.4 for disposition
and liquidation of the Purchased Assets are commercially reasonable. Seller
further agrees that it would not be commercially unreasonable for Buyer to
dispose of the Purchased Assets or any portion thereof by using internet sites
that provide for the auction of assets similar to the Purchased Assets, or that
have the reasonable capability of doing so, or that match buyers and sellers of
assets.

 

11.5No Obligation to Pursue Remedy. Buyer shall have the right to exercise any
of its rights and/or remedies without presentment, demand, protest or further
notice of any kind other than as expressly set forth herein, all of which are
hereby expressly waived by Seller. Seller further waives any right to require
Buyer to (a) proceed against any Person, (b) proceed against or exhaust all or
any of the Purchased Assets or pursue its rights and remedies as against the
Purchased Assets in any particular order, or (c) pursue any other remedy in its
power. Buyer shall not be required to take any steps necessary to preserve any
rights of Seller against holders of mortgages prior in lien to the lien of any
Purchased Asset or to preserve rights against prior parties. No failure on the
part of Buyer to exercise, and no delay in exercising, any right, power or
remedy provided hereunder, at law or in equity shall operate as a waiver
thereof; nor shall any single or partial exercise by Buyer of any right, power
or remedy provided hereunder, at law or in equity preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. Without
intending to limit the foregoing, all defenses based on the statute of
limitations are hereby waived by Seller. The remedies herein provided are
cumulative and are not exclusive of any remedies provided at law or in equity.

 

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11.6No Judicial Process. Buyer may enforce its rights and remedies hereunder
without prior judicial process or hearing, and Seller hereby expressly waives,
to the extent permitted by law, any right Seller might otherwise have to require
Buyer to enforce its rights by judicial process. Seller also waives, to the
extent permitted by law, any defense Seller might otherwise have to its
obligations under this Agreement arising from use of nonjudicial process,
enforcement and sale of all or any portion of the Purchased Assets or from any
other election of remedies. Seller recognizes that nonjudicial remedies are
consistent with the usages of the trade, are responsive to commercial necessity
and are the result of a bargain at arm’s length.

 

11.7Reimbursement of Costs and Expenses. Buyer may, but shall not be obligated
to, advance any sums or do any act or thing necessary to uphold and enforce the
lien and priority of, or the security intended to be afforded by, any Purchased
Asset, including, without limitation, payment of delinquent Taxes or assessments
and insurance premiums. All advances, charges, reasonable costs and expenses,
including reasonable attorneys’ fees and disbursements and losses resulting from
any hedging arrangements entered into by Buyer pursuant to Section 11.2(f),
incurred or paid by Buyer in exercising any right, power or remedy conferred by
this Agreement, or in the enforcement hereof, together with interest thereon, at
the Default Rate, from the time of payment until repaid, shall become a part of
the Repurchase Price.

 

11.8Application of Proceeds. The proceeds of any sale or other enforcement of
Buyer’s interest in all or any part of the Purchased Assets shall be applied by
Buyer:

 

(a)first, to the payment of the costs and expenses of such sale or enforcement,
including reasonable compensation to Buyer’s agents and counsel, and all
expenses, liabilities and advances made or incurred by or on behalf of Buyer in
connection therewith;

 

(b)second, to the costs of cover and/or related hedging transactions;

 

(c)third, to the payment of any other amounts due under this Agreement other
than the aggregate Repurchase Price;

 

(d)fourth, to the payment of the aggregate Repurchase Price;

 

(e)fifth, to all other obligations owed by Seller under this Agreement and the
other Principal Agreements; and

 

(f)sixth, in accordance with Buyer’s exercise of its rights under Section 11.9
hereof.

 

11.9Rights of Set-Off. Buyer shall have the following rights of set-off:

 

(a)If Seller shall default in the payment or performance of any of its
obligations under this Agreement, Buyer shall have the right, at any time, and
from time to time, without notice, to set-off claims and to appropriate or apply
any and all deposits of money or property or any other indebtedness at any time
held or owing by Buyer to or for the credit of the account of Seller against and
on account of the obligations and liabilities of Seller under this Agreement,
irrespective of whether or not Buyer shall have made any demand hereunder and
whether or not said obligations and liabilities shall have become due; provided,
however, that the aforesaid right to set-off shall not apply to any deposits of
escrow monies being held on behalf of the Mortgagors related to the Purchased
Mortgage Loans or other third parties. Without limiting the generality of the
foregoing, Buyer shall be entitled to set-off claims and apply property held by
Buyer with respect to any Transaction against obligations and liabilities owed
by Seller to Buyer with respect to any other Transaction. Buyer may set off
cash, the proceeds of any liquidation of the Purchased Assets and all other sums
or obligations owed by Buyer to Seller against all of Seller’s obligations to
Buyer, whether under this Agreement, under a Transaction, or under any other
agreement between the parties, or otherwise, whether or not such obligations are
then due, without prejudice to Buyer’s right to recover any deficiency. Buyer
agrees promptly to notify Seller after any such set-off and application made by
Buyer; provided that the failure to give such notice shall not affect the
validity of such set-off and application.

 

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(b)In addition to the rights in subsection (a), Buyer and its Affiliates
(collectively, the “Bank of America Related Entities”), shall have the right to
set-off and to appropriate or apply any and all deposits of money or property or
any other indebtedness at any time held or owing by the Bank of America Related
Entities to or for the credit of the account of Seller and its Affiliates
against and on account of the obligations of Seller under any agreement(s)
between Seller and/or its Affiliates, on the one hand, and the Bank of America
Related Entities, on the other hand, irrespective of whether or not the Bank of
America Related Entity shall have made any demand hereunder and whether or not
said obligations shall have matured. In exercising the foregoing right to
set-off, any Bank of America Related Entity shall be entitled to withdraw funds
in the Over/Under Account which are being held for or owing to Seller to set-off
against any amounts due and owing by Seller to the Bank of America Related
Entity. If a Bank of America Related Entity other than Buyer intends to exercise
its right to set-off in this subsection (b), such Bank of America Related Entity
shall provide Seller prior notice thereof, and upon Seller’s receipt of such
notice, if the basis for such right to set-off is Seller’s breach or default of
its obligations to the Bank of America Related Entity, Seller shall have three
(3) Business Days to cure any such breach or default in order to avoid such
set-off.

 

11.10Reasonable Assurances. If, at any time during the term of the Agreement,
Buyer has reason to believe that Seller is not conducting its business in
accordance with, or otherwise is not satisfying: (i) all applicable statutes,
regulations, rules, and notices of federal, state, or local governmental
agencies or instrumentalities, all applicable requirements of Approved Investors
and Insurers and prudent industry standards or (ii) all applicable requirements
of Buyer, as set forth in this Agreement, then, Buyer shall have the right to
demand, pursuant to notice from Buyer to Seller specifying with particularity
the alleged act, error or omission in question, reasonable assurances from
Seller that such a belief is in fact unfounded, and any failure of Seller to
provide to Buyer such reasonable assurances in form and substance reasonably
satisfactory to Buyer, within the time frame specified in such notice, shall
itself constitute an Event of Default hereunder, without a further cure period.
Seller hereby authorizes Buyer to take such actions as may be necessary or
appropriate to confirm the continued eligibility of Seller for Transactions
hereunder, including without limitation (i) ordering credit reports and/or
appraisals with respect to any Purchased Mortgage Loan, (ii) contacting
Mortgagors, licensing authorities and Approved Investors or Insurers, and (iii)
performing due diligence reviews on the Purchased Mortgage Loans and related
Mortgage Loan Files pursuant to Section 6.7 and other Purchased Assets.

 

ARTICLE 12
INDEMNIFICATION

 

12.1Indemnification. Seller shall indemnify and hold harmless each of the Bank
of America Related Entities and any of their respective officers, directors,
employees, agents and advisors (each, an “Indemnified Party”) from and against
any and all liabilities, obligations, losses, damages, penalties, judgments,
suits, costs, expenses and disbursements of any kind whatsoever (including
reasonable fees and disbursements of its counsel) that may be imposed upon,
incurred by or asserted against such Indemnified Party in any way relating to or
arising out of the Principal Agreements, any other document referred to therein
or any of the transactions contemplated thereby, or any Purchased Assets or
Seller’s obligations thereunder, except to the extent that such liabilities,
obligations, losses, damages, penalties, judgments, suits, costs, expenses or
disbursements are the direct result of such Indemnified Party’s gross
negligence, bad faith or willful misconduct. Seller also agrees to reimburse an
Indemnified Party as and when billed by such Indemnified Party for all such
Indemnified Party’s costs and expenses incurred in connection with the
enforcement or the preservation of such Indemnified Party’s rights under this
Agreement, any other Principal Agreement (provided that if the terms of any
Principal Agreement conflict with the foregoing, the terms of the Principal
Agreement shall control) or any transaction contemplated hereby or thereby,
including without limitation the reasonable fees and disbursements of its
counsel.

 

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12.2Reimbursement. Seller shall reimburse the Bank of America Related Entities
for all expenses required in the Transactions Terms Letter to be reimbursed when
they become due and owing. In addition, Seller agrees to pay as and when billed
by Buyer all of the reasonable out-of pocket costs and expenses incurred by
Buyer in connection with (i) the consummation and administration of the
transactions contemplated hereby including, without limitation, all the due
diligence, inspection, testing and review costs and expenses incurred by Buyer
with respect to Purchased Assets prior to the Effective Date or pursuant to
Section 6.7, or otherwise, (ii) the development, preparation and execution of,
and any amendment, supplement or modification to, any Principal Agreement or any
other documents prepared in connection therewith, and (iii) all the reasonable
fees, disbursements and expenses of counsel to Buyer incurred in connection with
any of the foregoing.

 

12.3Payment of Taxes.

 

(a)All payments made by Seller under this Agreement shall be made free and clear
of, and without deduction or withholding for or on account of, any present or
future taxes, levies, imposts, duties, deductions, charges, assessments, fees or
withholdings (including backup withholdings), and all liabilities (including
penalties, interest and additions to tax) with respect thereto imposed by any
Governmental Authority (collectively, “Taxes”), but excluding income taxes
(however denominated), branch profits taxes and franchise taxes imposed by the
United States, a state or a foreign jurisdiction under the laws of which Buyer
is organized or of its applicable lending office, or any political subdivision
thereof (such exclusions from Taxes, “Excluded Taxes”), all of which shall be
paid by Seller for its own account not later than the date when due. If Seller
is required by law or regulation to deduct or withhold any Taxes from or in
respect of any amount payable hereunder, it shall: (i) make such deduction or
withholding; (ii) pay the amount so deducted or withheld to the appropriate
Governmental Authority not later than the date when due; (iii) deliver to Buyer,
promptly, original tax receipts and other evidence satisfactory to Buyer of the
payment when due of the full amount of such Taxes; and (iv) pay to Buyer such
additional amounts as may be necessary so that such Buyer receives, free and
clear of all Indemnified Taxes (as defined below), a net amount equal to the
amount it would have received under this Agreement, as if no such deduction or
withholding had been made. In addition, Seller agrees to timely pay to the
relevant Governmental Authority in accordance with applicable law any current or
future stamp, court or documentary taxes, intangible, filing, excise, property
or similar Taxes (including, without limitation, mortgage recording taxes,
transfer taxes and similar fees) imposed by any Governmental Authority that
arise from any payment made hereunder or from the execution, delivery,
performance or registration of, from the receipt or perfection of a security
interest under, or otherwise with respect to, this Agreement (“Other Taxes”).
Taxes other than Excluded Taxes shall be referred to in this Agreement as
“Indemnified Taxes”.

 

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(b)Seller shall, within 10 days after demand therefor, indemnify and hold Buyer
harmless from and against the full amount of any and all Indemnified Taxes
(including any Indemnified Taxes imposed or asserted on or attributable to
amounts payable under this Section) and Other Taxes arising with respect to the
Purchased Assets, the Principal Agreements and other documents related thereto
and fully indemnify and hold Buyer harmless from and against any and all
liabilities or expenses with respect to or resulting from any delay or omission
to pay such Taxes, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or assessed by the relevant Governmental Authority.
A certificate as to the amount of any payment or liability of Buyer with respect
to such Indemnified Taxes or Other Taxes delivered to Seller by Buyer shall be
conclusive absent manifest error.

 

(c)Any Buyer that is not incorporated under the laws of the United States, any
State thereof, or the District of Columbia (a “Foreign Buyer”) and that is
entitled to an exemption from or reduction of withholding Tax with respect to
payments made under this Agreement shall provide Seller with properly completed
United States Internal Revenue Service (“IRS”) Form W-8BEN, W-8BEN-E, W-8IMY or
W-8ECI or any successor form prescribed by the IRS, certifying that such Foreign
Buyer is entitled to benefits under an income tax treaty to which the United
States is a party which reduces or eliminates the rate of withholding Tax on
payments of interest or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or business in
the United States on or prior to the date upon which each such Foreign Buyer
becomes a Buyer. If an IRS form previously delivered expires or becomes obsolete
or inaccurate in any respect, each Foreign Buyer will update such form or
promptly notify Seller of its legal inability to do so. For any period with
respect to which a Foreign Buyer has failed to provide Seller with the
appropriate IRS forms prescribed by this Section 12.3(c) (unless such failure is
due to a change in treaty, law, or regulation occurring subsequent to the date
on which such form originally was required to be provided), such Foreign Buyer
shall not be entitled to any “gross-up” of Indemnified Taxes or indemnification
under Section 12.3(b) with respect to Taxes imposed by the United States;
provided, however, that should a Foreign Buyer, which is otherwise exempt from a
withholding tax, become subject to Taxes because of its failure to deliver an
IRS form required hereunder, Seller shall take such steps as such Foreign Buyer
shall reasonably request to assist such Foreign Buyer to recover such Taxes.

 

(d)Nothing contained in this Section 12.3 shall require Buyer to make available
any of its tax returns or other information that it deems to be confidential or
proprietary or otherwise subject Buyer to any material unreimbursed cost or
expense or materially prejudice the legal or commercial position of Buyer.

 

12.4Buyer Payment. If Seller fails to pay when due any costs, expenses or other
amounts payable by it under this Article 12, such amount may be paid on behalf
of Seller by Buyer, in its discretion and Seller shall remain liable for any
such payments by Buyer. No such payment by Buyer shall be deemed a waiver of any
of Buyer’s rights under any of the Principal Agreements.

 

12.5Agreement not to Assert Claims. Seller agrees not to assert any claim
against any Indemnified Party, on any theory of liability, for special,
indirect, consequential or punitive damages arising out of or otherwise relating
to the Principal Agreements, the actual or proposed use of the proceeds of the
Transactions, this Agreement or any of the transactions contemplated hereby or
thereby. THE FOREGOING INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY
APPLIES, WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT) OF THE INDEMNIFIED PARTIES.

 

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12.6Survival. Without prejudice to the survival of any other agreement of Seller
hereunder, the covenants and obligations of Seller contained in this Article 12
shall survive the payment in full of the Repurchase Prices and all other amounts
payable hereunder and delivery of the Purchased Assets by Buyer against full
payment therefor.

 

ARTICLE 13
TERM AND TERMINATION

 

13.1Term. Provided that no Event of Default or Potential Default has occurred
and is continuing, and except as otherwise provided for herein, this Agreement
shall commence on the Effective Date and continue until the Expiration Date.
Following expiration or termination of this Agreement, all amounts due Buyer
under the Principal Agreements shall be immediately due and payable without
notice to Seller and without presentment, demand, protest, notice of protest or
dishonor, or other notice of default, and without formally placing Seller in
default, all of which are hereby expressly waived by Seller.

 

13.2Termination.

 

(a)Buyer may terminate this Agreement following an Event of Default or otherwise
for cause at any time, in each case, at any time by providing notice to Seller.
For the avoidance of doubt, cause shall be deemed to exist if (i) this Agreement
or any Transaction is deemed by a court or by statute to not constitute a
“repurchase agreement,” a “securities contract,” or a “master netting
agreement,” as each such term is defined in the Bankruptcy Code, (ii) payments
or security offered hereunder are deemed by a court or by statute not to
constitute “settlement payments” or “margin payments” as each such term is
defined in the Bankruptcy Code, (iii) this Agreement or any Transaction is
deemed by a court or by statute not to constitute an agreement to provide
financial accommodations as described in Bankruptcy Code Section 365(c)(1) or
(iv) Buyer determines that there has been fraud, misrepresentation or any
similar intentional conduct on behalf of Seller, its officers, directors,
employees, agents and/or its representatives with respect to any of Seller’s
obligations, responsibilities or actions undertaken in connection with this
Agreement. Further, Buyer may, without cause and for any reason whatsoever,
terminate this Agreement with respect to the Uncommitted Amount at any time by
providing two (2) Business Days’ prior notice to Seller.

 

(b)Upon termination of this Agreement for any reason, all outstanding amounts
due to Buyer under the Principal Agreements shall be immediately due and payable
without notice to Seller and without presentment, demand, protest, notice of
protest or dishonor, or other notice of default, and without formally placing
Seller in default, all of which are hereby expressly waived by Seller. Further,
any termination of this Agreement shall not affect the outstanding obligations
of Seller under this Agreement or any other Principal Agreement and all such
outstanding obligations and the rights and remedies afforded Buyer in connection
therewith, including, without limitation, those rights and remedies afforded
Buyer under this Agreement, shall survive any termination of this Agreement.
Buyer shall not be liable to Seller for any costs, loss or damages arising from
or relating to a termination by Buyer in accordance with any subsection of this
Section 13.2.

 

13.3Extension of Term. Upon mutual agreement of Seller and Buyer, the term of
this Agreement may be extended. Such extension may be made subject to the terms
and conditions hereunder and to any other terms and conditions as Buyer may
determine to be necessary or advisable. Under no circumstances shall such an
extension by Buyer be interpreted or construed as a forfeiture by Buyer of any
of its rights, entitlements or interest created hereunder. Seller acknowledges
and understands that Buyer is under no obligation whatsoever to extend the term
of this Agreement beyond the initial term.

 

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ARTICLE 14
GENERAL

 

14.1Integration; Servicing Provisions Integral and Non-Severable. This
Agreement, together with the other Principal Agreements, and all other documents
executed pursuant to the terms hereof and thereof, constitute the entire
agreement between the parties with respect to the subject matter hereof and
supersedes any and all prior or contemporaneous oral or written communications
with respect to the subject matter hereof, all of which such communications are
merged herein. All Transactions hereunder constitute a single business and
contractual relationship and each Transaction has been entered into in
consideration of the other Transactions. Accordingly, each of Buyer and the
Seller agrees that payments, deliveries, and other transfers made by either of
them in respect of any Transaction shall be deemed to have been made in
consideration of payments, deliveries, and other transfers in respect of any
other Transactions hereunder, and the obligations to make any such payments,
deliveries, and other transfers may be applied against each other and netted.
Without limiting the generality of the foregoing, the provisions of this
Agreement related to the servicing and Servicing Rights of the Purchased
Mortgage Loans are integral, interrelated, and are non-severable from the
purchase and sale provisions of the Agreement. Buyer has relied upon such
provisions as being integral and non-severable in determining whether to enter
into this Agreement and in determining the Purchase Price methodology for such
Mortgage Loans. The integration of these servicing provisions is necessary to
enable Buyer to obtain the maximum value from the sale of the Purchased Mortgage
Loans by having the ability to sell the Servicing Rights related to such
Purchased Mortgage Loans free from any claims or encumbrances. Further, the fact
that Seller or the Servicer may be entitled to a servicing fee for interim
servicing of the Purchased Mortgage Loans or that Buyer may provide a separate
notice of default to Seller or the Servicer regarding the servicing of the
Purchased Mortgage Loans shall not affect or otherwise change the intent of
Seller and Buyer regarding the integral and non- severable nature of the
provisions in the Agreement related to servicing and Servicing Rights nor will
such facts affect or otherwise change Buyer’s ownership of the Servicing Rights
related to the Purchased Mortgage Loans.

 

14.2Amendments. No modification, waiver, amendment, discharge or change of this
Agreement shall be valid unless the same is in writing and signed by the party
against whom the enforcement of such modification, waiver, amendment, discharge
or change is sought.

 

14.3No Waiver. No failure or delay on the part of Seller or Buyer in exercising
any right, power or privilege hereunder and no course of dealing between Seller
and Buyer shall operate as a waiver thereof nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder.

 

14.4Remedies Cumulative. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies that Seller or Buyer
would otherwise have. No notice or demand on Seller in any case shall entitle
Seller to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of Buyer to any other or
further action in any circumstances without notice or demand.

 

14.5Assignment. The Principal Agreements may not be assigned by Seller. The
Principal Agreements, along with Buyer’s right, title and interest, including
its security interest, in any or all of the Purchased Assets and other Purchased
Items, may, at any time, be transferred or assigned, in whole or in part, by
Buyer, and upon providing notice to Seller of such transfer or assignment
together with an acknowledgement from the assignee agreeing to Buyer’s rights
and obligations hereunder, any transferee or assignee thereof may enforce the
Principal Agreements and such security interest directly against Seller.

 

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14.6Successors and Assigns. The terms and provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.

 

14.7Participations. Buyer may from time to time sell or otherwise grant
participations in this Agreement, and the holder of any such participation, if
the participation agreement so provides, (i) shall, with respect to its
participation, be entitled to all of the rights of Buyer and (ii) may exercise
any and all rights of set-off or banker’s lien with respect thereto, in each
case as fully as though Seller were directly obligated to the holder of such
participation in the amount of such participation; provided, however, that
Seller shall not be required to send or deliver to any of the participants other
than Buyer any of the materials or notices required to be sent or delivered by
it under the terms of this Agreement, nor shall it have to act except in
compliance with the instructions of Buyer.

 

14.8Invalidity. In case any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had not been included.

 

14.9Additional Instruments. Seller shall execute and deliver such further
instruments and shall do and perform all matters and things necessary or
expedient to be done or observed for the purpose of effectively creating,
maintaining and preserving the security and benefits intended to be afforded by
this Agreement.

 

14.10Survival. All representations, warranties, covenants and agreements herein
contained on the part of Seller shall survive any Transaction and shall be
effective so long as this Agreement is in effect or there remains any obligation
of Seller hereunder to be performed.

 

14.11Notices.

 

(a)All notices, demands, consents, requests and other communications required or
permitted to be given or made hereunder in writing shall be mailed (first class,
return receipt requested and postage prepaid) or delivered in person or by
overnight delivery service or by facsimile, addressed to the respective parties
hereto at their respective addresses set forth below or, as to any such party,
at such other address as may be designated by it in a notice to the other:

 

If to Seller:The address set forth in the Transactions Terms Letter

 

If to Buyer:Bank of America, N.A.

4500 Park Granada

Mail Code: CA7-910-02-38

Calabasas, California 91302

Attention: Adam Gadsby, Managing Director

Telephone: (818) 225-6541

Facsimile: (213) 457-8707

Email: Adam.Gadsby@baml.com

 

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With copies to:

 

Bank of America, N.A.

One Bryant Park, 11th Floor

Mail Code: NY1-100-11-01

New York, New York 10036

Attention: Eileen Albus, Director, Mortgage Finance

Telephone:  (646) 855-0946

Facsimile:  (646) 855-5050

Email: Eileen.Albus@baml.com

 

Bank of America, N.A.

50 Rockefeller Plaza

Mail Code: NY1-050-12-01

New York, New York 10020

Attention: Amie Davis, Assistant General Counsel

Telephone: (646) 855-0183

Facsimile: (704) 409-0337

Email: Amie.Davis@bankofamerica.com

 

All written notices shall be conclusively deemed to have been properly given or
made when duly delivered, if delivered in person or by overnight delivery
service, or on the third (3rd) Business Day after being deposited in the mail,
if mailed in accordance herewith, or upon transmission by the receiving party of
a facsimile confirming receipt, if delivered by facsimile. Notwithstanding the
foregoing, any notice of termination shall be deemed effective upon mailing,
transmission, or delivery, as the case may be.

 

(b)All notices, demands, consents, requests and other communications required or
permitted to be given or made hereunder which are not required to be in writing
may also be provided electronically either (i) as an electronic mail sent and
addressed to the respective parties hereto at their respective electronic mail
addresses set forth below, or as to any such party, at such other electronic
mail address as may be designated by it in a notice to the other or (ii) with
respect to Buyer, via a posting of such notice on Buyer’s customer website(s).

 

If to Seller:The email address(es) specified in the Transactions Terms Letter,
if any.

 

If to Buyer:Adam.Gadsby@baml.com, Adam.Robitshek@baml.com, Eileen.Albus@baml.com
and Amie.Davis@bankofamerica.com.

 

14.12Governing Law. This Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the laws of the
State of New York, without regard to principles of conflicts of laws (other than
Section 5-1401 of the New York General Obligations Law).

 

14.13Submission to Jurisdiction; Service of Process; Waivers. All legal actions
between or among the parties regarding this Agreement, including, without
limitation, legal actions to enforce this Agreement or because of a dispute,
breach or default of this Agreement, shall be brought in the federal or state
courts located in New York County, New York, which courts shall have sole and
exclusive in personam, subject matter and other jurisdiction in connection with
such legal actions. The parties hereto irrevocably consent and agree that venue
in such courts shall be convenient and appropriate for all purposes 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. The parties hereto further irrevocably consent and
agree 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 in Section
14.11(a), and 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.

 

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14.14Waiver of Jury Trial. Each of Seller and Buyer hereby irrevocably waives,
to the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Agreement, any
other Principal Agreement or the transactions contemplated hereby or thereby.

 

14.15Counterparts. This Agreement may be executed in any number of counterparts
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same Agreement.

 

14.16Headings. The headings in this Agreement are for purposes of reference only
and shall not limit or otherwise affect the meaning or interpretation of any
provisions hereof.

 

14.17Reserved.

 

14.18Confidential Information. To effectuate this Agreement, Buyer and Seller
may disclose to each other certain confidential information relating to the
parties’ operations, computer systems, technical data, business methods, and
other information designated by the disclosing party or its agent to be
confidential, or that should be considered confidential in nature by a
reasonable person given the nature of the information and the circumstances of
its disclosure (collectively the “Confidential Information”). Confidential
Information can consist of information that is either oral or written or both,
and may include, without limitation, any of the following: (i) any reports,
information or material concerning or pertaining to businesses, methods, plans,
finances, accounting statements, and/or projects of either party or their
affiliated or related entities; (ii) any of the foregoing related to the parties
or their related or affiliated entities and/or their present or future
activities and/or (iii) any term or condition of any agreement (including this
Agreement) between either party and any individual or entity relating to any of
their business operations. With respect to Confidential Information, the parties
hereby agree, except as otherwise expressly permitted in this Agreement:

 

(a)not to use the Confidential Information except in furtherance of this
Agreement;

 

(b)to use reasonable efforts to safeguard the Confidential Information against
disclosure to any unauthorized third party with the same degree of care as they
exercise with their own information of similar nature; and

 

(c)not to disclose Confidential Information to anyone other than employees,
agents or contractors with a need to have access to the Confidential Information
and who are bound to the parties by like obligations of confidentiality, except
that the parties shall not be prevented from using or disclosing any of the
Confidential Information which: (i) is already known to the receiving party at
the time it is obtained from the disclosing party; (ii) is now, or becomes in
the future, public knowledge other than through wrongful acts or omissions of
the party receiving the Confidential Information; (iii) is lawfully obtained by
the party from sources independent of the party disclosing the Confidential
Information and without confidentiality and/or non-use restrictions; or (iv) is
independently developed by the receiving party without any use of the
Confidential Information of the disclosing party. Notwithstanding anything
contained herein to the contrary, Buyer may share any Confidential Information
of Seller with an Affiliate of Buyer for any valid business purpose, such as,
but not limited to, to assist an Affiliate in evaluating a current or potential
business relationship with Seller.

 

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In addition, the Principal Agreements and their respective terms, provisions,
supplements and amendments, and transactions and notices thereunder (other than
the tax treatment and tax structure of the transactions), are proprietary to
Buyer and shall be held by Seller in strict confidence and shall not be
disclosed to any third party without the consent of Buyer except for (i)
disclosure to Seller’s direct and indirect parent companies, directors,
attorneys, agents or accountants, provided that such attorneys or accountants
likewise agree to be bound by this covenant of confidentiality, or are otherwise
subject to confidentiality restrictions; (ii) upon prior written notice to
Buyer, disclosure required by law, rule, regulation or order of a court or other
regulatory body; (iii) upon prior written notice to Buyer, disclosure to any
approved hedge counterparty to the extent necessary to obtain any hedging
hereunder; (iv) any disclosures or filing required under Securities and Exchange
Commission (“SEC”) or state securities’ laws; or (v) the tax treatment and tax
structure of the transactions, which shall not be deemed confidential; provided
that in the case of (ii), (iii) and (iv), Seller shall take reasonable actions
to provide Buyer with prior written notice; provided further that in the case of
(iv), Seller shall not file any of the Principal Agreements other than the
Agreement with the SEC or state securities office unless Seller has (x) provided
at least fifteen (15) days (or such lesser time as may be demanded by the SEC or
state securities office) prior written notice of such filing to Buyer, and (y)
redacted all pricing information and other commercial terms to the extent
permitted.

 

If any party or any of its successors, Subsidiaries, officers, directors,
employees, agents and/or representatives, including, without limitation, its
insurers, sureties and/or attorneys, breaches its respective duty of
confidentiality under this Agreement, the nonbreaching party(ies) shall be
entitled to all remedies available at law and/or in equity, including, without
limitation, injunctive relief

 

14.19Intent. Seller and Buyer recognize and intend that:

 

(a)this Agreement and each Transaction hereunder constitutes a “repurchase
agreement” as that term is defined in Section 101(47)(A)(i) of the Bankruptcy
Code, a “securities contract” as that term is defined in Section 741(7)(A)(i) of
the Bankruptcy Code and a “master netting agreement” as that term is defined in
Section 101(38A)(A) of the Bankruptcy Code and that the pledge of the Related
Credit Enhancement in Section 6.1 hereof constitutes “a security agreement or
other arrangement or other credit enhancement” that is “related to” the
Agreement and Transactions hereunder within the meaning of Sections 101(38A)(A),
101(47)(A)(v) and 741(7)(A)(xi) of the Bankruptcy Code. Seller and Buyer further
recognize and intend that this Agreement is an agreement to provide financial
accommodations and is not subject to assumption pursuant to Bankruptcy Code
Section 365(a);

 

(b)Buyer’s right to liquidate the Purchased Mortgage Loans delivered to it in
connection with the Transactions hereunder or to accelerate or terminate this
Agreement or otherwise exercise any other remedies herein is a contractual right
to liquidate, accelerate or terminate such Transaction as described in
Bankruptcy Code Sections 555, 559 and 561 ;any payments or transfers of property
made with respect to this Agreement or any Transaction to: (i) satisfy a Margin
Deficit, (ii) comply with a Margin Call, or (iii) satisfy the provision of
Guarantees and/or additional security agreements to provide enhancements to
satisfy a deficiency in the Over/Under Account, shall in each case be considered
a “margin payment” as such term is defined in Bankruptcy Code Section 741(5);
and

 

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(c)any payments or transfers of property by Seller (i) on account of a Haircut,
(ii) in partial or full satisfaction of a repurchase obligation, or (iii) fees
and costs under this Agreement or under any Transaction shall in each case
constitute “settlement payments” as such term is defined in Bankruptcy Code
Section 741(8).

 

14.20Right to Liquidate. It is understood that either party’s right to liquidate
Purchased Assets delivered to it in connection with Transactions hereunder or to
terminate or accelerate obligations under this Agreement or any individual
Transaction, are contractual rights for same as described in Sections 555 and
559 of the Bankruptcy Code.

 

14.21Insured Depository Institution. If a party hereto is an “insured depository
institution” as such term is defined in the Federal Deposit Insurance Act (as
amended, the “FDIA”), then each Transaction hereunder is a “qualified financial
contract” as that term is defined in the FDIA and any rules, orders or policy
statements thereunder except insofar as the type of assets subject to such
Transaction would render such definition inapplicable.

 

14.22Netting Contract. This Agreement constitutes a “netting contract” as
defined in and subject to Title IV of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment
obligation under any Transaction hereunder shall constitute a “covered
contractual payment entitlement” or “covered contractual payment obligation”,
respectively, as defined in and subject to the FDICIA except insofar as one or
more of the parties hereto is not a “financial institution” as that term is
defined in the FDICIA.

 

14.23Tax Treatment. Each party to this Agreement acknowledges that it is its
intent, solely for purposes of United States federal income tax purposes and any
corresponding provisions of state, local and foreign law, but not for bankruptcy
or any other non-tax purpose, to treat each Transaction as indebtedness of
Seller that is secured by the Purchased Assets and to treat the Purchased Assets
as beneficially owned by Seller in the absence of an Event of Default by Seller.
All parties to this Agreement agree to such tax treatment and agree to take no
action inconsistent with this treatment, unless required by law.

 

14.24Examination and Oversight by Regulators. Seller agrees that the
transactions with Buyer under this Agreement may be subject to regulatory
examination and oversight by one or more Governmental Authorities. Seller shall
comply with all requests made by Buyer to assist Buyer in complying with
regulatory requirements imposed on Buyer.

 

(Signature page to follow)

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

BUYER: BANK OF AMERICA, N.A.         By: /s/ Adam Robitshek         Name: Adam
Robitshek         Title: Vice President       SELLER: FIVE OAKS ACQUISITION
CORP.         By: /s/ Darren Comisso         Name: Darren Comisso         Title:
EVP

  

Signature Page to the Master Repurchase Agreement

 

 

 

 

EXHIBIT A

 

GLOSSARY OF DEFINED TERMS

 

Ability to Repay Rule: 12 CFR 1026.43(c), including all applicable official
staff commentary.

 

Acceptable Title Insurance Company: A nationally recognized title insurance
company that has not been disapproved by Buyer in a writing provided to Seller.

 

Accepted Servicing Practices: With respect to any Purchased Mortgage Loan, those
mortgage servicing practices of prudent mortgage lending institutions which
service mortgage loans of the same type as such Purchased Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.

 

Acknowledgement of Confidentiality of Password Agreement: That certain
Acknowledgement of Confidentiality of Password Agreement attached hereto as
Exhibit I.

 

Additional Purchased Assets: Those additional Eligible Assets or cash provided
by Seller to Buyer pursuant to Section 6.3 of this Agreement.

 

Affiliate: With respect to any specified entity, any other entity controlling or
controlled by or under common control with such specified entity. For the
purposes of this definition, “control” when used with respect to a specified
entity means the power to direct the management and policies of such entity,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms “controlling” and “controlled” having
meanings correlative to the foregoing.

 

Agency: Fannie Mae, Freddie Mac or Ginnie Mae, as applicable.

 

Agency Audit: Any Agency, HUD, FHA and VA audits, examinations, evaluations,
monitoring reviews and reports of its origination and servicing operations
(including those prepared on a contract basis for any such Agency).

 

Agency Documents: The documents set forth on Exhibit M.

 

Agency Eligible Mortgage Loan: Unless defined otherwise in the Transactions
Terms Letter, a first lien mortgage loan or a Cooperative Mortgage Loan that is
originated in Strict Compliance with the Agency Guides and the eligibility
requirements specified for the applicable Agency Program, and is eligible for
sale to or securitization by such Agency.

 

Agency Guides: The Ginnie Mae Guide, the Fannie Mae Guide, the Freddie Mac
Guide, the FHA Regulations and/or the VA Regulations, as the context may
require, in each case as such guidelines have been or may be amended,
supplemented or otherwise modified from time to time (i) by Ginnie Mae, Fannie
Mae, Freddie Mac, the FHA or the VA, as applicable, in the ordinary course of
business and, with respect to material amendments, supplements or other
modifications, as to which Buyer shall not have reasonably objected within ten
(10) days of receiving notice of such or (ii) by Ginnie Mae, Fannie Mae, Freddie
Mac, the FHA or the VA, as applicable, at the request of Seller and as to which
(x) Seller has given notice to Buyer of any such material amendment, supplement
or other modification and (y) Buyer shall not have reasonably objected.

 

Agency Program: The Ginnie Mae Program, the Fannie Mae Program and/or the
Freddie Mac Program, as the context may require.

 

Exh. A-1

 

 

Aggregate Outstanding Purchase Price: The aggregate outstanding Purchase Price
of all Transactions or specified Purchased Assets, as the case may be, as of any
date of determination.

 

Aggregate Transaction Limit: The maximum aggregate principal amount of
Transactions (measured by the related outstanding Purchase Price) that may be
outstanding at any one time, as set forth in the Transactions Terms Letter.

 

Applicable Pricing Rate: With respect to any date of determination, the greater
of (i) One-Month LIBOR, and (ii) the LIBOR Floor. It is understood that the
Applicable Pricing Rate shall be adjusted on a daily basis.

 

Application: The application or “Buyer Application Profile,” including all
supporting documentation, submitted by Seller to Buyer with respect to this
Agreement.

 

Approvals: To the extent previously approved, with respect to Seller or
Servicer, the approvals obtained by the applicable Agency in designation of
Seller as a Ginnie Mae-approved issuer, a Ginnie Mae-approved servicer, a
FHA-approved mortgagee, a VA-approved lender, a Fannie Mae-approved lender or a
Freddie Mac-approved Seller/Servicer, as applicable, in good standing.

 

Approved Investor: Any Agency, any private institution or Governmental Authority
as approved by Buyer in its sole discretion, purchasing such Purchased Mortgage
Loans or Mortgage-Backed Securities on a forward basis from Seller pursuant to a
Purchase Commitment.

 

Approved Payee: As defined in the Transactions Terms Letter and as described in
Section 3.7 of this Agreement.

 

Asset: A Mortgage Loan, or in the case of a Pooled Mortgage Loan, the resulting
Mortgage-Backed Security pursuant to Section 3.8, as the context may require.

 

Asset Data Record: A document containing the information set forth on Buyer’s
website(s), which may be amended, supplemented and modified from time to time as
further set forth in the Handbook or such other information as Buyer may
reasonably request from time to time, completed by Seller and submitted to Buyer
with respect to each Purchased Asset.

 

Asset Value: With respect to each Purchased Asset and any date of determination,
an amount equal to the following, as applicable, as the same may be reduced in
accordance with Section 4.3, and, in the case of each Purchased Mortgage Loan,
as shall include the related Servicing Rights:

 

(a)          if the Purchased Asset has Standard Status, the product of the
related Type Purchase Price Percentage and the least of: (i) the Market Value of
such Purchased Asset; (ii) the unpaid principal balance of such Purchased Asset;
(iii) the purchase price paid by Seller for such Purchased Asset if it is a
Mortgage Loan; and (iv) the Takeout Price committed by the related Approved
Investor, as evidenced by the related Purchase Commitment, if applicable;

 

(b)          if the Purchased Asset is a Noncompliant Asset, the product of the
related Type Purchase Price Percentage for a Noncompliant Asset and the least
of: (i) the Market Value of such Purchased Asset; (ii) the unpaid principal
balance of such Purchased Asset; (iii) the purchase price paid by Seller for
such Purchased Asset if it is a Mortgage Loan; and (iv) the Takeout Price
committed by the related Approved Investor, as evidenced by the related Purchase
Commitment, if applicable; or

 

(c)          if the Purchased Asset is a Defective Asset, zero.

 

Exh. A-2

 

 

Assignment: A duly executed assignment to Buyer in recordable form of a
Purchased Mortgage Loan, of the indebtedness secured thereby and of all
documents and rights related to such Purchased Mortgage Loan.

 

Assignment of Closing Protection Letter: An assignment assigning and subrogating
Buyer to all of Seller’s rights in a Closing Protection Letter, substantially in
the form of Exhibit F hereto.

 

Assignment of Fidelity Bond and Errors and Omission Policy: An assignment
assigning and subrogating Buyer to all of Seller’s rights in a Fidelity Bond and
Errors and Omissions Policy, substantially in the form of Exhibit G hereto.

 

Assignment of Proprietary Lease: The specific agreement creating a first lien on
and pledge of the Cooperative Shares and the appurtenant Proprietary Lease
securing a Cooperative Mortgage Loan.

 

Bailee Agreement: A bailee agreement or bailee letter that is in a form
acceptable to Buyer.

 

Bankruptcy Code: Title 11 of the United States Code, now or hereafter in effect,
as amended, or any successor thereto.

 

Business Day: Any day, excluding Saturday, Sunday and any day that is a legal
holiday under the laws of the State of New York and the State of California or
as may otherwise be published on Buyer’s website(s).

 

Calculation Period: With respect to: (a) the initial Payment Date on which an
Unused Facility Fee is due, the period beginning on the Effective Date and
ending on the last day of the calendar quarter in which such Effective Date
occurs, (b) for each subsequent Payment Date on which an Unused Facility Fee is
due, the prior calendar quarter and (c) with respect to the date this Agreement
is terminated pursuant to the terms herein, the period beginning on the first
day of the calendar quarter in which such termination is to occur and ending on
the Expiration Date.

 

Cash Equivalents: Any (a) securities with maturities of ninety (90) days or less
from the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit and
Eurodollar time deposits with maturities of ninety (90) days or less from the
date of acquisition and overnight bank deposits of any commercial bank having
capital, surplus and retained earnings in excess of $70,000,000, (c) repurchase
obligations of any commercial bank satisfying the requirements of clause (b) of
this definition, having a term of not more than seven days with respect to
securities issued or fully guaranteed or insured by the United States
Government, (d) commercial paper of a domestic issuer rated at least “A-1” or
the equivalent thereof by S&P or “p-1” or the equivalent thereof by Moody’s and
in either case maturing within ninety (90) days after the day of acquisition,
(e) securities with maturities of ninety (90) days or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least
“A” by S&P or “A” by Moody’s, (f) securities with maturities of ninety (90) days
or less from the date of acquisition backed by standby letters of credit issued
by any commercial bank satisfying the requirements of clause (b) of this
definition, or (g) shares of money market, mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.

 

Change of Control: Change of Control shall mean any of the following with
respect to any Person:

 

Exh. A-3

 

  

(a)          if such Person is a corporation, any “person” (as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)), other than a trustee or other fiduciary holding
securities of Seller under an employee benefit plan of such Person, becomes the
“beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities of such Person representing 50% or
more of (A) the outstanding shares of common stock of such Person or (B) the
combined voting power of such Person’s then-outstanding securities;

 

(b)          if such Person is a legal entity other than a corporation, the
majority voting control of such Person, or its equivalent, under such Person’s
governing documents is transferred to any Person;

 

(c)          such Person is party to a merger or consolidation, or series of
related transactions, which results in the voting securities or majority voting
control interest of such Person outstanding immediately prior thereto failing to
continue to represent (either by remaining outstanding or by being converted
into voting securities or a majority voting controlling interest of the
surviving or another entity) at least fifty (50%) percent of the combined voting
power of the voting securities or majority voting control interest of such
Person or such surviving or other entity outstanding immediately after such
merger or consolidation;

 

(d)          the sale or disposition of all or substantially all of such
Person’s assets (or consummation of any transaction, or series of related
transactions, having similar effect);

 

(e)          there occurs a change in the composition of the Board of Directors
or governing body of such Person within a six (6) month period, as a result of
which fewer than a majority of the directors or governing body members are
incumbent; provided, however, that this provision (e) shall not apply in the
event that the composition of the Board of Directors or governing body changes
as a result of such Person availing itself of the public or private debt or
equity markets;

 

(f)          the dissolution or liquidation of such Person; or

 

(g)          any transaction or series of related transactions that has the
substantial effect of any one or more of the foregoing.

 

Closing Agent: The Person designated by Seller and approved by Buyer in
accordance with Section 3.7, to receive Purchase Prices from Buyer, for the
account of Seller, for the purpose of (i) funding a Purchased Mortgage Loan or
(ii) in the case of a new origination Wet Mortgage Loan or Dry Mortgage Loan as
to which the origination funds are being remitted to the closing table,
originating such Mortgage Loan in accordance with local law and practice in the
jurisdiction where such Mortgage Loan is being originated.

 

Closing Protection Letter: A document issued by a title insurance company to
Seller and/or Buyer and relied upon by Buyer to provide closing protection for
one or more mortgage loan closings and to insure Seller and/or Buyer, without
limitation, against embezzlement by the Closing Agent and loss or damage
resulting from the failure of the Closing Agent to comply with all applicable
closing instructions.

 

COBRA: As defined in Section 8.1(l) of this Agreement.

 

Code: The Internal Revenue Code of 1986, as amended.

 

Committed Amount: The portion of the Aggregate Transaction Limit that is
committed, as set forth in the Transactions Terms Letter.

 

Comprehensive Income Attributable to Common Stockholders: The “comprehensive
income attributable to common stockholders” as set forth in the financial
statements of the Guarantor.

 

Exh. A-4

 

 

Contingent Obligations: Any obligation of Seller arising from an existing
condition or situation that involves uncertainty as to outcome and that will be
resolved by the occurrence or nonoccurrence of some future event, including,
without limitation, any obligation guaranteeing or intended to guarantee any
Debt, leases, dividends or other obligations of any other Person in any manner,
whether directly or indirectly; provided; however, that endorsements of
instruments for deposit or collection in the ordinary course of business shall
not be included. With respect to guarantees, the amount of the Contingent
Obligation shall be equal to the stated or determinable amount of the primary
obligation in respect of the guarantee or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof, as determined by
Buyer.

 

Control Agreement: The agreement to perfect Buyer’s security interest in the
Custodial Account as described in Section 6.2(i) of this Agreement.

 

Conventional Conforming Mortgage Loan: Unless defined otherwise in the
Transactions Terms Letter, a first lien mortgage loan that fully conforms to all
underwriting and/or acquisition standards, loan amount limitations and other
requirements of that standard Agency mortgage loan purchase program accepting
only the highest quality mortgage loans underwritten without dependence on
expanded criteria provisions, or that is approved by Desktop Underwriter or Loan
Prospector.

 

Cooperative Corporation: With respect to any Cooperative Mortgage Loan, the
private, non-profit cooperative apartment corporation which owns all of the
related real property, including the land, separate dwelling units and all
common areas.

 

Cooperative Mortgage Loan: A mortgage loan that is secured by a first lien on
and perfected security interest in Cooperative Shares and the related
Proprietary Lease granting exclusive rights to occupy the related Cooperative
Unit in the building owned by the related Cooperative Corporation.

 

Cooperative Shares: With respect to any Cooperative Mortgage Loan, the shares of
stock issued by a Cooperative Corporation and allocated to a Cooperative Unit
and represented by a stock certificate.

 

Cooperative Unit: With respect to a Cooperative Mortgage Loan, the specific
dwelling unit relating to a Cooperative Mortgage Loan.

 

Correspondent Mortgage Loan: A Mortgage Loan originated by a third party
originator and acquired by Seller in accordance with Seller’s correspondent
Mortgage Loan program.

 

Cumulative Equity Proceeds: As of any date of determination, the aggregate
amount of all cash received on or prior to such date of determination by
Guarantor and its Subsidiaries in respect of any issuance of Equity effected
after Effective Date net of expenses incurred by Guarantor and its Subsidiaries
in connection therewith.

 

Current Assets: Those assets set forth in the consolidated balance sheet of
Seller, prepared in accordance with GAAP, as current assets, defined as those
assets that are now cash or will by their terms or disposition be converted to
cash within one (1) year of the date of the determination.

 

Current Liabilities: Those liabilities set forth in the consolidated balance
sheet of Seller, prepared in accordance with GAAP, as current liabilities,
defined as those liabilities due upon demand or within one (1) year of the date
of determination.

 

Custodial Account: The account described in Section 6.2(i) of this Agreement.

 

Exh. A-5

 

 

Custodial Agreement: The Custodial Agreement executed among Buyer, Seller and
Custodian with respect to this Agreement, as the same shall be modified and
supplemented and in effect from time to time.

 

Custodian: Wells Fargo Bank, N.A. or such other custodian selected by Buyer.

 

Debt: The debt of Seller consisting of, without duplication: (a) indebtedness
for borrowed money, including principal, interest, fees and other charges; (b)
obligations evidenced by bonds, debentures, notes or other similar instruments;
(c) obligations to pay the deferred purchase price of property or services; (d)
obligations as lessee under leases that shall have been or should be in
accordance with GAAP, recorded as capital leases; (e) obligations secured by any
lien upon property or assets owned by Seller, even though Seller has not assumed
or become liable for payment of such obligations; (f) obligations in connection
with any letter of credit issued for the account of Seller; (g) obligations
under direct or indirect guarantees in respect of and obligations, contingent or
otherwise, to purchase or otherwise acquire, or otherwise assure a creditor
against loss in respect of, indebtedness or obligations of others of the kinds
referred to above; and (h) all Contingent Obligations.

 

Default Rate: The lesser of (i) the Applicable Pricing Rate plus four percent
(4.00%), or (ii) the maximum nonusurious interest rate, if any, that at any
time, or from time to time, may be contracted for, taken, reserved, charged or
received under the laws of the United States and the State of New York, per
annum.

 

Defective Asset: A Purchased Asset:

 

(a)          that is not or at any time ceases to be an Eligible Asset;

 

(b)          that has not been repurchased within the Maximum Dwell Time for a
Noncompliant Asset or is ineligible to be a Noncompliant Asset because the
Aggregate Outstanding Purchase Price of other Purchased Assets that are deemed
to be Noncompliant Assets is equal to or exceeds the permitted Type Sublimit for
Noncompliant Assets (to the extent any such Type Sublimit is set forth in the
Transactions Terms Letter);

 

(c)          that is a Mortgage Loan and is the subject of fraud by any Person
involved in the origination of such Mortgage Loan;

 

(d)          that is a Mortgage Loan and the related Mortgaged Property is the
subject of material damage or waste and such damage or waste shall not have been
remedied within three (3) Business Days after receipt of notice from Buyer to do
so;

 

(e)          for which any breach of a warranty or representation set forth in
Section 8.2 occurs;

 

(f)          that is a Mortgage Loan where the related Mortgagor fails to make
the first payment due under the Mortgage Note on or before the applicable due
date, including any applicable grace period;

 

(g)          that was rejected by the Approved Investor set forth in the related
Purchase Commitment; or

 

(h)          that is a Purchased Mortgage Loan and it is determined to be
ineligible for sale as a Purchased Mortgage Loan of the Type originally
stipulated.

 

Exh. A-6

 

 

Depository: The Federal Reserve Bank of New York, or as otherwise defined in the
glossary of the Ginnie Mae Guide, the Fannie Mae Guide or the Freddie Mac Guide,
as applicable.

 

Dry Mortgage Loan: A Mortgage Loan for which Buyer or its Custodian has
possession of the related Mortgage Loan Documents, in a form and condition
acceptable to Buyer, prior to the payment of the Purchase Price.

 

Effective Date: That effective date set forth in the Transactions Terms Letter.

 

Electronic Tracking Agreement: An Electronic Tracking Agreement in a form
acceptable to Buyer.

 

Eligible Asset: With respect to any Transaction (i) from and after the related
Purchase Date, an Eligible Mortgage Loan, and (ii) from and after the related
Pooling Date, an Eligible Mortgage Loan that is a Pooled Mortgage Loan, as the
context may require.

 

Eligible Bank: Either (i) Buyer, or (ii) a bank selected by Seller and approved
by Buyer in writing and authorized to conduct trust and other banking business
in any state in which Seller conducts operations.

 

Eligible Mortgage Loan: A Mortgage Loan that meets the eligibility criteria set
forth in the Transactions Terms Letter.

 

Equity: As of any date of determination, with respect to any Person, the common
stock and retained earnings of such Person, determined in accordance with GAAP,
as reported on such Person’s balance sheet.

 

ERISA: The Employee Retirement Income Security Act of 1974, as amended from time
to time and any successor statute.

 

ERISA Affiliate: Any person (as defined in section 3(9) of ERISA) that together
with Seller or any of its Subsidiaries would be a member of the same “controlled
group” or treated as a single employer within the meaning of Section 414 of the
Code or ERISA Section 4001.

 

Event of Default: Any of the conditions or events set forth in Section 11.1.

 

Excluded Taxes: As defined in Section 12.3(a).

 

Executive Management: Seller’s (i) chairman of the board of directors, (ii)
chief executive officer, (iii) president, (iv) chief financial officer, (v)
chief operations officer, and (vi) Head of Aggregation and Securitization of
Mortgage Loans.

 

Existing Debt: Debt of Seller existing on the date of this Agreement, as set
forth on Schedule 3 hereto.

 

Expiration Date: The earliest of (i) the Expiration Date set forth in the
Transactions Terms Letter, (ii) at Buyer’s option, upon the occurrence of an
Event of Default and (iii) the date on which this Agreement shall terminate in
accordance with the provisions hereof or by operation of law.

 

Facility Fee: The non-refundable, annual commitment fee set forth in the
Transactions Terms Letter.

 

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

 

Fannie Mae Guide: The Fannie Mae MBS Selling and Servicing Guide, as such guide
may hereafter from time to time be amended.

 

Exh. A-7

 

 

Fannie Mae Program: The Fannie Mae Guaranteed Mortgage-Backed Securities
Programs, as described in the Fannie Mae Guide.

 

FHA: The Federal Housing Administration of the United States Department of
Housing and Urban Development and any successor thereto.

 

FHA Mortgage Insurance: Mortgage insurance authorized under Sections 203(b),
213, 221(d)(2), 222, and 235 of the Federal Housing Administration Act and
provided by the FHA.

 

FHA Mortgage Insurance Contract: A contractual obligation of the FHA respecting
the insurance of a Mortgage Loan.

 

FHA Regulations: The regulations promulgated by HUD under the FHA Act, codified
in 24 Code of Federal Regulations, and other HUD issuances relating to
Government Mortgage Loans, including the related handbooks, circulars, notices
and mortgagee letters.

 

FICO Score: The credit score of the Mortgagor provided by Fair, Isaac & Company,
Inc. or such other organization providing credit scores on the origination date
of a Mortgage Loan; provided, that if (a) two separate credit scores are
obtained on such origination date, the FICO Score shall be the lower credit
score; and (b) three separate credit scores are obtained on such origination
date, the FICO Score shall be the middle credit score.

 

Foreign Buyer: As defined in Section 12.3(c) of this Agreement.

 

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

 

Freddie Mac Guide: The Freddie Mac Sellers' and Servicers' Guide, as such guide
may hereafter from time to time be amended.

 

Freddie Mac Program: The Freddie Mac Home Mortgage Guarantor Program or the
Freddie Mac FHA/VA Home Mortgage Guarantor Program, as described in the Freddie
Mac Guide.

 

GAAP: Generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of 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 approved by a significant segment of the accounting profession
and that are applicable to the circumstances as of the date of determination.

 

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

 

Ginnie Mae Guide: The Ginnie Mae Mortgage-Backed Securities Guide I or II, as
such guide may hereafter from time to time be amended.

 

Ginnie Mae Program: The Ginnie Mae Mortgage-Backed Securities Programs, as
described in the Ginnie Mae Guide.

 

Government Mortgage Loan: Unless defined otherwise in the Transactions Terms
Letter, a first lien mortgage loan that is (a) eligible for FHA Mortgage
Insurance and is so insured or is subject to a current binding and enforceable
commitment for such insurance pursuant to the provisions of the National Housing
Act, as amended, and is originated in Strict Compliance with the Ginnie Mae
Guide and is eligible for inclusion in a Ginnie Mae mortgage-backed security
pool; or (b) eligible to be guaranteed by the VA and is so guaranteed or is
subject to a current binding and enforceable commitment for such guarantee
pursuant to the provisions of the Servicemen’s Readjustment Act, as amended, and
is otherwise eligible for inclusion in a Ginnie Mae mortgage-backed security
pool.

 

Exh. A-8

 

 

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.

 

Guarantee: A guarantee signed by a Guarantor in favor of Buyer, in a form
acceptable to Buyer.

 

Guarantor: Five Oaks Investment Corp.

 

Haircut: With respect to any Transaction with respect to which the Purchase
Price is being paid to one or more Approved Payees on behalf of Seller, if the
Purchase Price is less than the amount that such Approved Payees are entitled to
receive in respect of the related Mortgage Loans, the positive result (if any)
equal to such amount minus such Purchase Price, which shall be considered a
“settlement payment” as defined in Bankruptcy Code Section 741(8).

 

Handbook: The guide prepared by Buyer containing additional policies and
procedures, as same may be amended from time to time.

 

HUD: The United States Department of Housing and Urban Development or any
successor thereto.

 

Income: With respect to any Purchased Asset at any time, any principal and/or
interest thereon and all dividends, Proceeds and other collections and
distributions thereon.

 

Indemnified Party or Indemnified Parties: As defined in Section 12.1 of this
Agreement.

 

Insolvency Event: The occurrence of any of the following events:

 

(a)          such Person shall become insolvent or generally fail to pay, or
admit in writing its inability to pay, its debts as they become due, or shall
voluntarily commence any proceeding or file any petition under any bankruptcy,
insolvency or similar law or seeking dissolution, liquidation or reorganization
or the appointment of a receiver, trustee, custodian, conservator or liquidator
for itself or a substantial portion of its property, assets or business or to
effect a plan or other arrangement with its creditors, or shall file any answer
admitting the jurisdiction of the court and the material allegations of an
involuntary petition filed against it in any bankruptcy, insolvency or similar
proceeding, or shall be adjudicated bankrupt, or shall make a general assignment
for the benefit of creditors, or such Person, or a substantial part of its
property, assets or business, shall be subject to, consent to or acquiesce in
the appointment of a receiver, trustee, custodian, conservator or liquidator for
itself or a substantial property, assets or business;

 

(b)          corporate action shall be taken by such Person for the purpose of
effectuating any of the foregoing;

 

(c)          an order for relief shall be entered in a case under the Bankruptcy
Code in which such Person is a debtor; or

 

(d)          involuntary proceedings or an involuntary petition shall be
commenced or filed against such Person under any bankruptcy, insolvency or
similar law or seeking the dissolution, liquidation or reorganization of such
Person or the appointment of a receiver, trustee, custodian, conservator or
liquidator for such Person or of a substantial part of the property, assets or
business of such Person, or any writ, order, judgment, warrant of attachment,
execution or similar process shall be issued or levied against a substantial
part of the property, assets or business of such Person, and such proceeding or
petition shall not be dismissed, or such execution or similar process shall not
be released, vacated or fully bonded, within sixty (60) days after commencement,
filing or levy, as the case may be.

 

Exh. A-9

 

 

Insurer: A private mortgage insurer, which is acceptable to Buyer.

 

Intercreditor Agreement: An agreement substantially in the form acceptable to
Buyer.

 

Irrevocable Closing Instructions: Closing instructions, including wire
instructions, in the form of Exhibit B issued in connection with funds disbursed
for the funding of new origination Wet Mortgage Loans or Dry Mortgage Loans as
to which the origination funds are being remitted to the closing table.

 

Jumbo Mortgage Loan: Unless defined otherwise in the Transactions Terms Letter,
a first lien mortgage loan or Cooperative Mortgage Loan (i) with respect to
which Seller has obtained a Purchase Commitment on or prior to the related
Purchase Date and (ii) meets the transaction requirements set forth on Schedule
1 to the Transactions Terms Letter.

 

LIBOR Floor: As defined in the Transactions Terms Letter.

 

Lien: Any mortgage, lien, pledge, charge, security interest or similar
encumbrance.

 

Linked Transactions: Those transactions identified in Guarantor’s financial
statements as forward purchase (derivative) contracts where the initial transfer
of a financial asset and contemporaneous repurchase financing of such
mortgage-backed security with the same counterparty is considered part of the
same arrangement.

 

Liquidity: As of any date of determination, the sum of (a) Guarantor’s
unrestricted and unencumbered cash and Cash Equivalents and (b) the balance in
the Over/Under Account exclusive of funds held due to a Margin Deficit or Margin
Call. By way of example but not limitation, cash in escrow and/or impound
accounts shall not be included in this calculation.

 

Manufactured Home: A prefabricated or manufactured home on which a lien secures
a Mortgage Loan and which is considered and treated as “real estate” under
applicable law.

 

Margin Call: A margin call, as defined and described in Section 6.3 of this
Agreement.

 

Margin Deficit: A margin deficit, as defined and described in Section 6.3 of
this Agreement.

 

Market Value: With respect to an Asset, the fair market value of the Asset as
determined by Buyer in its sole discretion without regard to any market value
assigned to such Asset by Seller. Buyer’s determination of Market Value shall be
conclusive upon the parties, absent manifest error on the part of Buyer. At no
time and in no event will the Market Value of a Purchased Asset be greater than
the Market Value of such Purchased Asset on the Purchase Date. Any Mortgage Loan
that is not an Eligible Asset shall have a Market Value of zero.

 

Master Netting Agreement: The master netting agreement among Buyer, Seller and
certain Affiliates and Subsidiaries of Buyer and/or Seller, in form and
substance acceptable to Buyer, as the same shall be modified and supplemented
and in effect from time to time.

 

Exh. A-10

 

 

Material Adverse Effect: Any of the following: (i) a material adverse change in,
or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of Seller, Servicer or any
Affiliate that is a party to any Principal Agreement taken as a whole; (ii) a
material impairment of the ability of Seller, Servicer or any Affiliate that is
a party to any Principal Agreement to perform under any Principal Agreement and
to avoid any Event of Default; (iii) a material adverse effect upon the
legality, validity, binding effect or enforceability of any Principal Agreement
against Seller, Servicer or any Affiliate that is a party to any Principal
Agreement; (iv) a material adverse effect on the rights and remedies of Buyer
under any of the Principal Agreements; (v) a material adverse effect on the
marketability, collectability, value or enforceability of a material portion of
the Purchased Assets or (vi) a material adverse effect on the Approvals of
Seller (to the extent previously approved), in each case as determined by Buyer
in its sole good faith discretion.

 

Maximum Dwell Time: (i) For any Purchased Asset with Standard Status, the
maximum number of days such Purchased Asset can be not repurchased by Seller
before such Purchased Asset may be deemed to be a Noncompliant Asset; and (ii)
with respect to a Noncompliant Asset, the maximum number of days that such
Noncompliant Asset can be deemed to be a Noncompliant Asset before it may be
deemed to be a Defective Asset, all as set forth in the Transactions Terms
Letter.

 

MERS: Mortgage Electronic Registration Systems, Inc., a Delaware corporation, or
any successor in interest thereto.

 

Minimum Over/Under Account Balance: The balance required to be maintained by
Seller in the Over/Under Account as provided in Section 3.5(a) of this
Agreement, which balance is specified in the Transactions Terms Letter.

 

Moody’s: Moody’s Investors Service, Inc. or any successor thereto.

 

Mortgage: A first-lien or second-lien mortgage, deed of trust, security deed or
similar instrument on either (i) with respect to a Mortgage Loan other than a
Cooperative Mortgage Loan, improved real property or (ii) with respect to a
Cooperative Mortgage Loan, the Proprietary Lease and related Cooperative Shares.

 

Mortgage-Backed Security: Any fully-modified pass-through mortgage-backed
security that is (i) either issued by Seller and fully guaranteed by Ginnie Mae
or issued and fully guaranteed with respect to timely payment of interest and
ultimate payment of principal by Fannie Mae or Freddie Mac; (ii) evidenced by a
book-entry account in a depository institution having book-entry accounts at the
applicable Depository; and (iii) backed by a Pool, in substantially the
principal amount and with substantially the other terms as specified with
respect to such Mortgage-Backed Security in the related Purchase Commitment.

 

Mortgage Loan: A Jumbo Mortgage Loan, as further specified in the Transactions
Terms Letter, which Mortgage Loan may be either a Dry Mortgage Loan or a Wet
Mortgage Loan.

 

Mortgage Loan Documents: With respect to each Purchased Mortgage Loan:

 

(a)          the original Mortgage Note evidencing the Mortgage Loan, bearing
all intervening endorsements from the originator to the last endorsee endorsed,
“Pay to the order of ____________, without recourse” and signed in the name of
the last endorsee by an officer of the last endorsee;

 

(b)          if Seller did not originate the Mortgage Loan, a copy of all
original intervening assignments duly executed and acknowledged and in
recordable form, evidencing the chain of mortgage assignments from the
originator of the Mortgage Loan to Seller, or to MERS, in the case of a Mortgage
Loan registered with MERS, together with a certificate from Seller, the
applicable title insurance company, the applicable Closing Agent or the
applicable recorder’s office, certifying that such copy represents a true and
correct reproduction of the original and that such original has been duly
recorded or delivered for recordation in the appropriate records of the
jurisdiction in which the related Mortgaged Property is located;

 

Exh. A-11

 

 

(c)          except with respect to a Mortgage Loan that is registered with
MERS, an original Assignment in blank, executed by Seller, for the Mortgage
securing the Mortgage Note, in recordable form but unrecorded, with a complete
chain of intervening assignments from the originator to Seller;

 

(d)          a copy of the Mortgage securing the Mortgage Note bearing evidence
of the recordation of such Mortgage with the appropriate Governmental Authority,
together with a certificate from Seller, the applicable title insurance company,
the applicable Closing Agent or the applicable recorder’s office, certifying
that such copy represents a true and correct reproduction of the original and
that such original has been duly recorded or delivered for recordation in the
appropriate records of the jurisdiction in which the related Mortgaged Property
is located, or if such recording information is unavailable because the document
has not yet come back from the applicable recording office, then a copy of
evidence that such original Mortgage was sent out for recording by a Closing
Agent; and

 

(e)          an original or copy of the title insurance policy insuring the
first lien or second lien position of the Mortgage, as applicable, in at least
the original principal amount of the related Mortgage Note and containing only
those exceptions permitted by the Purchase Commitment or an unconditional
commitment to issue such a title insurance policy.

 

Mortgage Loan File: With respect to each Mortgage Loan, that file that contains
the Mortgage Loan Documents and is delivered to Buyer or its Custodian.

 

Mortgage Note: A promissory note secured by a Mortgage and evidencing a Mortgage
Loan.

 

Mortgaged Property: The real property or other Cooperative Mortgage Loan
collateral securing repayment of the debt evidenced by a Mortgage Note.

 

Mortgagor: The obligor of a Mortgage Loan.

 

Multiemployer Plan: A multiemployer plan within the meaning of Sections 3(37) or
4001(a)(3) of ERISA.

 

Net Worth: With respect to any Person, the excess of total assets of such
Person, over total liabilities of such Person, determined in accordance with
GAAP.

 

Noncompliant Asset: If applicable per the Transactions Terms Letter, as of any
date of determination, a Purchased Asset that is an Eligible Asset and was not
repurchased prior to the expiration of the Maximum Dwell Time permitted for a
Purchased Asset with Standard Status but was repurchased prior to the expiration
of the Maximum Dwell Time for Noncompliant Assets.

 

One-Month LIBOR: The daily rate per annum (rounded to three (3) decimal places)
for one-month U.S. dollar denominated deposits as offered to prime banks in the
London interbank market, as published on the Official ICE LIBOR Fixings page by
Bloomberg or in the Wall Street Journal as of the date of determination;
provided, that if Buyer determines that any law, regulation, treaty or directive
or any change therein or in the interpretation or application thereof, or any
circumstance materially and adversely affecting the London interbank market,
shall make it unlawful, impractical or commercially unreasonable for Buyer to
enter into or maintain Transactions as contemplated by this Agreement using
One-Month LIBOR, then Buyer may, in addition to its rights under Section 4.5
herein, select an alternative rate of interest or index in its discretion.

 

Exh. A-12

 

 

Other Mortgage Loan Documents: In addition to the Mortgage Loan Documents, with
respect to any Mortgage Loan, the following: (i) the original recorded Mortgage,
if not included in the Mortgage Loan Documents; (ii) a copy of the preliminary
title commitment showing the policy number or preliminary attorney’s opinion of
title and the original policy of mortgagee’s title insurance or unexpired
commitment for a policy of mortgagee’s title insurance, if not included in the
Mortgage Loan Documents; (iii) the original Closing Protection Letter and a copy
of the Irrevocable Closing Instructions; (iv) the original Purchase Commitment,
if any; (v) the original FHA certificate of insurance or commitment to insure,
the VA certificate of guaranty or commitment to guaranty and the Insurer’s
certificate or commitment to insure, as applicable; (vi) the survey, flood
certificate, hazard insurance policy and flood insurance policy, as applicable;
(vii) the original of any assumption, modification, consolidation or extension
agreements, with evidence of recording thereon or copies stamp certified by an
authorized officer of Seller to have been sent for recording, if any; (viii)
copies of each instrument necessary to complete identification of any exception
set forth in the exception schedule in the title policy; (ix) the loan
application; (x) verification of the Mortgagor’s employment and income, if
applicable; (xi) verification of the source and amount of the downpayment; (xii)
credit report on Mortgagor; (xiii) appraisal of the Mortgaged Property; (xiv)
the original executed disclosure statement; (xv) Tax receipts, insurance premium
receipts, ledger sheets, payment records, insurance claim files and
correspondence, current and historical computerized data files, acquisition
standards used for origination and all other related papers and records; (xvi)
the original of any guarantee executed in connection with the Mortgage Note (if
any); (xvii) the original of any security agreement, chattel mortgage or
equivalent document executed in connection with the Mortgage; (xviii) all copies
of powers of attorney or similar instruments, if applicable; (xix) copies of all
documentation in connection with the acquisition and origination of any
Purchased Mortgage Loan that evidences compliance with, (1) with respect to all
Purchased Mortgage Loans, the Ability to Repay Rule and, (2) with respect to all
Purchased Mortgage Loans, the QM Rule; and (xx) all other documents relating to
the Purchased Mortgage Loan.

 

Other Taxes: As defined in Section 12.3(a).

 

Over/Under Account: That account maintained by Buyer, as described in Section
3.5.

 

Payment Date: The fifth (5th) day of each month, or if such date is not a
Business Day, the Business Day immediately preceding the fifth (5th) day of the
month; provided, however, Buyer may change the Payment Date from time to time
upon thirty (30) days prior notice to Seller.

 

PBGC: The Pension Benefit Guaranty Corporation and any successor thereto.

 

Person: Includes natural persons, corporations, limited partnerships, general
partnerships, limited liability companies, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.

 

Plan: Any Multiemployer Plan or single-employer plan as defined in section 4001
of ERISA, that is maintained and contributed to by (or to which there is an
obligation to contribute of), or at any time during the five (5) calendar years
preceding the date of this Agreement was maintained or contributed to by (or to
which there is an obligation to contribute of), Seller or by a Subsidiary of
Seller or an ERISA Affiliate.

 

Pool: A pool of fully amortizing first lien residential Mortgage Loans eligible
in the aggregate to back a Mortgage-Backed Security.

 

Exh. A-13

 

 

Pooled Mortgage Loan: Any Mortgage Loan that is part of a Pool of Mortgage Loans
certified by the Custodian to an Agency that will be exchanged on the related
Settlement Date for a Mortgage-Backed Security backed by such Pool in accordance
with the terms of the applicable Agency Guide.

 

Pooling Date: With respect to Pooled Mortgage Loans, the date on which an Agency
pool number is assigned to the related Pool.

 

Potential Default: The occurrence of any event or existence of any condition
that, but for the giving of notice, the lapse of time, or both, would constitute
an Event of Default.

 

Power of Attorney: A power of attorney, substantially in the form attached
hereto as Exhibit H.

 

Price Differential: For each Purchased Asset or Transaction as of any date of
determination, an amount equal to the product of (a) (i) prior to the occurrence
of an Event of Default, the sum of the Applicable Pricing Rate plus the
applicable Type Margin, or (ii) following the occurrence and during the
continuance of an Event of Default, the Default Rate, and (b) the Purchase Price
for such Purchased Asset or Transaction. Price Differential will be calculated
in accordance with Section 2.6.

 

Principal Agreements: This Agreement, the Transactions Terms Letter, the
Electronic Tracking Agreement, the Control Agreement (if any), the Custodial
Agreement, the Master Netting Agreement, if any, any Servicing Agreement,
together with the related Servicer Notice, the Intercreditor Agreement (if any),
the Guarantee(s) (if required by the Transactions Terms Letter), all Trade
Assignments and related Purchase Commitments, and all other documents and
instruments evidencing the Transactions, as same may from time to time be
supplemented, modified or amended, and any other agreement entered into between
Buyer and Seller in connection herewith or therewith.

 

Proceeds: The total amount receivable or received when a Purchased Asset or
other Purchased Item is sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary, including, without
limitation, all rights to payment, including return premiums, with respect to
any insurance relating thereto and all escrow withholds and escrow payments for
Property Charges, as applicable.

 

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

 

Proprietary Lease: The lease on a Cooperative Unit evidencing the possessory
interest of the owner of the Cooperative Shares in such Cooperative Unit.

 

Purchase Advice: In connection with each wire transfer to be made to Buyer by
Seller or an Approved Investor, a written or electronic notification setting
forth (a)(i) the loan number assigned by Seller or last name of the Mortgagor
for each Mortgage Loan that is related to the Transaction in connection with
which a payment is being made, or (ii) the CUSIP of any related Mortgage-Backed
Security; (b) the amount of the wire transfer to be applied in the Transaction;
and (c) the total amount of the wire.

 

Purchase Commitment: A trade ticket or other written commitment issued in favor
of Seller by an Approved Investor pursuant to which that Approved Investor
commits to purchase one or more Purchased Assets, and as to which the Takeout
Price for such Purchased Assets is for an amount that is not less than the
outstanding Repurchase Price for such Purchased Assets, together with the
related correspondent, whole loan or forward purchase agreement by and between
Seller and the Approved Investor governing the terms and conditions of any such
purchases, all in form and substance satisfactory to Buyer.

 

Exh. A-14

 

 

Purchase Date: The date on which Buyer purchases a Purchased Asset from Seller.
If the Purchase Price is paid by wire transfer, the Purchase Date shall be the
date such funds are wired. If the Purchase Price is paid by a cashier’s check,
the Purchase Date shall be the date such check is issued by the bank. If the
Purchase Price is paid by a funding draft, the Purchase Date shall be the date
that the draft is posted by the bank on which the draft is drawn.

 

Purchase Price: The price at which each Asset is transferred by Seller to Buyer
which, except as otherwise may be set forth in the Transactions Terms Letter,
shall be equal to the product of the applicable Type Purchase Price Percentage
and the least of (i) the unpaid principal balance of such Asset, (ii) the Market
Value of such Asset, (iii) the purchase price committed by the related Approved
Investor, if applicable, as evidenced by the related Purchase Commitment, or
(iv) the purchase price paid by Seller for such Asset. For the sake of clarity,
the Purchase Price for each Mortgage-Backed Security subject to a Transaction
pursuant to Section 3.8 shall be the same Purchase Price that was paid for the
Purchased Mortgage Loans backing such Mortgage-Backed Security.

 

Purchased Assets: Purchased Mortgage Loans. The term “Purchased Assets” with
respect to any Transaction at any time shall also include Mortgage-Backed
Securities that replace the related Purchased Mortgage Loans pursuant to Section
3.8 and Additional Purchased Assets delivered pursuant to Section 6.3 of this
Agreement.

 

Purchased Items: All now existing and hereafter arising right, title and
interest of Seller in, under and to the following:

 

(a)          all Purchased Mortgage Loans, now owned or hereafter acquired,
including all Mortgage Notes and Mortgages evidencing such Mortgage Loans and
the related Mortgage Loan Documents, for which a Transaction has been entered
into between Buyer and Seller hereunder and for which the Repurchase Price has
not been paid in full and all Mortgage Loans, including all Mortgage Notes and
Mortgages evidencing such Mortgage Loans and the related Mortgage Loan
Documents, which, from time to time, are delivered, or caused to be delivered,
to Buyer (including delivery to a custodian or other third party on behalf of
Buyer) as additional security for the performance of Seller’s obligations
hereunder;

 

(b)          all Mortgage-Backed Securities issued in exchange for Purchased
Mortgage Loans for which the Repurchase Price has not been received by Buyer;

 

(c)          all Income related to the Purchased Assets and all rights to
receive such Income;

 

(d)          the Custodial Account and all amounts on deposit therein;

 

(e)          all rights of Seller under all related Purchase Commitments
(including the right to receive the related Takeout Price), purchase agreements
or other hedging arrangements, agreements, contracts or take-out commitments
relating to or constituting any or all of the foregoing, now existing and
hereafter arising, covering any part of the Purchased Assets, and all rights to
receive documentation relating thereto, and all rights to deliver Purchased
Mortgage Loans and related Mortgage-Backed Securities to permanent investors and
other purchasers pursuant thereto and all Proceeds resulting from the
disposition of such Purchased Assets;

 

(f)          all now existing and hereafter established accounts maintained with
broker-dealers by Seller for the purpose of carrying out transactions under
Purchase Commitments relating to any part of the Purchased Assets;

 

Exh. A-15

 

 

(g)          all now existing and hereafter arising rights of Seller to service,
administer and/or collect on the Purchased Assets hereunder and any and all
rights to the payment of monies on account thereof;

 

(h)          all Servicing Rights related to the Purchased Mortgage Loans, all
related Servicing Records, and all rights of Seller to receive from any third
party or to take delivery of any Servicing Records or other documents which
constitute a part of the Mortgage Loan Files, all rights of Seller to receive
from any third party or to take delivery of any records or other documents which
constitute a part of the Mortgage Loan Files, including, without limitation, the
Other Mortgage Loan Documents;

 

(i)          all now existing and hereafter arising accounts, contract rights
and general intangibles constituting or relating to any of the Purchased Assets;

 

(j)          all mortgage and other insurance and all commitments issued by
Insurers, the FHA or the VA, as applicable, to insure or guaranty any Purchased
Asset, including, without limitation, all FHA Mortgage Insurance Contracts and
VA Loan Guaranty Agreements relating to such Purchased Assets and the right to
receive all insurance proceeds and condemnation awards that may be payable in
respect of the premises encumbered by any Mortgage; and all other documents or
instruments delivered to Buyer in respect of the Purchased Assets;

 

(k)          all documents, files, surveys, certificates, correspondence,
appraisals, computer programs, tapes, discs, cards, accounting records and other
information and data of Seller relating to Purchased Assets;

 

(l)           all rights, but not any obligations or liabilities, of Seller with
respect to the Approved Investors relating to the Purchased Assets;

 

(m)         all property of Seller, in any form or capacity now or at any time
hereafter in the possession or control of Buyer, including, without limitation,
all deposit accounts and any funds at any time held therein, into which Proceeds
of the Purchased Assets are at any time deposited;

 

(n)          all products and Proceeds of the Purchased Assets; and

 

(o)          any funds of Seller at any time deposited or held in the Over/Under
Account.

 

 

Purchased Mortgage Loan: A Mortgage Loan that has been purchased by Buyer from
Seller in connection with a Transaction and which has not been repurchased by
Seller hereunder.

 

QM Rule: 12 CFR 1026.43(e), including all applicable official staff commentary.

 

Qualified Mortgage: A Mortgage Loan that satisfies the criteria for a “qualified
mortgage” as set forth in the QM Rule.

 

Rebuttable Presumption Qualified Mortgage: A Qualified Mortgage with an annual
percentage rate that exceeds the average prime offer rate for a comparable
mortgage loan as of the date the interest rate is set by 1.5 or more percentage
points for a first-lien Mortgage Loan or by 3.5 or more percentage points for a
subordinate-lien Mortgage Loan.

 

Recognition Agreement: An agreement whereby a Cooperative Corporation and a
mortgagee with respect to a Cooperative Mortgage Loan (i) acknowledge that such
mortgagee may make, or intends to make, such Cooperative Mortgage Loan, and (ii)
make certain agreements with respect to such Cooperative Mortgage Loan.

 

Exh. A-16

 

 

Reportable Event: An event described in Section 4043(b) of ERISA with respect to
a Plan as to which the thirty (30) days’ notice requirement has not been waived
by the PBGC.

 

Repurchase Acceleration Event: Any of the conditions or events set forth in
Section 4.2 of this Agreement.

 

Repurchase Date: The date on which Seller is to repurchase a Purchased Asset
subject to a Transaction from Buyer, which is either (i) the date specified in
the related Transactions Terms Letter and/or Asset Data Record, or (ii) the date
identified to Buyer by Seller as the date that the related Purchased Asset is to
be sold pursuant to a Purchase Commitment; provided, however, that if the
Repurchase Date is not a date within the Maximum Dwell Time for a Purchased
Asset with Standard Status, Buyer may, at its discretion, deem such Purchased
Asset a Noncompliant Asset and Buyer may pursue any rights and remedies accorded
Buyer hereunder as a result thereof, including, without limitation, charging
Seller any applicable fees as a result thereof. The Repurchase Date for each
Purchased Asset shall in no event occur later than one (1) year after the
Purchase Date of such Purchased Asset.

 

Repurchase Price: The price at which a Purchased Asset is to be transferred from
Buyer or its designee to Seller upon termination of a Transaction, which shall
equal the sum of (i) the Purchase Price, (ii) any applicable fees and
indemnities owed by Seller in connection with the Purchased Asset and (iii) the
Price Differential due on such Purchase Price pursuant to Section 2.6 as of the
date of such determination.

 

Repurchase Transaction: A repurchase transaction, as defined and described in
Section 6.6 of this Agreement.

 

Request for Temporary Increase: As defined in Section 2.10 of this Agreement.

 

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

 

Safe Harbor Qualified Mortgage: A Qualified Mortgage with an annual percentage
rate that does not exceed the average prime offer rate for a comparable mortgage
loan as of the date the interest rate is set by 1.5 or more percentage points
for a first-lien Mortgage Loan or by 3.5 or more percentage points for a
subordinate-lien Mortgage Loan.

 

Selling System: The Freddie Mac automated system by which sellers and servicers
of mortgage loans to Freddie Mac transfer mortgage summary and record data or
mortgage accounting and servicing information from their computer system or
service bureau to Freddie Mac, as more fully described in the Freddie Mac Guide.

 

Servicer: Seller, New Penn Financial, LLC, PHH Mortgage Corporation, Select
Portfolio Servicing, Inc. or such other entity responsible for servicing or
subservicing, as the case may be, the Purchased Mortgage Loans and that has been
approved by Buyer in writing, or, in each case, any successor or permitted
assigns.

 

Servicer Notice: The notice acknowledged by the Servicer which is substantially
in the form of Exhibit K hereto.

 

Servicer Termination Event: The occurrence of any of the following conditions or
events shall be a Servicer Termination Event:

 

Exh. A-17

 

 

(a)Servicer ceases to meet the qualifications for maintaining all Approvals,
such Approvals are revoked or such Approvals are materially modified;

(b)Servicer becomes subject to any penalties and/or sanctions by any Agency,
HUD, FHA, or VA; or

(c)Servicer fails to service the Eligible Assets subject to Transactions
materially in accordance with applicable Agency Guides resulting in a diminution
in value of any such Eligible Asset;

(d)Servicer fails to service the Eligible Assets subject to Transactions
materially in accordance with the related Servicing Agreement;

(e)Servicer fails to deliver any information, report, certification or other
material when required under the Regulation AB Compliance Addendum;

(f)Servicer fails to maintain all state and federal licenses necessary to do
business in any jurisdiction where Mortgaged Property is located if such license
is required, or to be in compliance with any licensing laws of any jurisdiction
where Mortgaged Property is located;

(g)(i) Servicer or any of its Subsidiaries or Affiliates shall default under, or
fail to perform as required under, or shall otherwise breach the terms of any
instrument, agreement or contract between Servicer or such other entity on the
one hand, and Buyer or any of Buyer’s Affiliates on the other; or (ii) Servicer
or any of its Subsidiaries or Affiliates shall default under, or fail to perform
as required under, the terms of any repurchase agreement, loan and security
agreement or similar credit facility, any agreement for borrowed funds or any
other material agreement entered into by Servicer or such other entity and any
third party;

(h)an Insolvency Event shall have occurred with respect to Servicer or any of
its Affiliates or Subsidiaries; or Servicer shall admit in writing its inability
to, or intention not to, perform any of its obligations under this Agreement or
any of the other Principal Agreements to which it is a party; or Buyer shall
have determined in good faith that Servicer is unable to meet its financial
commitments as they come due;

(i)a Change of Control shall occur with respect to Servicer; or

(j)a Material Adverse Effect shall occur with respect to Servicer.

 

Servicing Agreement: If the Purchased Mortgage Loans are serviced by any third
party servicer, the agreement with that third party in form and substance
acceptable to Buyer.

 

Servicing Records: All servicing agreements, files, documents, records, data
bases, computer tapes, copies of computer tapes, proof of insurance coverage,
insurance policies, appraisals, other closing documentation, payment history
records, and any other records relating to or evidencing the servicing of a
Mortgage Loan.

 

Servicing Released Mortgage Loans: A Purchased Mortgage Loan sold to Buyer
hereunder together with the related Servicing Rights, and indicated as servicing
released on the related Asset Data Record.

 

Servicing Retained Mortgage Loans: A Purchased Mortgage Loan sold to Buyer
hereunder together with the related Servicing Rights, and indicated as servicing
retained on the related Asset Data Record.

 

Servicing Rights: The contractual, possessory or other rights of Seller,
Servicer or any other Person, whether arising under a Servicing Agreement, the
Custodial Agreement or otherwise, to administer or service a Mortgage Loan or to
possess related Servicing Records.

 

Settlement Date: With respect to a Mortgage-Backed Security, the date on which
the applicable Agency delivers such Mortgage-Backed Security to the Depository
and it is registered as a book-entry security in the name of the Depository.

 

Exh. A-18

 

 

Standard Status: As of any date of determination, a Purchased Asset that has
been subject to a Transaction for less than the applicable Maximum Dwell Time
and that is not a Noncompliant Asset or a Defective Asset.

 

Stock Certificate: With respect to a Cooperative Mortgage Loan, the certificates
evidencing ownership of the Cooperative Shares issued by the Cooperative
Corporation.

 

Stock Power: With respect to a Cooperative Mortgage Loan, an assignment of the
Stock Certificate or an assignment of the Cooperative Shares issued by the
Cooperative Corporation.

 

Strict Compliance: The compliance of Seller and Mortgage Loans that are intended
to be Agency Eligible Mortgage Loans with the requirements of the applicable
Agency Guide, as applicable and as amended by any agreements between Seller and
the applicable Agency, sufficient to enable Seller to issue and Ginnie Mae to
guarantee or Fannie Mae or Freddie Mac to issue and guarantee a Mortgage-Backed
Security; provided, that until copies of any such agreements between Seller and
Fannie Mae, Freddie Mac or Ginnie Mae, as applicable, have been provided to
Buyer by Seller and agreed to by Buyer, such agreements shall be deemed, as
between Seller and Buyer, not to amend the requirements of the applicable Agency
Guide.

 

Subordinated Debt: Debt of Seller that either (i) has been subordinated to Buyer
as provided in this Agreement or (ii) that has been otherwise approved by Buyer.

 

Subsidiary: With respect to any Person, any corporation, partnership or other
entity of which at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions of such
corporation, partnership or other entity (irrespective of whether or not at the
time securities or other ownership interests of any other class or classes of
such corporation, partnership or other entity shall have or might have voting
power by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person.

 

Successor Servicer: Any successor subservicer of the Purchased Mortgage Loans
appointed by Buyer as described in Section 6.2(h) of this Agreement.

 

Takeout Price: The purchase price to be paid for a Purchased Asset or related
Mortgage-Backed Security by the related Approved Investor pursuant to the
related Purchase Commitment.

 

Tangible Net Worth: As of any date of determination, (i) the Net Worth of
Guarantor and its consolidated Subsidiaries, on a combined basis, determined in
accordance with GAAP, minus (ii) all intangibles determined in accordance with
GAAP (including, without limitation, goodwill, capitalized financing costs and
capitalized administration costs but excluding originated and purchased mortgage
servicing rights) and any and all advances to, investments in and receivables
held from Affiliates, and minus (iii) loans held for investment and real estate
owned net of acceptable financing (financing must be deemed acceptable by Buyer
in its sole discretion).

 

Taxes: As defined in Section 12.3(a) of this Agreement.

 

Temporary Aggregate Transaction Limit: As defined in Section 2.10 of this
Agreement.

 

Temporary Increase: As defined in Section 2.10 of this Agreement.

 

Exh. A-19

 

 

Total Adjusted Liabilities: As of any date of determination, the sum of (i) the
total liabilities of Guarantor on any given date of determination, to be
determined in accordance with GAAP consistent with those applied in the
preparation of Guarantor’s financial statements, plus (ii) to the extent not
already included under GAAP, the total aggregate outstanding amount owed by
Guarantor under any purchase, repurchase, refinance or other similar credit
arrangements, plus (iii) to the extent not already included under GAAP, any “off
balance sheet” purchase, repurchase, refinance or other similar credit
arrangements, plus (iv) the gross amount of repurchase financing related to
Linked Transactions, minus (v) non-recourse debt, minus (vi) any liabilities
related to any consolidation on Guarantor’s balance sheet.

 

Total Marginable Assets: As of any date of determination, in accordance with
GAAP, the sum of all assets of Guarantor subject to “margin”, including but not
limited to (i) mortgage loans held for sale, (ii) derivative assets less
derivative liabilities (solely to the extent the difference is greater than or
equal to zero); (iii) available for sale securities (solely to the extent
pledged), (iv) the gross amount pledged associated with Linked Transactions and
(v) loans held for investment, real estate owned property, mortgage servicing
rights and servicing advances; in the case of clauses (i)-(v), as detailed in
Guarantor’s monthly financial statements.

 

Trade Assignment: An assignment to Buyer of a forward trade between an Approved
Investor and Seller with respect to one or more Purchased Assets or related
Mortgage-Backed Security, in each case in substantially the form of Exhibit N
hereto, together with the related Purchase Commitment that has been fully
executed, is enforceable and is in full force and effect and confirms the
details of such forward trade.

 

Transaction: As set forth in the Recitals of this Agreement.

 

Transactions Terms Letter: The document executed by Buyer, Seller and Guarantor,
referencing this Agreement and setting forth certain specific terms, and any
additional terms, with respect to this Agreement.

 

Type: A specific type of Purchased Asset, as set forth in the Transactions Terms
Letter.

 

Type Margin: With respect to each Type of Purchased Asset, the corresponding
annual rate of interest for such Type as set forth in the Transactions Terms
Letter that shall be added to the Applicable Pricing Rate to determine the
annual rate of interest for the related Purchase Price.

 

Type Purchase Price Percentage: With respect to each Type of Purchased Asset,
the corresponding purchase price percentage for such Type, as set forth in the
Transactions Terms Letter.

 

Type Sublimit: Any of the applicable Type Sublimits, as set forth in the
Transactions Terms Letter.

 

Uncommitted Amount: The amount of the Aggregate Transaction Limit that is
uncommitted, as set forth in the Transactions Terms Letter, or such other amount
as may be determined by the Buyer in its sole discretion.

 

Underwriter Approval: Written evidence, in form and substance acceptable to
Buyer, that a Purchased Mortgage Loan has been underwritten to the satisfaction
of the Approved Investor issuing the applicable Purchase Commitment.

 

Uniform Commercial Code: The Uniform Commercial Code as in effect on the date
hereof in the State of New York or the Uniform Commercial Code as in effect in
the applicable jurisdiction.

 

Unused Facility Fee: The fee set forth in the Transactions Terms Letter payable
by Seller quarterly in arrears on each Payment Date, based upon the unused
portion of the Aggregate Transaction Limit; provided, however, that no fee shall
be due on a Payment Date if the Used Amount is less than the specified
percentage of the Aggregate Transaction Limit that is set forth in the
Transactions Terms Letter.

 

Exh. A-20

 

 

Used Amount: As defined in the Transactions Terms Letter.

 

VA: The Department of Veterans Affairs and any successor thereto.

 

VA Loan Guaranty Agreement: The obligation of the United States to pay a
specific percentage of a Mortgage Loan (subject to a maximum amount) upon
default of the Mortgagor pursuant to the Servicemen’s Readjustment Act, together
with all amendments, modifications, supplements and restatements thereto.

 

VA Regulations: Regulations promulgated by the U.S. Department of Veterans
Affairs pursuant to the Servicemen’s Readjustment Act, as amended, codified in
38 Code of Federal Regulations, and other VA issuances relating to Government
Mortgage Loans, including related handbooks, circulars and notices.

 

Warehouse Lender’s Release: A warehouse lender’s release in substantially the
form set forth in the Custodial Agreement.

 

Wet Mortgage Loan: A Mortgage Loan for which the complete Mortgage Loan File has
not been delivered to Custodian, subject to Seller’s obligation to deliver all
of the related Mortgage Loan Documents to Buyer or its Custodian in a form and
condition acceptable to Buyer within the applicable Maximum Dwell Time.

 

Wet Mortgage Loans Sublimit: The maximum aggregate principal amount of Purchased
Mortgage Loans that may be Wet Mortgage Loans at any time, as set forth in the
Transactions Terms Letter.

 

Exh. A-21

 

 

EXHIBIT B

 

FORM OF IRREVOCABLE CLOSING INSTRUCTIONS

 

[DATE]

 

      (“Closing Agent”)                               Dear    

 

Re:Irrevocable Closing Instructions

 

Closing Protection Letter Issued By, if applicable:
______________________________

 

Ladies and Gentlemen:

 

This letter is being sent in accordance with that Master Repurchase Agreement
dated as of December 30, 2014 (the “Agreement”) between Five Oaks Acquisition
Corp. (“Seller”) and Bank of America, N.A. (“Buyer”), the terms of which do not
affect Closing Agent except as set forth herein.

 

Pursuant to the Agreement, you have been identified as either:

 

·the title insurer to close and provide title insurance on certain mortgage
loans made by Seller; or

 

·the closing agent to close and fund certain mortgage loans made by Seller and
covered by the above referenced closing protection letter (the “Mortgage
Loans”).

 

From time to time, Buyer will wire to you, for the account of Seller, funds
requested by Seller under the terms of the Agreement to be used by you for the
purpose of funding such Mortgage Loan(s) and for no other purpose.
Notwithstanding anything to the contrary contained herein, you are not to
distribute any of such funds to Seller. You must immediately return the funds to
Buyer at the following account if one of the following conditions occurs:

 

·You do not close any Mortgage Loan within forty-eight (48) hours of the time
you receive the applicable funds; or

 

·You receive funds for a Mortgage Loan for which you have not been instructed by
Seller to (a) obtain title insurance from the title insurance company specified
in the above referenced closing protection letter or (b) underwrite the title
insurance.

 

Bank: Bank of America, N.A. ABA No.: 026009593 Account No.: 1233460784 Credit:
Warehouse Lending – Payoff Account Reference: Five Oaks Acquisition Corp.

 

If the Mortgage Loan Documents (as described below) have not been delivered to
Seller prior to the funding of the Transaction, within forty-eight (48) hours of
closing any Mortgage Loan, unless otherwise instructed by Buyer, you must
deliver to Seller, the following Mortgage Loan Documents:

 

Exh. B-1

 

 

(a)the original mortgage note evidencing the Mortgage Loan, endorsed by Seller
in blank, with a complete chain from the originator to Seller;

 

(b)if in your possession, an original assignment in blank executed by Seller for
the mortgage or deed of trust securing the mortgage note, in recordable form but
unrecorded, with a complete chain of intervening assignments from the originator
to Seller;

 

(c)a certified copy of the executed mortgage or deed of trust securing the
mortgage note; and

 

(d)an original or copy of the title insurance policy insuring the first lien or
second lien position of the mortgage or deed of trust, as applicable, in at
least the original principal amount of the related mortgage note and containing
only those exceptions permitted by the purchase commitment, as set forth in the
final closing instructions referred to below, or an unconditional commitment to
issue such a title insurance policy, or a preliminary report and instructions
received from Seller relating to the issuance of such a title insurance policy.

 

With respect to each Mortgage Loan for which you act as Closing Agent, Seller
will deliver to you final closing instructions specific to such Mortgage Loan.
In the event that the terms of the final closing instructions contradict the
terms of these irrevocable closing instructions, the terms of these irrevocable
closing instructions shall govern. Permission to change the scheduled closing
date for any Mortgage Loan beyond the time permitted herein or permission to
otherwise deviate from these irrevocable closing instructions must be furnished
to you in a writing signed by Buyer and Seller.

 

By your participation in the closing and funding of a Mortgage Loan as Closing
Agent, you agree to act as Buyer’s bailee with respect to such Mortgage Loan and
the Mortgage Loan Documents referenced above and you thereby acknowledge your
responsibility to Buyer as holder of an interest in such Mortgage Loan and to
care for and protect Buyer’s interest in such Mortgage Loan. Facsimile
signatures on these instructions shall be deemed valid and binding to the same
extent as the original.

 

Sincerely,

 

Bank of America, N.A.   Five Oaks Acquisition Corp.       By:     By:          
  Name:      Name:             Title:     Title:  

 

Exh. B-2

 

  

EXHIBIT C

 

FORM OF SECRETARY’S CERTIFICATE

 

I, _______________________, am the duly elected Secretary of Five Oaks
Acquisition Corp. (“Company”), and I hereby certify that:

 

1.Each of the persons listed below has been duly elected to and now holds the
office of the Company set forth opposite his or her name and is currently
serving, in such capacity, and the signature of each such person set forth
opposite his or her title is his or her true and genuine signature:

 

Name   Office   Signature                                                      
                         

 

2.Attached hereto as Exhibit A is a true and complete copy of the Articles of
Incorporation of the Company (or its equivalent if the Company is not a
corporation), as in full force and effect. No amendment or other document
relating to or affecting the Articles of Incorporation (or its equivalent) has
been filed in the office of the Secretary of State of incorporation or formation
and no action has been taken by the Company or its shareholders, directors or
officers in contemplation of the filing of any such amendment or other documents
and no proceedings therefore have occurred;

 

3.Attached hereto as Exhibit B is a true and complete copy of the By-laws of the
Company (or its equivalent if the Company is not a corporation), as in full
force and effect, and such By-laws (or its equivalent) have not been amended,
except for amendments included in the copy attached hereto; and

 

4.Attached hereto as Exhibit C is true and complete copy of the resolutions duly
and validly adopted either at a special or regular meeting or by unanimous
consent that apply to the Master Repurchase Agreement between the Company and
Bank of America, N.A., and such resolutions have not been amended, modified or
rescinded in any respect and remain in full force and effect without
modification or amendment as of the date hereof.

 

Dated:     By:           Secretary

 

Exh. C-1

 

 

EXHIBIT D

 

FORM OF RESOLUTIONS

 

WHEREAS, Five Oaks Acquisition Corp. (the “Company”) desires to enter into
mortgage loan purchase transactions (the “Transactions”) in an aggregate amount
not to exceed $100,000,000 with Bank of America, N.A. (“Buyer”) pursuant to a
Master Repurchase Agreement substantially in the form attached hereto (the
“Agreement”).

 

NOW, THEREFORE, IT IS RESOLVED BY THE BOARD OF DIRECTORS (OR ITS EQUIVALENT) OF
THE COMPANY THAT:

 

1.Company is hereby authorized and directed to enter into and execute each of
the following documents:

 

(a)the Agreement between Company and Buyer, attached hereto; and

 

(b)any and all other agreements and documents in connection with the
Transactions,

 

2.Any one of the following officers are separately and independently authorized
and directed to execute and deliver the Agreement and any and all other
agreements and documents related to the Transactions, and to do any and all
things which he or she may deem necessary or desirable in connection with the
Transactions, including approving, executing and delivering any amendments or
modifications to the Agreement.

 

Name/Title   Specimen Signature                                                
           

 

3.Any one of the following officers, directors and/or employees is separately
and independently authorized to take the following actions in connection with
the Agreement and Transactions: (a) request Transactions; (b) sign receipts
acknowledging delivery of funds and documents from Buyer; (c) request and effect
transfers of funds; and (d) ship and release documents to Buyer:

 

Name/Title   Specimen Signature   Restrictions, if any                          
                                                                         

 

Exh. D-1

 

 

4.The employees of Buyer are hereby appointed as assistant secretaries and vice
presidents of Company, and, as such, are authorized to, in the name of Company,
do any of the following:

 

(a)to receive, endorse and collect all checks made payable to the order of
Company representing any payment on account of the Purchased Assets (as defined
in the Agreement);

 

(b)to assign or endorse any mortgage, deed of trust, promissory note or other
instrument relating to the Purchased Assets;

 

(c)to correct any assignment, mortgage, deed of trust or promissory note or
other instrument relating to the Purchased Assets, including, without
limitation, unendorsing and re- endorsing a promissory note to another investor;

 

(d)to complete and execute lost note affidavits or other lost document
affidavits relating to the Purchased Assets;

 

(e)to issue title requests and instructions relating to the Purchased Assets;

 

(f)to give notice to any individual or entity of its interest in the Purchased
Assets under the Agreement; and

 

(g)to service and administer the Purchased Assets, including, without
limitation, the receipt and collection of all sums payable in respect of the
Purchased Assets.

 

I, ___________________, being the Secretary of Company, hereby certify that the
foregoing is a true copy of the Resolutions duly adopted by the Board of
Directors (or its equivalent) of Company, effective as of _________________,
which is in full force and effect on this date and does not conflict with
Company’s governing documents.

 

By:           Name:    

 

Tile: Secretary

 

Exh. D-2

 

 

EXHIBIT E

 

FORM OF OFFICER’S CERTIFICATE

 

Period Ending:

Seller Name:

Guarantor Name:

[DATE]

Five Oaks Acquisition Corp.

Five Oaks Investment Corp.

 

I, ___________________________, do hereby certify that I am the duly elected
authorized Chief Financial Officer of Five Oaks Acquisition Corp. (“Seller”) and
Five Oaks Investment Corp. (“Guarantor”). This certificate in connection with
Section 9.1(c) of the Master Repurchase Agreement, dated as of December 30,
2014, by and between Seller and Bank of America, N.A. (“Bank of America” or
“Buyer”) (as amended, supplemented or otherwise modified from time to time, the
“Agreement”) and the Guaranty, dated as of December 30, 2014 by Guarantor to and
for the benefit of Bank of America. I do hereby certify that, as of the date of
the financial statements attached hereto and as of the date hereof, Seller and
Guarantor are and have been in compliance with all the terms of the Agreement
and Guaranty and, without limiting the generality of the foregoing, I certify
that:

 

1. Representations and Warranties: The representations and warranties made by
Seller and Guarantor under the Agreement, Guaranty and other Principal
Agreements (between Bank of America and Seller and Bank of America and
Guarantor) are accurate and true on and as of the date hereof with the same
effect as though such representations and warranties had been made on and as of
the date hereof, including, without limitation, the following:

 

a) Financial Condition: All financial statements of Seller and Guarantor
delivered to Bank of America fairly and accurately present the financial
condition of the parties for whom such statements are submitted as of the date
set forth therein. The financial statements of Seller and Guarantor have been
prepared in accordance with GAAP consistently applied throughout the periods
involved, and there are no contingent liabilities not disclosed thereby that
would adversely affect the financial condition of Seller and/or Guarantor. Since
the close of the period covered by the latest financial statement delivered to
Bank of America with respect to Seller and Guarantor, there has been no material
adverse change in the assets, liabilities or financial condition of Seller and
Guarantor nor is Seller or Guarantor aware of any facts that, with or without
notice or lapse of time or both, would or could result in any such material
adverse change. No event has occurred, including, without limitation, any
litigation or administrative proceedings, and no condition exists or, to the
knowledge of Seller or Guarantor, is threatened, that (i) might render Seller or
Guarantor unable to perform its obligations under the Principal Agreements and
all other documents contemplated thereby; (ii) would constitute a Potential
Default or Event of Default; or (iii) is reasonably likely to have a Material
Adverse Effect with respect to Seller or Guarantor.

 

b) Solvency: The fair value of the assets of Seller and Guarantor is greater
than the fair value of the liabilities (including, without limitation,
contingent liabilities if and to the extent required to be recorded as a
liability on the financial statements of Seller and Guarantor, respectively, in
accordance with GAAP) of Seller and Seller is and will be solvent, is and will
be able to pay its debts as they mature and does not and will not have an
unreasonably small capital to engage in the business in which it is engaged and
proposes to engage. Seller does not intend to incur, or believe that it has
incurred, debts beyond its ability to pay such debts as they mature. Seller and
Guarantor are not contemplating the commencement of insolvency, bankruptcy,
liquidation or consolidation proceedings or the appointment of a receiver,
liquidator, conservator, trustee or similar official in respect of Seller and
Guarantor or any of its assets. Seller and Guarantor are not transferring any
Mortgage Loans with any intent to hinder, delay or defraud any of its creditors.

 

2. Compliance with Agreement and other Principal Agreements: Seller and
Guarantor are in full compliance with all of the terms and provisions set forth
in the Agreement, Guaranty and other Principal Agreements on its part to be
performed and observed, and no Event of Default or Potential Default has
occurred and is continuing.

 

3. Compliance with Other Agreements: Seller and Guarantor are in full compliance
with all of the terms and provisions set forth in any agreements between Seller
or Guarantor, Bank of America and/or Bank of America affiliates on its part to
be performed and observed, and no Event of Default or Potential Default has
occurred and is continuing.

 

Exh. E-1

 

 

4. No Change in Executive Management: Other than as previously disclosed to
Buyer, no material change in the Executive Management has occurred.

 

5. Reserved.

 

6. No Changes in Structure of Seller or Guarantor: Other than as previously
disclosed to Buyer, there has been no (i) change to the location of Seller’s or
Guarantor’s chief executive office/chief place of business from that specified
in Section 8.1(t) of the Agreement, (ii) change in the name, identity or
corporate structure (or the equivalent) of the Seller or Guarantor or change in
the location where Seller or Guarantor maintains its records with respect to the
Purchased Assets or any Purchased Items, or (iii) reincorporation or
reorganization of Seller or Guarantor under the laws of another jurisdiction.

 

7. Escrow and Mortgage Insurance Proceeds: To the extent applicable, Seller and
Guarantor has segregated all escrow and mortgage insurance proceeds into an
individual custodial account and is in compliance with all applicable laws.

 

8. Liabilities and Advances: Except as otherwise permitted under the Agreement,
Seller has not, either directly or indirectly, without the prior written consent
of Bank of America, made any personal loans or advances to any officers,
employees, shareholders, members, partners or owners of Seller or any Guarantor
in an aggregate amount exceeding ten percent (10%) of Seller’s Tangible Net
Worth. Except as otherwise permitted under the Agreement, Seller has not
incurred any additional material Debt without the prior written consent of Bank
of America.

 

9. Regulatory Action: Seller has not, either directly or indirectly, without the
prior written consent of Bank of America, taken, or failed to take, any action
that would cause Seller to lose all or any part of its status as an eligible
seller or mortgagee or willfully terminate its status as an eligible seller or
mortgagee by an Agency or Government Authority without forty-five (45) days
prior written notice to Bank of America.

 

10. Attachments: The following attachments and information contained therein are
accurate and true in all respects and do not fail to include any information
which is necessary to not make such attachments and the information contained
therein misleading.

 

11. Capitalized Terms: All capitalized terms used herein and not otherwise
defined shall have the meanings assigned to them in the Agreement, Guaranty and
Principal Agreements between Bank of America and Seller and between Bank of
America and Guarantor.

Exh. E-2

 

 

Officer Certificate for: Five Oaks Investment Corp. as of:

Financial Ratios: The following financial ratios are accurate and true and are
calculated in accordance with the Agreement and Principal Agreements between
Bank of America and Seller and Bank of America and Guarantor as of the date
hereof:

 

Covenant Calculations     As of: [DATE] Minimum Tangible Net Worth   % Required
Capital Total Equity     [INPUT] Less: Receivables Due from Officers, Employees,
and Shareholders     [INPUT] Less: Other Intangibles not acceptable under GAAP  
  [INPUT] Less: Loans Held for Investment     [INPUT] Less: Real Estate Owned  
  [INPUT]     Plus: Cumulative Equity Proceeds   50% [INPUT] Covenant TNW (a)  
  0 Liquidity   %   Unrestricted and unencumbered cash and Cash Equivalents    
[INPUT] Balance in the Over/Under Account exclusive of funds held due to a
Margin Deficit or Margin Call     [INPUT] Actual Liquidity (b)     0 Total
Assets     [INPUT]     Plus: Gross Assets related to Linked Transactions    
[INPUT] Less: Linked Transactions, Net     [INPUT] Total Marginable Assets (c)  
  0 Minimum Liquidity: 1% of (g) + 2% of (h) + 2% (i) + 2% (j)     0 Agency (g)
    [INPUT] Non-Agency (h)     [INPUT] Multi-Family (i)     [INPUT] Mortgage
Loans Held for Sale (j)     [INPUT] Leverage       Total Liabilities on Balance
Sheet     [INPUT]     Plus Gross Liabilities related to Linked Transactions    
[INPUT]     Plus Aggregate amount owned by borrower under any credit arrangement
    [INPUT]     Plus Any "off balance sheet" credit arrangements not included
under GAAP     [INPUT]     Less non-recourse debt     [INPUT] Adjusted Total
Liabilities (d)     - Covenant TNW (e)     - Leverage Ratio (d/f)     0.0x      
  Covenant Compliance     As of: [DATE] Minimum Ratio of Total Equity to
Required Capital       Minimum Tangible Net Worth:
The sum of (i) $150,000,000 plus (ii) 50% of Cumulative Equity Proceeds.
Cumulative Equity Proceeds:  As of any date of determination, the aggregate
amount of all cash received on or prior to such date of determination by
Guarantor and its Subsidiaries in respect of any issuance of Equity effected
after Effective Date net of expenses incurred by Guarantor and its Subsidiaries
in connection therewith.
Tangible Net Worth:  As of any date of determination, (i) the Net Worth of
Guarantor and its consolidated Subsidiaries, on a combined basis, determined in
accordance with GAAP, minus (ii) all intangibles determined in accordance with
GAAP (including, without limitation, goodwill, capitalized financing costs and
capitalized administration costs but excluding originated and purchased mortgage
servicing rights) and any and all advances to, investments in and receivables
held from Affiliates, and minus (iii) loans held for investment and real estate
owned net of acceptable financing (financing must be deemed acceptable by Buyer
in its sole discretion). $0     Minimum $150,000,000     In Compliance? N
Liquidity       Minimum Liquidity: Not less than an amount equal to the sum of
(i) 1% of Total Marginable Assets which consist of mortgage-backed securities
issued or fully guaranteed or insured by the United States Government or any
Agency and (ii) 2% of all other Total Marginable Assets.
Liquidity: As of any date of determination, the sum of (a) Guarantor’s
unrestricted and unencumbered cash and Cash Equivalents and (b) the balance in
the Over/Under Account exclusive of funds held due to a Margin Deficit or Margin
Call.  By way of example but not limitation, cash in escrow and/or impound
accounts shall not be included in this calculation.
Total Marginable Assets: As of any date of determination, in accordance with
GAAP, the sum of all assets of Guarantor subject to “margin”, including but not
limited to (i) mortgage loans held for sale, (ii) derivative assets less
derivative liabilities (solely to the extent the difference is greater than or
equal to zero); (iii) available for sale securities (solely to the extent
pledged), (iv) the gross amount pledged associated with Linked Transactions and
(v) loans held for investment, real estate owned property, mortgage servicing
rights and servicing advances; in the case of clauses (i)-(v), as detailed in
Guarantor’s monthly financial statements. 0     Minimum 0     In Compliance? N
Leverage         Guarantor’s ratio of Total Adjusted Liabilities to Tangible Net
Worth has not exceeded 8:1
Total Adjusted Liabilities:  As of any date of determination, the sum of (i) the
total liabilities of Guarantor on any given date of determination, to be
determined in accordance with GAAP consistent with those applied in the
preparation of Guarantor’s financial statements, plus (ii) to the extent not
already included under GAAP, the total aggregate outstanding amount owed by
Guarantor under any purchase, repurchase, refinance or other similar credit
arrangements, plus (iii) to the extent not already included under GAAP, any “off
balance sheet” purchase, repurchase, refinance or other similar credit
arrangements, plus (iv) the gross amount of repurchase financing related to
Linked Transactions, minus (v) non-recourse debt, minus (vi) any liabilities
related to any consolidation on Guarantor’s balance sheet. 0.0x     Maximum 8.0x
    In Compliance? Y Profitability       Guarantor shall report positive
Comprehensive Income Attributable to Common Stockholders on a quarterly basis,
as determined in accordance with GAAP

 

[Input Y or N]

Compliance with other agreements       Is the Company in compliance with the
terms of all other agreements pertaining to borrowed funds? [Input Y or N]
Permitted Distributions         Did the Company make distributions during the
reporting period? [INPUT Y or N] Was the Company permitted to make
distributions, i.e. No Default or Potential Event of Default? [INPUT Y or N]    
In Compliance? Y

 

Exh. E-3

 

 

Officer Certificate for: Five Oaks Investment Corp. as of:          
Repurchases/Indemnifications   UPB Year to Date: Billable / Actual or
Estimated Losses Open repurchase requests   [INPUT] [INPUT] [INPUT] Open
repurchases being contested   [INPUT] [INPUT] [INPUT] Repurchases settled YTD in
2014   [INPUT] [INPUT] [INPUT]           Repurchase Settlement Method YTD Total
# of
Loans Indemnifications
($) Cash ($) Payment Installment
Plan ($) All Investors [INPUT] [INPUT] [INPUT] [INPUT]           Description of
applicable     To the extent applicable, please provide the values for the
following (if not provided explicitly in the Balance Sheet):   Asset or
Liability Value Balance Sheet line item where data is
recorded   Escrow Assets         Escrow Liabilities         Loans Held For
Investment (LHFI)         Real Estate Owned (REO)         Loan Loss Reserves    
    UPB of Loans Held for Sale                   Hedging / Derivative Assets and
Liabilities       Fair value portion of Loans Held For Sale [INPUT] Fair value
of interest rate lock commitments (IRLC's) - Asset / (Liability) [INPUT]
    Notional Balance of IRLC's [INPUT] Fair value of pipeline hedging
instruments - Asset / (Liability) [INPUT]     Notional balance of hedging
instruments [INPUT] Accounting methodology for MSR (Fair Value or LOCOM) [INPUT]
If applicable - Fair value adjustment of MSR Asset - Gain / (Loss) [INPUT] If
applicable - Fair value adjustment of MSR hedging instrument - Gain / (Loss)
[INPUT]           Servicing Portfolio as of period ending date: (as applicable)
Servicing portfolio UPB [INPUT] Servicing sold (UPB of bulk sale) [INPUT]
  Value of servicing sold [INPUT]   Cash proceeds of servicing sold [INPUT]
Servicing acquired (UPB of bulk purchase) [INPUT]   Value of servicing purchased
[INPUT] Sub-servicer (If Applicable) [INPUT] Third party conducting valuation
[INPUT] Most recent valuation date [INPUT] MSR valuation (at midpoint, if
applicable) [INPUT]                

Exh. E-4

 

 

Officer Certificate for: Five Oaks Investment Corp. as of: To the extent that
the necessary data is provided in a different format that contains the same
information - the below summary information may be omitted.  Please insert /
"drop" MTD and YTD origination data on "Origination" tab, or in a separate file.
Originations Month to Date: Year to Date:   $ # units $ # units Conv Conf [INPUT
[INPUT UNITS] [INPUT [INPUT UNITS] Govt. [INPUT [INPUT UNITS] [INPUT [INPUT
UNITS] Jumbo [INPUT [INPUT UNITS] [INPUT [INPUT UNITS] Other [INPUT [INPUT
UNITS] [INPUT [INPUT UNITS] % Retail ($) [INPUT %]   [INPUT %]   % TPO ($)
[INPUT %]   [INPUT %]   % Correspondent ($) [INPUT %]   [INPUT %]   % Refi ($)
[INPUT %]   [INPUT %]   Loans Banked within the Period [INPUT [INPUT UNITS]
[INPUT [INPUT UNITS] Loans Brokered within the Period ($) [INPUT [INPUT UNITS]
[INPUT [INPUT UNITS] Total Banked and Brokered - - - -           Warehouse
Facilities as of period ending date:       Lender Name   Line Amount Amount
Outstanding Line Maturity [INPUT]   [INPUT] [INPUT] [INPUT] [INPUT]   [INPUT]
[INPUT] [INPUT] [INPUT]   [INPUT] [INPUT] [INPUT] [INPUT]   [INPUT] [INPUT]
[INPUT] [INPUT]   [INPUT] [INPUT] [INPUT]           Total   0 0            
Other Indebtedness:   Total Facility
Size Outstanding
Indebtedness Expiration Date 1) [LENDER NAME]   [INPUT] [INPUT] [INPUT] 2)
[LENDER NAME]   [INPUT] [INPUT] [INPUT] Total   [INPUT] [INPUT]  

 

Description of Other Indebtedness (Type of facility, security/collateral, etc.):

 

 

     

 

IN WITNESS WHEREOF, the undersigned has here unto signed his/her name on
_____________, 201__.

 

Five Oaks Acquisition Corp

Five Oaks Investment Corp

 

By:________________________________

 

Name:

 

 

Exh. E-5

 

 

EXHIBIT F

 

ASSIGNMENT OF CLOSING PROTECTION LETTER

 

Five Oaks Acquisition Corp. (“Assignor”) declares that for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, it
does hereby convey, transfer, assign, deliver and give to Assignee, and hereby
expressly subrogates Bank of America, N.A. (“Assignee”) unto, all of Assignor’s
claims, demands, rights and causes of action, past, present or future, that
Assignor has for loss or damage covered by the closing protection letter issued
by (Title Company) attached hereto (“Closing Protection Letter”). Such rights
being assigned by Assignor hereunder include, without limitation, the right to
demand, sue, collect, receive, protect, preserve and enforce performance under
the Closing Protection Letter. Assignee shall succeed to all rights of recovery
of Assignor under the Closing Protection Letter and Assignor shall execute such
instruments and documents necessary and proper to further secure such rights to
Assignee and shall not act in any manner hereafter to prejudice or impair the
rights of Assignee. Assignor hereby grants Assignee an irrevocable mandate and
power of attorney coupled with an interest with full power of substitution to
transact this act of assignment and subrogation.

 

IN WITNESS WHEREOF, the Assignor has caused this assignment to be duly executed
as of [DATE].

 

FIVE OAKS ACQUISITION CORP.

 

By:       Name:        Title:  

 

Exh. F-1

 

 

EXHIBIT G

 

ASSIGNMENT OF FIDELITY BOND AND ERRORS AND OMISSION POLICY

 

Five Oaks Acquisition Corp. (“Assignor”) declares that for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, it
does hereby convey, transfer, assign, deliver and give to Assignee, and hereby
expressly subrogates Bank of America, N.A. (“Assignee”) unto, all of Assignor’s
claims, demands, rights and causes of action, past, present or future, that
Assignor has for loss or damage covered by Assignor’s fidelity bond and errors
and omission policy (collectively, the “Policy”). Such rights being assigned by
Assignor hereunder include, without limitation, the right to demand, sue,
collect, receive, protect, preserve and enforce performance under the Policy.
Assignee shall succeed to all rights of recovery of Assignor under the Policy
and Assignor shall execute such instruments and documents necessary and proper
to further secure such rights to Assignee and shall not act in any manner
hereafter to prejudice or impair the rights of Assignee. Assignor hereby grants
Assignee an irrevocable mandate and power of attorney coupled with an interest
with full power of substitution to transact this act of assignment and
subrogation.

 

IN WITNESS WHEREOF, the Assignor has caused this assignment to be duly executed
as of [DATE].

 

FIVE OAKS ACQUISITION CORP.

 

By:       Name:        Title:  

 

Exh. G-1

 

 

EXHIBIT H

 

FORM OF POWER OF ATTORNEY

 

KNOW ALL MEN BY THESE PRESENTS:

 

WHEREAS, Bank of America, N.A. (“Buyer”) and Five Oaks Acquisition Corp.
(“Seller”) have entered into the Master Repurchase Agreement, dated as of
December 30, 2014 (the “Agreement”), pursuant to which Buyer has agreed to
purchase from Seller certain mortgage loans from time to time, subject to the
terms and conditions set forth therein;

 

WHEREAS, Seller has agreed to give to Buyer a power of attorney on the terms and
conditions contained herein in order for Buyer to take any action that Buyer may
deem necessary or advisable to accomplish the purposes of the Agreement;

 

NOW, THEREFORE, Seller hereby irrevocably constitutes and appoints Buyer its
true and lawful Attorney-in-Fact, with full power and authority hereby conferred
in its name, place and stead and for its use and benefit, to do and perform the
following in connection with assets purchased by Buyer from Seller under the
Agreement (the “Purchased Assets”) or as otherwise provided below:

 

(1)to receive, endorse and collect all checks made payable to the order of
Seller representing any payment on account of the Purchased Assets;

 

(2)to assign or endorse any mortgage, deed of trust, promissory note or other
instrument relating to the Purchased Assets;

 

(3)to correct any assignment, mortgage, deed of trust or promissory note or
other instrument relating to the Purchased Assets, including, without
limitation, unendorsing and re- endorsing a promissory note to another investor;

 

(4)to complete and execute lost note affidavits or other lost document
affidavits relating to the Purchased Assets;

 

(5)to issue title requests and instructions relating to the Purchased Assets;

 

(6)to give notice to any individual or entity of its interest in the Purchased
Assets under the Agreement; and

 

(7)upon termination of Seller as Servicer by Buyer as permitted under the
Agreement, to service and administer the Purchased Assets, including, without
limitation, the receipt and collection of all sums payable in respect of the
Purchased Assets.

 

Seller hereby ratifies and confirms all that said Attorney-in-Fact shall
lawfully do or cause to be done by authority hereof.

 

Third parties without actual notice may rely upon the power granted under this
Power of Attorney upon the exercise of such power by the Attorney-in-Fact.

 

Exh. H-1

 

 

FIVE OAKS ACQUISITION CORP.

 

By:  

Name:

Title:

 

WITNESS my hand this ____ day of _____________, 20___.

 

STATE OF       County of  

 

This instrument was acknowledged, subscribed and sworn to before me this _____
day of _________, by ______________________________________.

 

      Notary Public

 

My Commission Expires:________________

 

  Notary Seal:

 

Exh. H-2

 

 

EXHIBIT I

 

ACKNOWLEDGEMENT OF PASSWORD CONFIDENTIALITY AGREEMENT

 

Five Oaks Acquisition Corp. (“Seller”) has entered into a Master Repurchase
Agreement with Bank of America, N.A. (“Buyer”). In connection therewith, Seller
is being provided access to the website at
www.bankofamerica.com/warehouselending (the “Website”). As consideration for
being provided access to and use of the Website, Seller agrees that:

 

1.Seller may only access the Website by using a user name and password issued by
Buyer.

 

2.Buyer reserves the right to revoke or deactivate any user name and/or password
at any time.

 

3.Seller shall designate in writing an authorized representative (the
“Authorized Representative”) to communicate with Buyer regarding the authorized
users of the Website. The Authorized Representative shall be responsible for
notifying Buyer of any changes, additions or deletions to the authorized users.
Under no circumstances may user names and passwords be transferred between
authorized users. Seller shall be solely responsible for all actions of its
Authorized Representative and shall immediately notify Buyer of any change in
its Authorized Representative. Buyer shall be entitled to rely on the authority
and directions of the Authorized Representative without further inquiry.
Authorized Representative shall communicate with Buyer in writing or via
telephone by dialing (800) 669-2955.

 

4.Seller shall be solely responsible for safeguarding access to user names and
passwords and for implementing controls to prevent unauthorized usage of the
Website.

 

5.Seller is responsible for all requests, approvals and other transactions on
the Website accessed through user names and/or passwords issued to Seller.

 

6.Buyer shall be entitled to rely on all requests, approvals and other
communications made on the Website through a user name and/or password issued to
Seller until such time as:

 

(a)Seller provides Buyer with written instructions to the contrary; and

 

(b)Buyer has sufficient time to notify the appropriate employees and modify its
computerized systems to deactivate the affected user name and/or password.

 

7.Any dispute regarding the use of user names and/or passwords shall be resolved
in accordance with the terms and conditions of the Agreement.

 

By signing below you acknowledge your agreement to the terms and conditions set
forth herein. Facsimile signatures shall be deemed valid and binding to the same
extent as the original.

 

SELLER AUTHORIZATIONS:

 

Any of the persons whose signatures and titles appear below, or attached hereto,
are authorized, acting singly, to act for the Seller under this Agreement as an
Authorized Representative.

 

By:     By:     By:                   Name:      Name:      Name:               
    Title:     Title:     Title:  

 

Exh. I-1

 

 

FIVE OAKS ACQUISITION CORP.

 

Print Name:      Number Assigned:   

 

Signature:     Date:  

 

Exh. I-2

 

  

EXHIBIT J

 

WIRING INSTRUCTIONS

 

Seller’s Wire Instructions:

 

Bank of America

ABA:  026009593

A/C:   237025398780

FBO:  Five Oaks Acquisition Corp.

 

Buyer’s Wire Instructions:

 

Bank:  Bank of America, N.A.
ABA No.:  026009593
Account No.: 1233460784
Reference:  Five Oaks Acquisition Corp.

 

These wiring instructions may not be changed except by an authorized
representative of Buyer or Seller, as applicable. Buyer shall be entitled to
rely on these wiring instructions without further inquiry or verification.

 

Exh. J-1

 

 

EXHIBIT K

 

FORM OF SERVICER NOTICE AND ACKNOWLEDGEMENT

 

[Date]

 

[_______________], as Servicer
[ADDRESS]
Attention: __________________

 

Re:Master Repurchase Agreement, dated as of December 30, 2014 (the “Repurchase
Agreement”), by and between Five Oaks Acquisition Corp. (the “Seller”) and Bank
of America, N.A. (the “Buyer”).

 

Ladies and Gentlemen:

 

[_______________________] (“Servicer”) is servicing certain mortgage loans for
Seller pursuant to that certain [Servicing Agreement] [Servicing Agreement and
AAR for retained loans], dated as of [DATE] (the “Servicing Agreement”) between
Servicer and Seller. Pursuant to the Repurchase Agreement between Buyer and
Seller, Servicer is hereby notified that Seller may from time to time sell to
Buyer certain mortgage loans which are currently being serviced by Servicer
pursuant to the terms of the Servicing Agreement.

 

Section 1. Direction Notice. (a) Upon receipt of notice from Buyer (a “Direction
Notice”) in which Buyer shall identify the mortgage loans which are sold to
Buyer under the Repurchase Agreement (the “Mortgage Loans”), Servicer shall
segregate all amounts collected on account of such Mortgage Loans, hold them in
trust for the sole and exclusive benefit of Buyer, and remit such collections in
accordance with Buyer’s written instructions. Further, Servicer shall follow the
instructions of Buyer with respect to the Mortgage Loans, and shall deliver to
Buyer any information with respect to the Mortgage Loans as reasonably requested
by Buyer.

 

(b) Notwithstanding any contrary information which may be delivered to the
Servicer by Seller, Servicer may conclusively rely on any information delivered
by Buyer, and Seller shall indemnify and hold the Servicer harmless for any and
all claims asserted against it for any actions taken in good faith by the
Servicer in connection with the delivery of such information.

 

Section 2. No Modification of the Servicing Agreement. Without the prior written
consent of Buyer exercised in Buyer’s sole discretion, Servicer shall not agree
to (a) any material modification, amendment or waiver of the Servicing
Agreement; (b) any termination of the Servicing Agreement or (c) the assignment,
transfer, or material delegation of any of its rights or obligations under the
Servicing Agreement.

 

Section 3. Right of Termination. Buyer shall have the right to terminate the
Servicer’s rights and obligations to service the Mortgage Loans under the
Servicing Agreement in accordance with the terms thereof. Any fees due to the
Servicer (a) in connection with any termination shall be paid by Seller and (b)
incurred following receipt of a Direction Notice shall be paid by Buyer to the
extent that such fees relate to the Mortgage Loans that are subject to the
Servicing Agreement. Seller and the Servicer shall cooperate in transferring the
servicing with respect to such Mortgage Loans to a successor servicer appointed
by Buyer in its sole discretion.

 

Exh. K-1

 

 

Section 4. Notices. All notices, demands, consents, requests and other
communications required or permitted to be given or made hereunder in writing
shall be mailed (first class, return receipt requested and postage prepaid) or
delivered in person or by overnight delivery service or by facsimile, addressed
to the respective parties hereto at their respective addresses set forth below
or, as to any such party, at such other address as may be designated by it in a
notice to the other:

 

Any notices to Buyer should be delivered to the following addresses:

 

Bank of America, N.A.

One Bryant Park – 11th floor

Mail Code: NY1-100-11-01

New York, New York 10036

Attention: Eileen Albus, Director – Mortgage Finance

Telephone: (646) 855-0946

Facsimile: (646) 855-5050

Email: Eileen.Albus@baml.com

 

and

 

Bank of America, N.A.

4500 Park Granada

Mail Code: CA7-910-02-38

Calabasas, California 91302

Attention: Adam Gadsby, Managing Director

Telephone: (818) 225-6541

Facsimile: (213) 457-8707

Email: Adam.Gadsby@baml.com

 

Any notices to Servicer should be delivered to the following addresses:

 

[                       ]

 

Any notices to Seller should be delivered to the following addresses:

 

Five Oaks Acquisition Corp.

c/o Oak Circle Capital Partners LLC

540 Madison Avenue, 19th Floor

New York, New York 10022

Telephone: (212) 257-5072

Facsimile: (212) 257-5099

Email: LoanOPS@oakcirclecapital.com

 

Section 5. Counterparts. This agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all such
counterparts shall together constitute one and the same instrument.

 

Section 6. Entire Agreement; Severability. This agreement shall supersede any
existing agreements between the parties containing general terms and conditions
for the servicing of the Mortgage Loans. Each provision and agreement herein
shall be treated as separate and independent from any other provision or
agreement herein and shall be enforceable notwithstanding the unenforceability
of any such other provision or agreement.

 

Section 7. Governing Law; Jurisdiction; Waiver of Jury Trial. (a) This agreement
and the rights and obligations of the parties hereunder shall be construed in
accordance with and governed by the laws of the State of New York, without
regard to principles of conflicts of laws (other than Section 5-1401 of the New
York General Obligations Law).

 

Exh. K-2

 

 

(b) All legal actions between or among the parties regarding this agreement,
including, without limitation, legal actions to enforce this agreement or
because of a dispute, breach or default of this agreement, shall be brought in
the federal or state courts located in New York County, New York, which courts
shall have sole and exclusive in personam, subject matter and other jurisdiction
in connection with such legal actions. The parties hereto irrevocably consent
and agree that venue in such courts shall be convenient and appropriate for all
purposes 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. The parties hereto further irrevocably
consent and agree 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
in Section 4, and 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.

 

(c) The parties hereto hereby irrevocably waive, 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 or the transactions contemplated
hereby or thereby.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

Exh. K-3

 

 

 

IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by
their respective officers thereunto duly authorized as of the day and year first
above written.

 

  BANK OF AMERICA, N.A., as Buyer         By:       Name:     Title:        
FIVE OAKS ACQUISITION CORP., as Seller         By:       Name:     Title:      
  [                         ], as Servicer         By:       Name:     Title:

 

Exh. K-4

 

 

EXHIBIT L

 

REPRESENTATIONS AND WARRANTIES

 

Representations and Warranties Concerning Purchased Assets. Seller represents
and warrants to and covenants with Buyer that the following are true and correct
with respect to each Purchased Asset as of the related Purchase Date through and
until the date on which such Purchased Asset is repurchased by Seller:

 

(a)Eligible Asset. The Mortgage Loan is an Eligible Mortgage Loan. The Mortgage
Loan is a legal, valid and binding obligation of the Mortgagor thereunder,
enforceable in accordance with its terms and subject to no offset, defense or
counterclaim, obligating Mortgagor to make the payments specified therein.

 

(b)Purchase Commitment; Trade Assignment. Unless otherwise stated in the
Transactions Terms Letter, the Asset is covered by a Purchase Commitment that
(i) permits assignment thereof to Buyer, (ii) does not exceed the availability
under such Purchase Commitment (taking into consideration mortgage loans or
securities, as applicable, which have been purchased by the respective Approved
Investor under the Purchase Commitment), (iii) conforms to the requirements and
the specifications set forth in such Purchase Commitment and the related
regulations, rules, requirements and/or handbooks of the applicable Approved
Investor, and (iv) is eligible for sale to and insurance or guaranty by,
respectively, the applicable Approved Investor and any applicable insurer. Each
such Purchase Commitment is enforceable, in full force and effect, and if such
Asset is a Pooled Mortgage Loan, such Purchase Commitment is validly and
effectively assigned to Buyer pursuant to a Trade Assignment. Each such Trade
Assignment is enforceable and in full force and effect, and was delivered by
Seller to Buyer in accordance with the requirements set forth in Section 7.2(b).
Each Purchase Commitment and Trade Assignment is a legal, valid and binding
obligation of Seller enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).

 

(c)Asset Data Record. The information contained in the Asset Data Record is
true, correct and complete.

 

(d)Origination and Servicing. The Mortgage Loan was originated by or in
conjunction with a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act, a
savings and loan association, a savings bank, a commercial bank, credit union,
insurance company or similar banking institution which is supervised and
examined by a federal or state authority. The Mortgage Loan has been originated
and serviced in compliance with Accepted Servicing Practices, applicable
Approved Investor and Insurer requirements and all applicable federal, state and
local statutes, regulations and rules, including, without limitation, the
Federal Truth-in-Lending Act of 1968, as amended, and Regulation Z thereunder,
the Federal Fair Credit Reporting Act, the Federal Equal Credit Opportunity Act,
the Federal Real Estate Settlement Procedures Act of 1974, as amended, and
Regulation X thereunder, and all applicable usury, licensing, real property,
consumer protection and other laws.

 

(e)Compliance with Applicable Laws. Any and all requirements of any federal,
state or local law including, without limitation, usury, truth-in-lending, real
estate settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws applicable to the Asset have been complied with,
the consummation of the transactions contemplated hereby will not involve the
violation of any such laws or regulations, and Seller shall maintain or shall
cause its agent to maintain in its possession, available for the inspection of
Buyer, and shall deliver to Buyer, upon demand, evidence of compliance with all
such requirements.

 

Exh. L-1

 

 

(f)Validity of Mortgage Documents. The Mortgage Loan is evidenced by instruments
acceptable to FHA, VA, Fannie Mae, Freddie Mac or the Approved Investor, as
applicable, given the type of Mortgage Loan. The Mortgage Loan Documents, Other
Mortgage Loan Documents and any other agreement executed and delivered by a
Mortgagor or guarantor, if applicable, in connection with a Mortgage Loan, and
all signatures thereon, are genuine, and each such document is the legal, valid
and binding obligation of the maker thereof enforceable in accordance with its
terms, except as may be limited by bankruptcy or other laws affecting the
enforcement of creditor’s rights generally, and there are no rights of
rescission, set-offs, counterclaims or other defenses with respect thereto. All
parties to the Mortgage Loan Documents, Other Mortgage Loan Documents and any
other agreement executed and delivered by a Mortgagor or guarantor, if
applicable, had legal capacity to enter into the Mortgage Loan and to execute
and deliver any such instrument or agreement and such instrument or agreement
has been duly and properly executed by such related parties. Seller has reviewed
all of the documents constituting the Mortgage Loan File and has made such
inquiries as it deems necessary to make and confirm the accuracy of the
representations set forth herein. To the best of Seller’s knowledge, except as
disclosed to Buyer in writing, all tax identifications and property descriptions
are legally sufficient; and tax segregation, where required, has been completed.

 

(g)No Outstanding Charges. All taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable.
Neither Seller nor any originator from which Seller acquired the Mortgage Loan
has advanced funds, or induced, solicited or knowingly received any advance of
funds by a party other than the Mortgagor, directly or indirectly, for the
payment of any amount required under the Mortgage Loan, except for interest
accruing from the date of the Mortgage Note or date of disbursement of the
proceeds of the Mortgage Loan, whichever is earlier, to the day which precedes
by one month the due date of the first installment of principal and interest
thereunder.

 

(h)Private Mortgage Insurance. Each Agency Eligible Mortgage Loan and
Conventional Conforming Mortgage Loan is insured by a policy of private mortgage
insurance in the amount required by Fannie Mae or Freddie Mac, as applicable,
and by an Insurer and all provisions of such private mortgage insurance policy
have been and are being complied with, such policy is in full force and effect
and all premiums due thereunder have been paid. There are no defenses,
counterclaims or rights of setoff affecting the Agency Eligible Mortgage Loan
and Conventional Conforming Mortgage Loan or affecting the validity or
enforceability of any private mortgage insurance applicable to such Mortgage
Loan.

 

(i)Original Terms Unmodified. The terms of the Mortgage Note and Mortgage (and
the Proprietary Lease, the Assignment of Proprietary Lease and Stock Power with
respect to each Cooperative Mortgage Loan) have not been impaired, waived,
altered or modified in any respect from the date of origination, except by a
written instrument which has been recorded, if necessary to protect the
interests of Buyer, and which has been delivered to Custodian; provided, that
none of the payment terms, interest rate, maturity date or other material terms
have been impaired, waived, altered or modified in any respect. The substance of
any such waiver, alteration or modification has been approved by the title
insurer, to the extent required. No Mortgagor in respect of the Mortgage Loan
has been released, in whole or in part, except in connection with an assumption
agreement approved by the title insurer, to the extent required by such policy,
and which assumption agreement is part of the Mortgage Loan File delivered to
Custodian.

 

Exh. L-2

 

 

(j)No Defenses. The Mortgage Loan (and the Assignment of Proprietary Lease to
each Cooperative Mortgage Loan) is not subject to any right of rescission,
set-off, counterclaim or defense, including, without limitation, the defense of
usury, nor will the operation of any of the terms of the Mortgage Note or the
Mortgage, or the exercise of any right thereunder, render either the Mortgage
Note or the Mortgage unenforceable, in whole or in part and no such right of
rescission, set-off, counterclaim or defense has been asserted with respect
thereto, and no Mortgagor in respect of the Mortgage Loan was a debtor in any
state or federal bankruptcy or insolvency proceeding at the time the Mortgage
Loan was originated. Seller has no knowledge nor has it received any notice that
any Mortgagor in respect of the Mortgage Loan is a debtor in any state or
federal bankruptcy or insolvency proceeding.

 

(k)No Satisfaction of Mortgage. The Mortgage has not been satisfied, canceled,
subordinated or rescinded, in whole or in part, and the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or in part, nor has
any instrument been executed that would affect any such release, cancellation,
subordination or rescission. Seller has not waived the performance by the
Mortgagor of any action, if the Mortgagor’s failure to perform such action would
cause the Mortgage Loan to be in default, nor has Seller waived any default
resulting from any action or inaction by the Mortgagor; and with respect to each
Cooperative Mortgage Loan, there is no default in complying with the terms of
the Mortgage Note, the Assignment of Proprietary Lease and the Proprietary Lease
and all maintenance charges and assessments (including assessments payable in
the future installments, which previously became due and owing) have been paid,
and Seller has the right under the terms of the Mortgage Note, Assignment of
Proprietary Lease and Recognition Agreement to pay any maintenance charges or
assessments owed by the Mortgagor.

 

(l)No Defaults. There is no default, breach, violation or event of acceleration
existing under the Mortgage or the related Mortgage Note, and no event has
occurred that, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or event of
acceleration, and neither Seller nor its predecessors have waived any default,
breach, violation or event of acceleration.

 

(m)No Waiver. The terms of the Mortgage Loan have not been waived, impaired,
changed or modified, except to the extent such amendment or modification has
been disclosed to Buyer in writing and does not affect the salability of the
Mortgage Loan pursuant to the applicable Purchase Commitment; provided, that
none of the payment terms, interest rate, maturity date or other material terms
have been impaired, waived, altered or modified in any respect.

 

(n)Customary Provisions. The Mortgage Note has a stated maturity. The Mortgage
contains customary and enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for the realization against the
Mortgaged Property of the benefits of the security provided thereby. There is no
homestead or other exemption or other right available to the Mortgagor or any
other person, or restriction on Seller or any other person, including without
limitation, any federal, state or local, law, ordinance, decree, regulation,
guidance, attorney general action, or other pronouncement, whether temporary or
permanent in nature, that would interfere with, restrict or delay, either (y)
the ability of Seller, Buyer or any servicer, subservicer or any successor
servicer or successor subservicer to sell the related Mortgaged Property at a
trustee's sale or otherwise, or (z) the ability of Seller, Buyer or any servicer
or any successor servicer to foreclose on the related Mortgage. The Mortgage
Note and Mortgage are on forms acceptable to Freddie Mac or Fannie Mae.

 

Exh. L-3

 

 

(o)Location and Type of Mortgaged Property. The Mortgaged Property consists of a
single parcel of real property with a detached single family residence erected
thereon, or a two- to four-family dwelling, or such other dwelling(s) conforming
with the applicable Fannie Mae and Freddie Mac requirements regarding such
dwellings or conforming to Seller’s acquisition guidelines acceptable to Buyer
in its sole discretion; provided that no residence or dwelling is a condominium
unit (unless the related Mortgage Loan was originated in compliance with (x)
with respect to Agency Eligible Mortgage Loans, the Agency Guides and (y) with
respect to Jumbo Mortgage Loans, the underwriting or acquisition guidelines, as
applicable), a mobile home or a manufactured home. No Mortgage Loan is secured
by a multi-family, mixed-use or commercial property, nor is any portion of the
Mortgaged Property used for commercial purposes.

 

(p)Location of Improvements; No Encroachments. All improvements which were
considered in determining the appraised value of the Mortgaged Property lie
wholly within the boundaries and building restriction lines of the Mortgaged
Property, and no improvements on adjoining properties encroach upon the
Mortgaged Property. No improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning and building law, ordinance or
regulation.

 

(q)Occupancy of the Mortgaged Property. As of the Purchase Date the Mortgaged
Property is lawfully occupied under applicable law. All inspections, licenses
and certificates required to be made or issued with respect to all occupied
portions of the Mortgaged Property and, with respect to the use and occupancy of
the same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities. Seller has not received notification from any Governmental
Authority that the Mortgaged Property is in material non-compliance with such
laws or regulations, is being used, operated or occupied unlawfully or has
failed to have or obtain such inspection, licenses or certificates, as the case
may be. Seller has not received notice of any violation or failure to conform
with any such law, ordinance, regulation, standard, license or certificate.

 

(r)Lien Position. The Mortgage Loan is secured by a valid first priority lien on
the Mortgaged Property, including all buildings on the Mortgage Property, under
the laws of the state where the related mortgaged property in located. The lien
of the Mortgage is subject only to:

 

(i)          [reserved];

 

(ii)         the lien of current real property taxes and assessments not yet due
and payable;

 

(iii)        covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording acceptable to
prudent mortgage lending institutions generally and specifically referred to in
Buyer’s title insurance policy delivered to the originator of the Mortgage Loan
and (a) referred to or otherwise considered in the appraisal made for the
originator of the Mortgage Loan or (b) which do not adversely affect the
appraised value of the Mortgaged Property set forth in such appraisal; and

 

(iv)        other matters to which like properties are commonly subject which do
not materially interfere with the benefits of the security intended to be
provided by the Mortgage or the use, enjoyment, value or marketability of the
related Mortgaged Property.

 

Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting and enforceable first lien and first priority security interest on
the property described therein and Seller has full right to pledge and assign
the same to Buyer. The Mortgaged Property was not, as of the date of origination
of the Mortgage Loan, subject to a mortgage, deed of trust, deed to secure debt
or other security instrument creating a lien subordinate to the lien of the
Mortgage.

 

Exh. L-4

 

 

(s)No Future Advances. The full original principal amount of each Mortgage Loan,
net of any discounts, has been fully advanced or disbursed to the Mortgagor
named therein, unless otherwise expressly agreed by the parties in writing. All
costs, fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage were paid, and the Mortgagor is not entitled to any
refund of any amounts paid or due under the Mortgage Note or Mortgage. There is
no requirement for future advances and any and all requirements as to completion
of any on-site or off-site improvements and as to disbursements of any escrow
funds therefor have been satisfied.

 

(t)Ownership. Seller owns and has full right to sell the Asset to Buyer free and
clear of any encumbrance, equity, participation interest, lien, pledge, charge,
claim or security interest, and has full right and authority subject to no
interest or participation of, or agreement with, any other party, to sell each
Asset pursuant to this Agreement and following the sale of each Asset, Buyer
will own such Asset (and with respect to any Cooperative Mortgage Loan, the sole
owner of the related Assignment of Proprietary Lease) free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest except any such security interest created pursuant to the
terms of this Agreement.

 

(u)Doing Business. All parties which have had any interest in the Mortgage Loan,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) (i) in compliance with
any and all applicable licensing requirements of the laws of the state wherein
the Mortgaged Property is located, and (ii) either (A) organized under the laws
of such state, (B) qualified to do business in such state, (C) a federal savings
and loan association, a savings bank or a national bank having a principal
office in such state, or (D) not doing business in such state.

 

(v)Hazard Insurance. The Mortgage Loan is covered by a policy of hazard
insurance and insurance against other insurable risks and hazards as are
customary in the area where the Mortgaged Property is located as required by the
applicable Approved Investor and in accordance with (x) with respect to Agency
Eligible Mortgage Loans, the Agency Guides and (y) with respect to Jumbo
Mortgage Loans, the underwriting or acquisition guidelines, as applicable, in an
amount not less than the greatest of (i) 100% of the replacement cost of all
improvements to the Mortgaged Property, (ii) the outstanding principal balance
of the Mortgage Loan, and (iii) the amount necessary to avoid the operation of
any co-insurance provisions with respect to the Mortgaged Property or such
maximum lesser amount as permitted by the applicable Approved Investor and
applicable law, all in a form usual and customary in the industry and that is in
full force and effect, and all amounts required to have been paid under any such
policy have been paid. If any portion of the Mortgaged Property is in an area
identified by any federal Governmental Authority as having special flood
hazards, and flood insurance is available, a flood insurance policy meeting the
current guidelines of the Federal Emergency Management Agency is in effect with
a generally acceptable insurance carrier, in an amount representing coverage not
less than the least of (1) the outstanding principal balance of the Mortgage
Loan (2) the full insurable value of the Mortgaged Property, and (3) the maximum
amount of insurance available under the National Flood Insurance Act of 1968, as
amended by the Flood Disaster Protection Act of 1974. All such insurance
policies (collectively, the “hazard insurance policy”) contain a standard
mortgagee clause naming Seller, its successors and assigns (including, without
limitation, subsequent owners of the Mortgage Loan), as mortgagee, and may not
be reduced, terminated or canceled without 30 days’ prior written notice to the
mortgagee. No such notice has been received by Seller. All premiums on such
insurance policy have been paid. The related Mortgage obligates the Mortgagor to
maintain all such insurance and, at such Mortgagor’s failure to do so,
authorizes the mortgagee to maintain such insurance at the Mortgagor’s cost and
expense and to seek reimbursement therefor from such Mortgagor. Where required
by state law or regulation, the Mortgagor has been given an opportunity to
choose the carrier of the required hazard insurance, provided the policy is not
a “master” or “blanket” hazard insurance policy covering a condominium, or any
hazard insurance policy covering the common facilities of a planned unit
development. The hazard insurance policy is the valid and binding obligation of
the insurer and is in full force and effect. Seller has not engaged in, and has
no knowledge of the Mortgagor’s having engaged in, any act or omission which
would impair the coverage of any such policy, the benefits of the endorsement
provided for herein, or the validity and binding effect of either including,
without limitation, no unlawful fee, commission, kickback or other unlawful
compensation or value of any kind has been or will be received, retained or
realized by any attorney, firm or other Person, and no such unlawful items have
been received, retained or realized by Seller.

 

Exh. L-5

 

 

(w)Title Insurance. A valid and enforceable title insurance policy has been
issued or a commitment to issue such title insurance policy has been obtained
for the Mortgage Loan in an amount not less than the original principal amount
of such Mortgage Loan, which title insurance policy insures that the Mortgage
relating thereto is a valid first lien or second lien, as applicable, on the
property therein described and that the mortgaged property is free and clear of
all encumbrances and liens having priority over the first lien of the Mortgage
and otherwise in compliance with the requirements of the applicable Approved
Investor. The title insurance company that issued the applicable Closing
Protection Letter has also issued or has committed to issue the title insurance
policy. Seller, its successors and assigns, are the sole insureds of such title
insurance policy, and such title insurance policy is valid and remains in full
force and effect and will be in force and effect upon the consummation of the
transactions contemplated by this Agreement. No claims have been made under such
title insurance policy, and no prior holder, servicer or subservicer of the
related Mortgage, including Seller, has done, by act or omission, anything which
would impair the coverage of such title insurance policy, including without
limitation, no unlawful fee, commission, kickback or other unlawful compensation
or value of any kind has been or will be received, retained or realized by any
attorney, firm or other Person, and no such unlawful items have been received,
retained or realized by Seller.

 

(x)Assignment. The Assignment (i) has been duly authorized by all necessary
corporate action by Seller, duly executed and delivered by Seller and is the
legal, valid and binding obligation of Seller enforceable in accordance with its
terms, and (ii) complies with all applicable laws including all applicable
recording, filing and registration laws and regulations and is adequate and
legally sufficient for the purpose intended to be accomplished thereby,
including, without limitation, the assignment of all of the rights, powers and
benefits of Seller as mortgagee.

 

(y)No Fraud. No error, omission, misrepresentation, negligence, fraud or similar
occurrence has taken place with respect to the Mortgage Loan on the part of any
Person, including, without limitation, the Mortgagor, any appraiser, any builder
or developer or any other party involved in the origination of the Mortgage Loan
or in the application of any insurance in relation to such Mortgage Loan.

 

(z)Compliance with Guidelines. The Mortgage Loan was originated in compliance
with and remains in compliance with Seller’s underwriting and/or acquisition
guidelines, as applicable. Each Agency Eligible Mortgage Loan was originated in
Strict Compliance with and remains in compliance with the applicable Agency
Guides.

 

Exh. L-6

 

 

(aa)Transfer of Mortgage Loans. Except with respect to Mortgage Loans intended
for purchase by Ginnie Mae and for Mortgage Loans registered with MERS, the
Assignment is in recordable form and is acceptable for recording under the laws
of the jurisdiction in which the Mortgaged Property is located.

 

(bb)Due-On-Sale. The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage Loan
in the event that the Mortgaged Property is sold or transferred without the
prior written consent of the mortgagee thereunder.

 

(cc)No Buydown Provisions; No Graduated Payments or Contingent Interests. Except
with respect to Agency Eligible Mortgage Loans, the Mortgage Loan does not
contain provisions pursuant to which monthly payments are paid or partially paid
with funds deposited in any separate account established by Seller, the
Mortgagor, or anyone on behalf of the Mortgagor, nor does it contain any other
similar provisions which may constitute a “buydown” provision. The Mortgage Loan
is not a graduated payment mortgage loan and the Mortgage Loan does not have a
shared appreciation or other contingent interest feature.

 

(dd)Consolidation of Future Advances. Any future advances made to the Mortgagor
prior to the Purchase Date have been consolidated with the outstanding principal
amount secured by the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term. The lien
of the Mortgage securing the consolidated principal amount is expressly insured
as having first lien priority by a title insurance policy, an endorsement to the
policy insuring the mortgagee’s consolidated interest or by other title evidence
acceptable to Fannie Mae and Freddie Mac. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan.

 

(ee)No Condemnation Proceeding. There have not been any condemnation proceedings
with respect to the Mortgaged Property and Seller has no knowledge of any such
proceedings.

 

(ff)Servicemembers Civil Relief Act. The Mortgagor has not notified Seller, and
Seller has no knowledge, of any relief requested or allowed to the Mortgagor
under the Servicemembers Civil Relief Act of 2003.

 

(gg)Appraisal. A full appraisal of the related Mortgaged Property was conducted
and executed prior to the funding of the Mortgage Loan by a qualified appraiser,
duly appointed by Seller, who had no interest, direct or indirect in the
Mortgaged Property or in any loan made on the security thereof, and whose
compensation is not affected by the approval or disapproval of the Mortgage
Loan, and the appraisal and appraiser both satisfy the relevant Fannie Mae and
Freddie Mac guidelines, each as amended and as in effect on the date the
Mortgage Loan was originated.

 

(hh)Disclosure Materials. The Mortgagor has executed a statement to the effect
that the Mortgagor has received all disclosure materials required by applicable
law with respect to the making of adjustable rate mortgage loans, and Seller
maintains such statement in the Mortgage Loan File.

 

(ii)Construction or Rehabilitation of Mortgaged Property. No Mortgage Loan was
made in connection with the construction or rehabilitation of a Mortgaged
Property or facilitating the trade-in or exchange of a Mortgaged Property.

 

(jj)Capitalization of Interest. The Mortgage Note does not by its terms provide
for the capitalization or forbearance of interest.

 

(kk)No Equity Participation. No document relating to the Mortgage Loan provides
for any contingent or additional interest in the form of participation in the
cash flow of the Mortgaged Property or a sharing in the appreciation of the
value of the Mortgaged Property. The indebtedness evidenced by the Mortgage Note
is not convertible to an ownership interest in the Mortgaged Property or the
Mortgagor and Seller has not financed nor does it own directly or indirectly,
any equity of any form in the Mortgaged Property or the Mortgagor.

 

Exh. L-7

 

 

(ll)Proceeds of Mortgage Loan. The proceeds of the Mortgage Loan have not been
and shall not be used to satisfy, in whole or in part, any debt owed or owing by
the Mortgagor to Seller or any Affiliate or correspondent of Seller, except in
connection with a refinanced Mortgage Loan.

 

(mm)Mortgage Submitted for Recordation. The Mortgage either has been or will
promptly be submitted for recordation in the appropriate governmental recording
office of the jurisdiction where the Mortgaged Property is located.

 

(nn)Other Encumbrances. To the best of Seller’s knowledge, any property subject
to any security interest given in connection with such Mortgage Loan is not
subject to any other encumbrances other than a stated first mortgage, if
applicable, and encumbrances which may be allowed under (x) with respect to
Agency Eligible Mortgage Loans, the Agency Guides and (y) with respect to Jumbo
Mortgage Loans, the underwriting or acquisition guidelines, as applicable.

 

(oo)Located in U.S. No collateral (including, without limitation, the related
real property and the dwellings thereon and otherwise) relating to a Mortgage
Loan is located in any jurisdiction other than in one of the fifty (50) states
of the United States of America or the District of Columbia.

 

(pp)HOEPA. No Mortgage Loan is (a) subject to the provisions of 12 U.S.C.
Section 226.32 of Regulation Z implementing the Homeownership and Equity
Protection Act of 1994 as amended (“HOEPA”), (b) a “high cost” mortgage loan,
“covered” mortgage loan, “high risk home” mortgage loan, or “predatory” mortgage
loan or any other comparable term, no matter how defined under any federal,
state or local law, (c) subject to any comparable federal, state or local
statutes or regulations, or any other statute or regulation providing for
heightened regulatory scrutiny or assignee liability to holders of such mortgage
loans, or (d) a High Cost Loan or Covered Loan, as applicable (as such terms are
defined in the current Standard & Poor’s LEVELS® Glossary Revised, Appendix E).

 

(qq)No Predatory Lending. No predatory, abusive or deceptive lending practices,
including but not limited to, the extension of credit to a mortgagor without
regard for the mortgagor’s ability to repay the Mortgage Loan and the extension
of credit to a mortgagor which has no tangible net benefit to the mortgagor,
were employed in connection with the origination of the Mortgage Loan.

 

(rr)Negative Amortization. None of the Mortgage Notes relating to any of the
Mortgage Loans provides for negative amortization.

 

(ss)Mortgaged Property Undamaged. The Mortgaged Property is in good repair and
undamaged by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty so as to affect adversely the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which the premises
were intended and each Mortgaged Property is in good repair.

 

(tt)No Exception. No document deficiency exists with respect to the Mortgage
Loan which would materially adversely affect the Mortgage Loan or Buyer’s
ownership and/or security interest granted by Seller in the Mortgage Loan as
determined by Buyer in its sole discretion.

 

Exh. L-8

 

 

(uu)Acceptable Investment. No specific circumstances or conditions exist with
respect to the Mortgage, the Mortgaged Property, Mortgagor or Mortgagor’s credit
standing that should reasonably be expected to (i) cause private institutional
investors which invest in Mortgage Loans similar to the Mortgage Loan to regard
the Mortgage Loan as an unacceptable investment, (ii) cause the Mortgage Loan to
be more likely to become past due in comparison to similar Mortgage Loans, or
(iii) adversely affect the value or marketability of the Mortgage Loan in
comparison to similar Mortgage Loans.

 

(vv)MERS Mortgage Loans. With respect to each Mortgage Loan registered with
MERS, a mortgage identification number has been assigned by MERS and such
mortgage identification number is accurately provided on the Asset Data Record.
The related Assignment to MERS has been duly and properly recorded. With respect
to each Mortgage Loan registered with MERS, no Mortgagor has received any notice
of liens or legal actions with respect to such Mortgage Loan and no such notices
have been electronically posted by MERS.

 

(ww)Prepayment Fees. The Mortgage Loan does not contain a provision permitting
imposition of a premium upon a prepayment prior to maturity.

 

(xx)Points and Fees. All points and fees related to the Mortgage Loan were
disclosed in writing to the Mortgagor in accordance with applicable state and
federal law and regulation. The points and fees related to such Mortgage Loan
did not exceed 3% of the total loan amount (or such other applicable limits for
lower balance Mortgages) as specified under 12 CFR 1026.43(e)(3), and the points
and fees were calculated using the calculation required for qualified mortgages
under 12 CFR 1026.32(b) to determine compliance with applicable requirements.

 

(yy)Mandatory Arbitration. No Mortgage Loan that was originated on or after
October 31, 2004, is subject to mandatory arbitration except when the terms of
the arbitration also contain a waiver provision that provides that in the event
of a sale or transfer of the Mortgage Loan or interest in the Mortgage Loan to
Fannie Mae, the terms of the arbitration are null and void and cannot be
reinstated. Seller hereby covenants that Seller or subservicer of the Mortgage
Loan, as applicable, will notify the Mortgagor in writing within 60 days of the
sale or transfer of the Mortgage Loan to Fannie Mae that the terms of the
arbitration are null and void.

 

(zz)Mortgage Loan Products. No Mortgagor was encouraged or required to select a
Mortgage Loan product offered by the originator of the Mortgage Loan which is a
higher cost product designed for less creditworthy Mortgagors, unless at the
time of the origination of such Mortgage Loan, such Mortgagor did not qualify
taking into account credit history and debt to income ratios for a lower cost
credit product then offered by the originator of the Mortgage Loan or any
affiliate of the originator of such Mortgage Loan. If, at the time of Mortgage
Loan application, the Mortgagor may have qualified for a lower cost credit
product than offered by any mortgage lending affiliate of the originator of the
Mortgage Loan, such originator referred the Mortgagor’s application to such
affiliate for underwriting consideration.

 

(aaa)Environmental Matters. The Mortgaged Property is free from any and all
toxic or hazardous substances and there exists no violation of any local, state
or federal environmental law, rule or regulation. To the best of Seller’s
knowledge, no Mortgaged Property was, as of the related Purchase Date, located
within a one-mile radius of any site listed in the National Priorities List as
defined under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or on any similar state list of hazardous
waste sites which are known to contain any hazardous substance or hazardous
waste.

 

Exh. L-9

 

 

(bbb)Government Mortgage Loans. With respect to each Government Mortgage Loan,
(i) the FHA Mortgage Insurance Contract is in full force and effect, there
exists no impairment to full recovery, and HUD is not entitled to be indemnified
by the related mortgagee under FHA Mortgage Insurance and the VA Loan Guaranty
Agreement is in full force and effect to the maximum extent stated therein and
there exists no impairment to full recovery thereunder, (ii) all necessary steps
have been taken to keep such guaranty or insurance valid, binding and
enforceable and each of such is the binding, valid and enforceable obligation of
the FHA and the VA, respectively, to the full extent thereof, without surcharge,
set-off or defense, (iii) such Government Mortgage Loan is insured, or eligible
to be insured, pursuant to the National Housing Act or is guaranteed, or
eligible to be guaranteed, under the provisions of Chapter 37 of Title 38 of the
United States Code, as applicable, (iv) with respect to each FHA insurance
certificate or VA guaranty certificate, Seller has complied with applicable
provisions of the insurance for guaranty contract and federal statutes and
regulations, all premiums or other charges due in connection with such insurance
or guarantee have been paid, there has been no act or omission which would or
may invalidate any such insurance or guaranty, and the insurance or guaranty is,
or when issued, will be, in full force and effect with respect to such Loan, (v)
Seller has no knowledge of any defenses, counterclaims, or rights of setoff
affecting such Government Mortgage Loan or affecting the validity or
enforceability of any private mortgage insurance or FHA Mortgage Insurance or VA
loan guaranty with respect to such Government Mortgage Loan, and (vi) Seller has
no knowledge of any circumstance which would cause such Government Mortgage Loan
to be ineligible for FHA Mortgage Insurance or a VA loan guaranty, as
applicable, or cause the FHA or the VA, as applicable, to deny or reject the
related Mortgagor’s application for FHA Mortgage Insurance or a VA loan
guaranty, respectively. Each Government Mortgage Loan was originated in
accordance with the criteria of an Agency for purchase of such Government
Mortgage Loans.

 

(ccc)Pooled Mortgage Loans. Each Purchased Mortgage Loan that will be pooled to
support a Mortgage-Backed Security is being serviced by a subservicer having all
Approvals necessary to make such Purchased Mortgage Loan eligible to back the
related Mortgage-Backed Security.

 

(ddd)Mortgage-Backed Securities. Each Mortgage-Backed Security subject to a
Transaction (i) is backed by Agency Eligible Mortgage Loans that satisfy the
“Good Delivery Guidelines” promulgated by SIFMA, (iii) is subject to a valid and
binding Purchase Commitment that is enforceable in accordance with its terms,
(iv) with respect to which, the applicable Agency Documents list Buyer as sole
subscriber, (v) has been validly issued, and is fully paid and non assessable,
and has been issued in compliance with all applicable laws, including, without
limitation, the applicable Agency Guides, (vi) is in book-entry form and held
through the facilities of the applicable Depository, and (vii) is unencumbered
(other than liens created in favor of Buyer pursuant to this Agreement and liens
created by or through Buyer). There are (i) no outstanding rights, options,
warrants or agreements (other than as created by Buyer) for a purchase, sale or
issuance, in connection with any Mortgage-Backed Security, (ii) no agreements on
the part of the Seller to issue, sell or distribute the Mortgage-Backed
Securities, and (iii) no obligations on the part of the Seller (contingent or
otherwise) to purchase, redeem or otherwise acquire any securities or any
interest therein or to pay any dividend or make any distribution in respect of
the Mortgage-Backed Securities.

 

(eee)Qualified Mortgage.  Each Mortgage Loan satisfies the following criteria:

(i)Such Mortgage Loan is a Qualified Mortgage;

(ii)Such Mortgage Loan is accurately identified in writing to Buyer as either a
Safe Harbor Qualified Mortgage or a Rebuttable Presumption Qualified Mortgage;

(iii)Prior to the origination of such Mortgage Loan, the related originator made
a reasonable and good faith determination that the related Mortgagor would have
a reasonable ability to repay such Mortgage Loan according to its terms, in
accordance with, at a minimum, the eight underwriting factors set forth in 12
CFR 1026.43(c)(2); and

 

Exh. L-10

 

 

(iv)Such Mortgage Loan is supported by documentation that evidences compliance
with the Ability to Repay Rule and the QM Rule.

 

(fff)Ability to Repay Determination. There is no action, suit or proceeding
instituted by or against or threatened against Seller in any federal or state
court or before any commission or other regulatory body (federal, state or
local, foreign or domestic) that questions or challenges the compliance of any
Mortgage Loan (or the related underwriting) with, (x) the Ability to Repay Rule
or, (y) the QM Rule.

 

(ggg)Cooperative Mortgage Loan: Valid First Lien. With respect to each
Cooperative Mortgage Loan, the related Mortgage is a valid, enforceable and
subsisting first security interest on the related cooperative shares securing
the related cooperative note and lease, subject only to (a) liens of the
cooperative for unpaid assessments representing the Mortgagor’s pro rata share
of the cooperative’s payments for its blanket mortgage, current and future real
property taxes, insurance premiums, maintenance fees and other assessments to
which like collateral is commonly subject and (b) other matters to which like
collateral is commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the security interest. There
are no liens against or security interests in the cooperative shares relating to
each Cooperative Mortgage Loan (except for unpaid maintenance, assessments and
other amounts owed to the related cooperative which individually or in the
aggregate will not have a material adverse effect on such Cooperative Mortgage
Loan), which have priority equal to or over Seller’s security interest in such
Cooperative Shares.

 

(hhh)Cooperative Mortgage Loan: Compliance with Law. With respect to each
Cooperative Mortgage Loan, the related cooperative corporation that owns title
to the related cooperative apartment building is a “cooperative housing
corporation” within the meaning of Section 216 of the Code, and is in material
compliance with applicable federal, state and local laws which, if not complied
with, could have a material adverse effect on the Mortgaged Property.

 

(iii)Cooperative Mortgage Loan: No Pledge. With respect to each Cooperative
Mortgage Loan, there is no prohibition against pledging the shares of the
cooperative corporation or assigning the Proprietary Lease. With respect to each
Cooperative Mortgage Loan, (i) the term of the related Proprietary Lease is
longer than the term of the Cooperative Mortgage Loan, (ii) there is no
provision in any Proprietary Lease which requires the Mortgagor to offer for
sale the Cooperative Shares owned by such Mortgagor first to the Cooperative
Corporation, (iii) there is no prohibition in any Proprietary Lease against
pledging the Cooperative Shares or assigning the Proprietary Lease and (iv) the
Recognition Agreement is on a form of agreement published by Aztech Document
Systems, Inc. as of the date hereof or includes provisions which are no less
favorable to the lender than those contained in such agreement.

 

(jjj)Cooperative Mortgage Loan: Acceleration of Payment. With respect to each
Cooperative Mortgage Loan, each Assignment of Proprietary Lease contains
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization of the material benefits of the security
provided thereby. The Assignment of Proprietary Lease contains an enforceable
provision for the acceleration of the payment of the unpaid principal balance of
the Mortgage Note in the event the Cooperative Unit is transferred or sold
without the consent of the holder thereof.

 

Exh. L-11

 

 

Exhibit M

 

REQUIRED AGENCY DOCUMENTS

 

·For the purpose of Section 7.2(e): Form HUD 11705 (Schedule of Subscribers),
Fannie Mae Form 2014 (Delivery Schedule) or Freddie Mac Form 381 (Contract
Delivery Summary) and Freddie Mac Form 939 (Settlement and Information Multiple
Registration Form), as applicable, fully completed and designating Buyer as the
party authorized to receive the related Mortgage-Backed Securities, duly
executed by Seller; and Form HUD 11706 (Schedule of Pooled Mortgages) and the
reverse side of Form HUD 11706 (Initial Certification), Fannie Mae Form 2005
(Schedule of Mortgages with Magnetic Tape Format Instructions), or Freddie Mac
Form 11 (Mortgage Submission Schedule) and Freddie Mac Form 13SF (Mortgage
Submission Voucher) or Selling System computer tape, as applicable, that has
been delivered to the applicable Agency indicating the Custodian’s initial
certification of the Pooled Mortgage Loans

 

·For the purpose of Section 8.1(bb): Freddie Mac Form 987 (Wire Transfer
Authorization for a Cash Warehouse Delivery), Fannie Mae Form 1068 (Fixed-Rate,
Graduated-Payment, or Growing-Equity Mortgage Asset Schedule) or Fannie Mae Form
1069 (Adjustable-Rate Mortgage Asset Schedule), as applicable.

 

Exh. M-1

 

 

EXHIBIT N

FORM OF TRADE ASSIGNMENT

 

__________ (“Approved Investor”)
(Address)

Attention:
Fax No.:

 

Dear Sirs:

 

Attached hereto is a correct and complete copy of your confirmation of
commitment (the “Commitment”), trade-dated _________ __, ____, to purchase

 

[$______of __% ___ year,]

 

(Check Box)

 

 

(a) Ginnie Mae;         (b) Fannie Mae; or         (c) Freddie Mac

 

mortgage-backed pass-through securities (“Securities”) at a purchase price of
$___________ from _________ on [insert Settlement Date].

 

Our intention is to assign $_____ of this Commitment’s full amount, which
assignment shall be effective and shall be fully enforceable by the assignee on
the Settlement Date. This is to confirm that (i) the form of this assignment
conforms to the SIFMA guidelines, (ii) the Commitment is in full force and
effect, (iii) the Commitment has been assigned to Bank of America, N.A. (“BANA”)
as security for the obligations of Five Oaks Acquisition Corp., the “Seller”
under that certain Master Repurchase Agreement, dated as of December 30, 2014,
between Five Oaks Acquisition Corp. (“Seller”) and BANA, whose acceptance of
such assignment is indicated below, [and] (iv) upon delivery of this trade
assignment to you by BANA you will accept Seller’s direction set forth herein to
pay BANA for such Securities, [(v) you will accept delivery of such Securities
directly from BANA, (vi) BANA is obligated to make delivery of such Securities
to you in accordance with the attached Commitment and (vii) you have released
Seller from its obligation to deliver the Securities to you under the
Commitment.] Payment will be made “delivery versus payment (DVP)” to BANA in
immediately available funds.

 

Exh. N-1

 

 

If you have any questions, please call [SELLER CONTACT] at (___) ___-____
immediately or contact him by fax at (___) ___-____.

 

  Very truly yours,         FIVE OAKS ACQUISITION CORP.         By:     Name:  
Title:

 

Agreed to:

 

BANK OF AMERICA, N.A.

 

By:   Name:    Title:  

 

Notice of delivery and confirmation of receipt are the obligations of BANA.
Prompt notification of incorrect information or rejection of the trade
assignment should be made to [______].

 

Exh. N-2

 

 

EXHIBIT O

 

FORM OF REQUEST FOR TEMPORARY INCREASE

 

Bank of America, N.A.
One Bryant Park, 11th floor
New York, New York 10036
NY1-100-11-01
Attention:  Eileen Albus

 

Re:The Master Repurchase Agreement, dated as of December 30, 2014 (the
“Repurchase Agreement”), between Bank of America, N.A. (“Buyer”) and Five Oaks
Acquisition Corp. (“Seller”)

 

Ladies and Gentlemen:

 

In accordance with Section 2.10 of the Repurchase Agreement, Buyer hereby
consents to a Temporary Increase of the Aggregate Transaction Limit, the
Committed Amount or the Uncommitted as further set forth below:

 

Amount of Temporary Increase: $__________________.

 

Temporary Committed Amount: $__________________.

 

Temporary Uncommitted Amount : $__________________.

 

Effective date and time:  [dd/mm/yyyy at ___:___ _.m.]

 

Termination date and time:  [dd/mm/yyyy at ___:___ _.m.]

 

On and after the effective date and time indicated above and until the
termination date and time indicated above, the Aggregate Transaction Limit,
Committed Amount, and Uncommitted Amount shall equal the Temporary Aggregate
Transaction Limit, Temporary Committed Amount and Temporary Uncommitted Amount,
respectively, indicated above for all purposes of the Repurchase Agreement and
all calculations and provisions relating to the Aggregate Transaction Limit,
Committed Amount, and Uncommitted Amount shall refer to the Temporary Aggregate
Transaction Limit, Temporary Committed Amount and Temporary Uncommitted Amount,
respectively, including without limitation, Type Sublimits. Unless otherwise
terminated pursuant to the Repurchase Agreement, this Temporary Increase shall
terminate on the termination date and time indicated above. Upon the termination
of this Temporary Increase, Seller shall repurchase Purchased Assets such that
(i) the Aggregate Outstanding Purchase Price does not exceed the Aggregate
Transaction Limit and (ii) the applicable portion of the Aggregate Outstanding
Purchase Price does not exceed any Type Sublimit. Seller shall repurchase
Purchased Assets in order to reduce the Aggregate Outstanding Purchase Price to
the Aggregate Transaction Limit (as reduced by the termination of such Temporary
Increase) in accordance with Section 4.2(k) of the Repurchase Agreement.

 

All terms used herein and not otherwise defined herein shall have the respective
meanings ascribed to such terms in the Repurchase Agreement.

 

Exh. O-1

 

 

  FIVE OAKS ACQUISITION CORP., Seller         By:       Name:     Title:

 

Agreed and Consented by:

 

BANK OF AMERICA, N.A., Buyer

 

By:      Name:   Title:

 

Date: ________________

 

Exh. O-2

 

 

EXHIBIT P

 

RESERVED

 

Exh. P-1

 

 

EXHIBIT Q

 

RESERVED

 

Exh. Q-1

 

 

EXHIBIT R

 

AUTOFUND AUTHORIZATION REQUEST

 

I, the undersigned, as a duly authorized representative of Seller listed below,
hereby request that Bank of America, N.A. (“Buyer”) approve the automatic
funding of Transaction requests made by Seller under the Master Repurchase
Agreement (including any amendments thereto, collectively, the “Agreement”) by
and between Buyer and Seller. I understand that if this request is approved by
Buyer, such automatic funding requests shall be subject to the following terms
and conditions:

 

1. Buyer reserves the right to determine the terms and conditions on which it
will approve automatic funding of Transactions for Seller and further reserves
the right to change such terms and conditions at any time for any reason,
including, revoking its approval of automatic funding of Transactions for
Seller, upon notice to Seller.

 

2. Buyer shall be entitled to conclusively rely on and assume that any
information provided by Seller to Buyer in connection with any Transaction
request, whether such information is provided electronically or verbally, is
true and correct in all respects. While Buyer reserves the right to verify any
such information at any time and for any reason, Buyer shall have no obligation
to do so and Seller shall be solely liable and responsible for any errors in
such information and shall indemnify and hold harmless Buyer for any such errors
in accordance with the terms and conditions of the Agreement. The following data
fields (if checked) are subject to reconfirmation and authorization through
warehouselending.com and may not be eligible for automatic funding if Buyer
changes or modifies the data from the values originally submitted in the Asset
Data Record by Seller.

 

Wire Auto Funding Criteria

üABA Num

üAcc Num

 

Optional: (select fields, which if changed by Buyer will result in Sellers
re-verification, ineligible for Auto Funding).

 

¨OPB or UPB

¨Requested Wire Amount

¨Requested Purchase Date

¨Closing Agent Name

¨Closing Agent Branch

¨Further Credit Acc Num

¨Further Credit Bank Name

 

Seller:       Authorized Representative:     Print name     Signed:       Date:
 

 

Exh. R-1

 

 

SCHEDULE 1

 

Filing Jurisdictions and Offices

 

Delaware

 

Sch. 1-1

 

 

SCHEDULE 2

 

States and Jurisdictions

 

All States except for Mississippi.

 

Sch. 2-1

 

 

SCHEDULE 3

 

List of Seller’s Existing Debt

 

As of December 29, 2014

 

1.Master Repurchase Agreement, dated February 25, 2014, among Credit Suisse
First Boston Mortgage Capital LLC, as buyer, Five Oaks Acquisition Corp., as
seller, and Five Oaks Investment Corp., as guarantor, with a maximum amount of
$125 million.

 

2.Loan and Security Agreement, dated July 18, 2014, between Bank of America,
N.A., as lender, and Five Oaks Acquisition Corp., as borrower, with a maximum
amount of $100,000,000.

 

3.Master Repurchase Agreement, dated July 29, 2014, among Barclays Bank PLC, as
purchaser and agent, Five Oaks Acquisition Corp., as seller, and Five Oaks
Investment Corp., as guarantor, with a maximum amount of $100,000,000.

 

Sch. 3-1