Exhibit 10.1

 

AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

 

 

CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC, as buyer,

 

 

PENNYMAC CORP., PENNYMAC HOLDINGS, LLC and PENNYMAC OPERATING PARTNERSHIP, L.P.,
each a seller,

 

 

PMC REO FINANCING TRUST, as an asset subsidiary, and

 

 

PENNYMAC MORTGAGE INVESTMENT TRUST and PENNYMAC OPERATING PARTNERSHIP, L.P.,
each a guarantor

 

 

 

 

 

 

Dated March 31, 2016

 

 

 

   

 

TABLE OF CONTENTS

 

Page

 

 

1. Applicability 1 2. Definitions 2 3. Program; Initiation of Transactions 32 4.
Repurchase 35 5. Price Differential 37 6. Margin Maintenance 38 7. Income
Payments 39 8. Security Interest 40 9. Payment and Transfer 46 10. Conditions
Precedent 46 11. Program; Costs 52 12. Servicing; Property Management 54 13.
Representations and Warranties 56 14. Covenants 64 15. Events of Default 78 16.
Remedies Upon Default 82 17. Reports 86 18. Repurchase Transactions 91 19.
Single Agreement 91 20. Notices and Other Communications 91 21. Entire
Agreement; Severability 93 22. Non assignability 93 23. Set-off 94

 

 

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24. Binding Effect; Governing Law; Jurisdiction 94 25. No Waivers, Etc. 95 26.
Intent 95 27. Disclosure Relating to Certain Federal Protections 96 28. Power of
Attorney 97 29. Buyer May Act Through Affiliates and REO Subsidiary May Act
Through Seller 97 30. Indemnification; Obligations 97 31. Counterparts 98 32.
Confidentiality 99 33. Recording of Communications 100 34. Agency and Allocation
Agreement. 100 35. Condition Subsequent 100 36. Periodic Due Diligence Review
100 37. Authorizations 101 38. Acknowledgement of Anti-Predatory Lending
Policies 101 39. Documents Mutually Drafted 102 40. General Interpretive
Principles 102 41. Joint and/or Several Liability of Sellers 102 42. Amendment
and Restatement 103 43. Reaffirmation of Guaranty 103

 

 

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SCHEDULES

 

Schedule 1 - Representations and Warranties

 

Part I: with Respect to New Origination Mortgage Loans

 

Part II: with Respect to Underlying Repurchase Transactions

 

Part III: with Respect to Seasoned Mortgage Loans

 

Part IV: with Respect to REO Property

 

Part V: with Respect to REO Subsidiary Interests

 

Part VI: with Respect to Rental Property

 

Schedule 2 – Authorized Representatives

 

EXHIBITS

 

Exhibit A – Form of Tenant Instruction Notice

 

Exhibit B – Form of Property Manager Report

 

Exhibit C – Form of Property Management Agreement Side Letter

 

Exhibit D – Form of Power of Attorney

 

Exhibit E-1 – Form of Servicer Power of Attorney

 

Exhibit E-2 – Form of REO Subsidiary Power of Attorney

 

Exhibit F – Reserved.

 

Exhibit G – Seller Parties’ and Guarantors’ Tax Identification Numbers

 

Exhibit H – Existing Indebtedness

 

Exhibit I – Escrow Instruction Letter

 

Exhibit J – Form of Servicer Notice and Pledge

 

Exhibit K – Loan Activity Report

 

Exhibit L – Form of Trade Assignment

 

Exhibit M – State Specific Foreclosure Aging Timeline

 

Exhibit N – State Specific REO Disposition Timeline

 

Exhibit O – State Specific REO Recording Timeline

 

 

 

 - iii - 

 

This is an AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT, dated as of March
31, 2016, by and among CREDIT SUISSE FIRST BOSTON MORTGAGE CAPITAL LLC (the
“Buyer”), PENNYMAC HOLDINGS, LLC (“PennyMac Holdings” and a “Seller”), PENNYMAC
CORP. (“PMC” and a “Seller”), PENNYMAC OPERATING PARTNERSHIP, L.P., in its
capacity as a seller (“POP” and a “Seller”, together with PennyMac Holdings and
PMC, the “Sellers”), PMC REO FINANCING TRUST (the “REO Subsidiary”) and PENNYMAC
MORTGAGE INVESTMENT TRUST (“PMIT”) and PENNYMAC OPERATING PARTNERSHIP, L.P., in
their capacity as guarantors (each, a “Guarantor” and collectively, the
“Guarantors”).

 

The Buyer, the Guarantors and PennyMac Holdings, as seller, previously entered
into a Master Repurchase Agreement, dated as of March 29, 2012 (as amended,
supplemented and otherwise modified from time to time, the “Existing Internal
Rewarehouse Master Repurchase Agreement”).

 

The Buyer, the Guarantors and PMC, as seller, previously entered into an Amended
and Restated Master Repurchase Agreement, dated as of June 1, 2013 (as amended,
supplemented and otherwise modified from time to time, the “Existing Regular Way
Master Repurchase Agreement”).

 

The Buyer, PMIT, as guarantor, PMC, as seller, and PennyMac Holdings, as seller,
previously entered into an Amended and Restated Master Repurchase Agreement,
dated as of August 25, 2011 (as amended, supplemented and otherwise modified
from time to time, the “Existing NPL Master Repurchase Agreement” and, together
with the Existing Internal Rewarehouse Master Repurchase Agreement and the
Existing Regular Way Master Repurchase Agreement, the “Existing Master
Repurchase Agreements”).

 

The parties hereto have requested that the Existing Master Repurchase Agreements
be consolidated, amended and restated, in their entirety, on the terms and
subject to the conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual agreements contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

 

1. Applicability

 

On a Purchase Date, the Buyer purchased the Subsidiary Certificates (as defined
herein) from the Sellers in connection with the Transaction on such date, with a
simultaneous agreement by Buyer to transfer to Sellers each Subsidiary
Certificate at a date certain, against the transfer of funds by Sellers, in an
amount equal to the Repurchase Price for such Subsidiary Certificate. From time
to time the parties hereto may enter into Transactions in which the applicable
Seller agrees to initiate the transfer of Mortgage Loans or Contributed Assets,
as applicable (as hereinafter defined) on a servicing released basis against the
transfer of funds by Buyer in an amount equal to the Purchase Price for the
related Purchased Mortgage Loans or the Purchase Price Increase on account of
the applicable Subsidiary Certificate as the result of the increase in value
with respect to the Contributed Asset transferred to the Asset Subsidiary, with
a simultaneous agreement by Buyer to sell the Purchased Mortgage Loans back to
the Seller for the applicable Repurchase Price or permit the release of
Contributed Assets with respect thereto from the Asset Subsidiary, to or for the
benefit of the applicable Seller upon payment by such Seller of a portion of the
Repurchase Price for the Subsidiary Certificate representing the Repurchase
Price in respect of such Contributed Asset, in all cases subject to the terms of
this Agreement. Each such transaction involving any acquisition or transfer of
Subsidiary Interests, Mortgage Loans and/or Contributed Assets shall be referred
to herein as a “Transaction” and, unless otherwise agreed in writing, shall be
governed by this Agreement, including any supplemental terms or conditions
contained in any annexes identified herein, as applicable hereunder. This
Agreement is a commitment by Buyer to engage in the Transactions (and requests
for Purchase Price Increases, from time to time) as set forth herein up to the
applicable Maximum Committed Purchase Price; provided, that Buyer shall have no
commitment to enter into any Transaction or agree to any Purchase Price Increase
requested that would result in the aggregate Purchase Price of then-outstanding
Transactions to exceed the applicable Maximum Committed Purchase Price, and in
no event shall the aggregate Purchase Price of outstanding Transactions exceed
the Maximum Purchase Price at any time.

 

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Pursuant to the Underlying Master Repurchase Agreement (as defined herein), POP
has acquired and will own 100% of the Capital Stock in the REO Subsidiary.

 

On or prior to the Effective Date, PMC and POP each pledged their rights to the
REO Subsidiary Interests to Buyer.

 

2. Definitions

 

Whenever used in this Agreement, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:

 

“1934 Act” means the Securities Exchange Act of 1934, as amended from time to
time.

 

“Acceptable State” means any state acceptable pursuant to the Underwriting
Guidelines.

 

“Acceptable Underlying Repurchase Transaction” means an Underlying Repurchase
Transaction with an Underlying Repurchase Counterparty in which all right, title
and interest in each underlying Mortgage Loan or REO Subsidiary Interest sold to
a Seller pursuant to such Underlying Repurchase Transaction is documented by
Underlying Repurchase Documents that contain the following characteristics:

 

i. The Underlying Repurchase Agreement contains broad repledge, assignment and
rehypothecation provisions in favor of each Seller permitting such Seller to
sell, transfer and assign to Buyer hereunder, without restriction or rights to
consent by the Underlying Repurchase Counterparty or any other Person, all of
such Seller’s right, title and interest in Mortgage Loans or REO Subsidiary
Interests purchased by such Seller pursuant to such Underlying Repurchase
Agreement;

 

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ii. The Underlying Repurchase Agreement contains a back-up grant of security
interest in each related Mortgage Loan or REO Subsidiary Interest to each
Seller, similar in form and substance to the security interest granted to Buyer
in Section 8 hereof, and the Underlying Repurchase Agreement or an ancillary
document thereto provides for a provision or instruction that, (i) unless such
Mortgage Loan is a Wet-Ink Mortgage Loan, the Asset File in respect of such
Mortgage Loan be delivered by the Underlying Repurchase Counterparty directly to
Buyer or Buyer’s designee and (ii) if such Mortgage Loan is a Wet-Ink Mortgage
Loan, the Settlement Agent has been instructed to hold the Asset File for the
benefit of Buyer or Buyer’s designee and has agreed to deliver the related Asset
File directly to Buyer or Buyer’s designee;

 

iii. The Underlying Repurchase Agreement contains a broad grant of a power of
attorney to each Seller and each Seller’s attorneys-in-fact, including Buyer;

 

iv. The Underlying Repurchase Agreement grants to each Seller and Buyer the
right to immediately terminate the Underlying Repurchase Counterparty’s right or
any third party servicer’s right to service or manage, as applicable, Mortgage
Loans and Contributed Assets;

 

v. The Underlying Repurchase Agreement requires that each Servicer or Property
Manager, as applicable, has adequate financial standing, servicing facilities,
procedures and experienced personnel necessary for the sound servicing or
managing, as applicable, of mortgage loans and real property of the same types
as may from time to time constitute Mortgage Loans and Contributed Assets and in
accordance with Accepted Servicing Practices or Accepted Property Management
Practices, as applicable;

 

vi. The Underlying Electronic Tracking Agreement or other Underlying Repurchase
Documents provides that the Underlying Repurchase Counterparty (i) gives Buyer
the authority to change fields in the MERS System as appropriate, including,
without limitation, changing the “interim funder” field to insert parties with
which a Seller enters into financing arrangements including repurchase
agreements with respect to such Mortgage Loans and (ii) authorizes a Seller to
enter into an electronic tracking agreement with MERS and third party lender in
connection with MERS taking instructions from an interim funder under certain
circumstances;

 

vii. Unless expressly agreed to in writing by Buyer, during the duration of the
related Transaction, no third-party custodian shall hold any Asset Documents
pursuant to an agreement to which Underlying Repurchase Counterparty is a party,
or beneficiary;

 

viii. The Underlying Repurchase Documents have not been assigned by any Seller
and no Seller has granted a security interest in, the Underlying Repurchase
Documents to any third party;

 

 

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ix. A financing statement on Form UCC-1 has been filed in the applicable filing
office naming the Underlying Repurchase Counterparty as debtor and each Seller
as secured party with a collateral description reasonably acceptable to Buyer,
which shall be similar in form and substance to the Repurchased Assets in which
a security interest is granted pursuant to Section 8 hereof; and

 

x. All of the representations and warranties set forth on Schedule 1, Part II
are true and correct in all material respects.

 

Buyer acknowledges that the transactions contemplated by the Underlying
Repurchase Agreement qualify as Acceptable Underlying Repurchase Transactions,
provided that any amendment to such Underlying Repurchase Agreement shall not be
deemed to qualify as an Acceptable Underlying Repurchase Transaction unless
consented to in writing by Buyer.

 

“Accepted Property Management Practices” means, with respect to any Rental
Property, those property management, rental or sales practices of prudent
institutions that (i) manage single family and 2-4 family residential homes for
rent and sale of the same type as such Rental Property in the jurisdiction where
the related Rental Property is located, (ii) employ procedures intended to
produce the highest net present value on the Rental Properties for the REO
Subsidiary and Buyer, and (iii) exercise the same care that it customarily
employs and exercises in managing similar properties for its own account giving
due consideration to clauses (i) and (ii) of this definition and Requirements of
Law.

 

“Accepted Servicing Practices” means, with respect to any Purchased Mortgage
Loan or REO Property, those mortgage servicing practices or property management
practices, as applicable, of prudent mortgage lending institutions which service
mortgage loans and manage real estate properties, as applicable, of the same
type as such Purchased Mortgage Loan or REO Property, as applicable, in the
jurisdiction where the related Mortgaged Property or REO Property is located.

 

“Accrual Period” means with respect to any Payment Date, the period from and
including the last Payment Date to but excluding the next Payment Date. Buyer
shall provide notice to Sellers of interest accrued during the applicable
Accrual Period one Business Day prior to the applicable Payment Date.

 

“Acquisition Guidelines” means the standards, procedures and guidelines of
Sellers for acquiring Mortgage Loans and Contributed Assets, as applicable, in
general conformance with such Seller’s due diligence protocols for the purchase
of Mortgage Loans or Contributed Assets, as applicable, as previously provided
to Buyer.

 

“Act of Insolvency” means, with respect to any Person or its Affiliates, (a) the
filing of a petition, commencing, or authorizing the commencement of any case or
proceeding, or the voluntary joining of any case or proceeding under any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law
relating to the protection of creditors, or suffering any such petition or
proceeding to be commenced by another which is consented to, not timely
contested or results in entry of an order for relief; (b) the seeking of the
appointment of a receiver, trustee, custodian or similar official for such party
or an Affiliate or any substantial part of the property of either; (c) the
appointment of a receiver, conservator, or manager for such party or an
Affiliate by any governmental agency or authority having the jurisdiction to do
so; (d) the making or offering by such party or an Affiliate of a composition
with its creditors or a general assignment for the benefit of creditors; (e) the
admission by such party or an Affiliate of such party of its inability to pay
its debts or discharge its obligations as they become due or mature; or (f) that
any governmental authority or agency or any person, agency or entity acting or
purporting to act under governmental authority shall have taken any action to
condemn, seize or appropriate, or to assume custody or control of, all or any
substantial part of the property of such party or of any of its Affiliates, or
shall have taken any action to displace the management of such party or of any
of its Affiliates or to curtail its authority in the conduct of the business of
such party or of any of its Affiliates.

 

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“Adjusted Tangible Net Worth” has the meaning set forth in the Pricing Side
Letter.

 

“Affiliate” means, with respect to any Person, any “affiliate” of such Person,
as such term is defined in the Bankruptcy Code; provided, however, that any
entity that is otherwise not directly or indirectly owned or controlled by any
Seller or any Guarantor shall not be deemed an “Affiliate” for the purposes of
this definition. For the avoidance of doubt, the term “Affiliate” as used herein
shall include only PennyMac Mortgage Investment Trust and its Subsidiaries.

 

“Aged Loan” means a Mortgage Loan (other than a Non-Agency QM Mortgage Loan, New
Origination Performing Mortgage Loan, a Seasoned Mortgage Loan and a Pooled
Mortgage Loan) which has been subject to one or more Transactions hereunder for
a period of greater than 60 days but not greater than 90 days.

 

“Aged New Origination Performing Loan” means a New Origination Performing
Mortgage Loan which has been subject to one or more Transactions hereunder for a
period of greater than 90 days but not greater than 180 days.

 

“Agency” means Freddie Mac, Fannie Mae or GNMA, as applicable.

 

“Agency Approvals” has the meaning set forth in Section 14.w hereof.

 

“Agency Mortgage Loan” means a Conforming Mortgage Loan, a FHA Loan (including a
FHA 203(k) Loan), a Streamlined Mortgage Loan, a USDA Loan and a VA Loan.

 

“Agency Security” means a mortgage-backed security issued by an Agency.

 

“Aging Limit” has the meaning set forth in the Pricing Side Letter.

 

“Agreement” means this Amended and Restated Master Repurchase Agreement, as it
may be amended, supplemented or otherwise modified from time to time.

 

“Allocated Repurchase Price” means the price at which Purchased Mortgage Loans
or Contributed Assets supporting a portion of the Purchase Price or a Purchase
Price Increase are to be released from the REO Subsidiary or from the Buyer, as
applicable, upon the Optional Partial Prepayment Date, which price will be equal
to the sum of (a) such portion of the Purchase Price or the Purchase Price
Increase, as applicable, and (b) accrued unpaid Price Differential related to
such Purchased Mortgage Loan or Contributed Asset, as applicable, as of the date
of such determination.

 

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“ALTA” means the American Land Title Association.

 

“Ancillary Income” means all income derived from the Purchased Mortgage Loans
are to be repurchased or Contributed Assets (other than payments or other
collections in respect of principal, interest and escrow payments attributable
to the Purchased Mortgage Loans or Contributed Assets), as applicable,
attributable to such Purchased Mortgage Loan or Contributed Asset, including,
but not limited to, late charges, all interest received on funds deposited in
the Collection Account or REO Subsidiary Account, as applicable, reconveyance
fees, subordination fees, speedpay fees, mortgage pay on the web fees, automatic
clearing house fees, demand statement fees, modification fees, if any, fees
received with respect to checks on bank drafts returned by the related bank for
insufficient funds, assumption fees and other similar types of fees arising from
or in connection with any Purchased Mortgage Loan or Contributed Asset to the
extent not otherwise payable to the Mortgagor or other Person under applicable
law or pursuant to the terms of the related Mortgage Note or Lease Agreement.

 

“Appraised Value” means the value set forth in an appraisal made in connection
with the origination of the related Mortgage Loan as the value of the Mortgaged
Property.

 

“Asset Documents” means the documents in the related Asset File to be delivered
to the Custodian.

 

“Asset File” means, with respect to each Purchased Mortgage Loan or Contributed
Asset, the documents and instruments relating to such Purchased Mortgage Loan or
Contributed Asset, as applicable, and set forth in an exhibit to the Custodial
Agreement, which, with respect to any Rental Property, shall include the related
SFR Property Documents.

 

“Asset Schedule” means, with respect to any Transaction as of any date, an Asset
Schedule in the form prescribed by the Custodial Agreement.

 

“Asset Value” has the meaning assigned to such term in the Pricing Side Letter.

 

“Assignment of Mortgage” means an assignment of the Mortgage, notice of transfer
or equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
transfer of the Mortgage.

 

“Assignment of Proprietary Lease” means the specific agreement creating a first
lien on and pledge of the Co-op Shares and the appurtenant Proprietary Lease
securing a Co-op Loan.

 

“Attorney Bailee Letter” means a bailee letter substantially in the form
prescribed by the Custodial Agreement or otherwise approved in writing by Buyer.

 

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“Bailee Letter” has the meaning assigned to such term in the Custodial
Agreement.

 

“Bank” means City National Bank and any successor or assign.

 

“Bankruptcy Code” means the United States Bankruptcy Code of 1978, as amended
from time to time.

 

“Base Rate” has the meaning assigned to such term in the Pricing Side Letter.

 

“BPO” means an opinion of the fair market value of a Mortgaged Property, Rental
Property or other REO Property given by a licensed real estate agent or broker
in conformity with customary and usual business practices, which includes
comparable sales and comparable listings and complies with the criteria set
forth in FIRREA for an “appraisal” or an “evaluation” as applicable; provided,
that no BPO shall be valid if it is dated earlier than (x) with respect to
Mortgaged Property and Contributed Assets, one hundred and eighty (180) days
prior to the date of determination, and (y) with respect to Rental Property,
three hundred and sixty (360) days prior to the date of determination.

 

“Business Day” means any day other than (A) a Saturday or Sunday and (B) a
public or bank holiday in New York City.

 

“Buyer” means Credit Suisse First Boston Mortgage Capital LLC, and any successor
or assign hereunder.

 

“Capital Lease Obligations” means, for any Person, all obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.

 

“Capital Stock” means, as to any Person, any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent equity ownership interests in a Person which
is not a corporation, including, without limitation, any and all member or other
equivalent interests in any limited liability company, limited partnership,
trust, and any and all warrants or options to purchase any of the foregoing, in
each case, designated as “securities” (as defined in Section 8-102 of the
Uniform Commercial Code) in such Person, including, without limitation, all
rights to participate in the operation or management of such Person and all
rights to such Person’s properties, assets, interests and distributions under
the related organizational documents in respect of such Person. “Capital Stock”
also includes (i) all accounts receivable arising out of the related
organizational documents of such Person; (ii) all general intangibles arising
out of the related organizational documents of such Person; and (iii) to the
extent not otherwise included, all proceeds of any and all of the foregoing
(including within proceeds, whether or not otherwise included therein, any and
all contractual rights under any revenue sharing or similar agreement to receive
all or any portion of the revenues or profits of such Person).

 

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“Cash Equivalents” means (a) securities with maturities of 90 days or less from
the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of 90 days or less from the date of
acquisition and overnight bank deposits of Buyer or of any commercial bank
having capital and surplus in excess of $500,000,000, (c) repurchase obligations
of Buyer or 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 90 days after the day of acquisition,
(e) securities with maturities of 90 days or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the securities of which
state, commonwealth, territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at least “A” by S&P or “A” by
Moody’s, (f) securities with maturities of 90 days or less from the date of
acquisition backed by standby letters of credit issued by Buyer or 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.

 

“Category” means the category or type of Purchased Mortgage Loan or Contributed
Asset as delineated in the definitions of Aging Limit, Asset Value, Pricing Rate
and Purchase Price Percentage.

 

“Change in Control” means:

 

(a) any transaction or event as a result of which PennyMac Operating
Partnership, L.P. ceases to own, beneficially or of record, 100% of the Capital
Stock of PMC or PennyMac Holdings;

 

(b) any transaction or event as a result of which PennyMac Mortgage Investment
Trust ceases to own, beneficially or of record, 100% of the Capital Stock of
PennyMac Operating Partnership, L.P.;

 

(c) any transaction or event as a result of which PennyMac Operating
Partnership, L.P. ceases to own, beneficially or of record, 100% of the Capital
Stock of each Underlying Repurchase Counterparty;

 

(d) any transaction (other than those contemplated under this Agreement) or
event as a result of which PMC ceases to own, beneficially or of record, 100% of
the Capital Stock of the REO Subsidiary;

 

(e) the acquisition by any Person or group (within the meaning of the Securities
Exchange Act of 1934, as amended, and the rules of the Securities and Exchange
Commission thereunder), directly or indirectly, beneficially or of record, of
ownership or control of in excess of 50% of the voting common stock of PennyMac
Mortgage Investment Trust on a fully diluted basis at any time;

 

 - 8 - 

 

 

(f) the sale, transfer, or other disposition of all or substantially all of
Underlying Repurchase Counterparty’s, any Seller Party’s or any Guarantor’s
assets (excluding any such action taken in connection with any securitization
transaction); or

 

(g) the consummation of a merger or consolidation of Underlying Repurchase
Counterparty, Seller Parties or Guarantors with or into another entity or any
other corporate reorganization, if more than 50% of the combined voting power of
the continuing or surviving entity’s stock outstanding immediately after such
merger, consolidation or such other reorganization is owned by Persons who were
not stockholders of Underlying Repurchase Counterparty, Seller Parties or
Guarantors immediately prior to such merger, consolidation or other
reorganization.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Collection Account” means each account established at the Bank into which all
Income other than REO Subsidiary Income shall be deposited, each of which shall
be subject to a Collection Account Control Agreement.

 

“Collection Account Control Agreement” means a letter agreement among PennyMac
Loan Services, LLC, Buyer, and Bank in form and substance reasonably acceptable
to Buyer, as it may be amended, supplemented or otherwise modified from time to
time.

 

“Commitment Fee” has the meaning specified in the Pricing Side Letter.

 

“Committed Mortgage Loan” means a Mortgage Loan which is the subject of a
Take-out Commitment with a Take-out Investor.

 

“Compare Ratio” has the meaning set forth in the applicable Compare Report.

 

“Compare Report” means the Underlying Repurchase Counterparty DE Compare Report
or the Underlying Repurchase Counterparty Institution Compare Report, as
applicable.

 

“Conforming Mortgage Loan” means a first lien Mortgage Loan originated in
accordance with the criteria of an Agency for purchase of Mortgage Loans,
including, without limitation, conventional Mortgage Loans, as determined by
Buyer in its sole discretion.

 

“Contributed Asset” means a Rental Property or a REO Property.

 

“Co-op” means a private, cooperative housing corporation, having only one class
of stock outstanding, which owns or leases land and all or part of a building or
buildings, including apartments, spaces used for commercial purposes and common
areas therein and whose board of directors authorizes the sale of stock and the
issuance of a Proprietary Lease.

 

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

 

 - 9 - 

 

 

“Co-op Lien Search” means a search for (a) federal tax liens, mechanics’ liens,
lis pendens, judgments of record or otherwise against (i) the Co-op Corporation
and (ii) seller of the Co-op Unit, (b) filings Uniform Commercial Code financing
statements and (c) the deed of the Co-op Project into the Co-op Corporation.

 

“Co-op Loan” means a Mortgage Loan secured by the pledge of stock allocated to a
dwelling unit in a residential cooperative housing corporation and collateral
assignment of the related Proprietary Lease.

 

“Co-op Project” means, with respect to any Co-op Loan, all real property and
improvements thereto and rights therein and thereto owned by a Co-op Corporation
including without limitation the land, separate dwelling units and all common
elements.

 

“Co-op Shares” means, with respect to any Co-op Loan, the shares of stock issued
by a Co-op Corporation and allocated to a Co-op Unit and represented by a Stock
Certificate.

 

“Co-op Unit” means, with respect to any Co-op Loan, a specific unit in a Co-op
Project.

 

“Custodial Agreement” means the amended and restated custodial agreement dated
as of the date hereof, among Seller Parties, Buyer and Custodian, as the same
may be amended, restated, supplemented or otherwise modified from time to time.

 

“Custodial Asset Schedule” has the meaning assigned to such term in the
Custodial Agreement.

 

“Custodian” means Deutsche Bank Trust Company Americas or such other party
specified by Buyer and agreed to by Sellers, which approval shall not be
unreasonably withheld.

 

“DE Compare Ratio” means either the DE Compare (public) Ratio or the DE Compare
(private) Ratio, as applicable.

 

“DE Compare (public) Ratio” means the Two Year FHA Direct Endorsement Lender
Compare Ratio, excluding streamline FHA refinancings, as made publicly available
by HUD.

 

“DE Compare (private) Ratio” means the Two Year FHA Direct Endorsement Lender
Compare Ratio, including streamline FHA refinancings, as made privately
available by HUD to a Seller.

 

“Deed” means the deed issued in connection with a foreclosure sale of a
Mortgaged Property or in connection with receiving a deed in lieu of foreclosure
evidencing title to the related Contributed Asset.

 

“Default” means an Event of Default or an event that with notice or lapse of
time or both would become an Event of Default.

 

 - 10 - 

 

 

“Deposit Account” has the meaning assigned to such term in the Securities
Account Control Agreement.

 

“Diligence Agent” means such Person as may be appointed by Buyer in its sole
good faith discretion to perform certain diligence services described herein.

 

“Dollars” and “$” means dollars in lawful currency of the United States of
America.

 

“Due Date” means the day of the month on which the Monthly Payment is due on a
Mortgage Loan, exclusive of any days of grace.

 

“Early Repurchase Trigger Event” means either of the following shall have
occurred and be continuing on a cumulative basis commencing on the Effective
Date for more than thirty (30) calendar days, (i) the Purchase Price of all
Rental Properties that fail to be owned by REO Subsidiary is equal to or greater
than ten percent (10%) of the REO Property Concentration Limit as defined in the
Pricing Side Letter; or (ii) Rental Properties are subject to Liens that (A) are
prior to the Lien of the Buyer; (B) are not insured by a valid title insurance
policy; (C) are reasonably likely to have a material adverse effect on the
marketability and value of the Rental Property; and (D) the Purchase Price of
all such Rental Properties is equal to or greater than ten percent (10%) of the
REO Property Concentration Limit as defined in the Pricing Side Letter.

 

“EDGAR” means the Electronic Data-Gathering, Analysis, and Retrieval system
maintained by the SEC.

 

“Effective Date” means the date upon which the conditions precedent set forth in
Section 10 shall have been satisfied.

 

“Eligible Lease” means a Lease Agreement that (i) is in a form that is customary
for the jurisdiction in which such Rental Property is located, (ii) is entered
into on an arms-length basis, (iii) is in material conformance with the REO
Subsidiary’s Leasing Criteria, and (v) is in compliance with all applicable
laws, rules and regulations.

 

“Eligible Tenant” means a Tenant that, as of any date of determination, (i) is
not a debtor in any state or federal bankruptcy or insolvency proceeding, and
(ii) conforms to the REO Subsidiary’s Tenant Underwriting Criteria.

 

“Environmental Issue” means any material environmental issue with respect to any
Mortgaged Property or Contributed Asset, as determined by the Buyer in its good
faith discretion, including without limitation, the violation of any federal,
state, foreign or local statute, law, rule, regulation, ordinance, code,
guideline, written policy and rule of common law now or hereafter in effect and
in each case as amended, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, relating to the environment, employee health and safety or hazardous
substances, materials or other pollutants, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”),
42 U.S.C. § 9601 et seq.; the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. § 6901 et seq.; the
Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C. § 2601 et seq.; the Clean Air Act, 42 U.S.C.
§ 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. § 3803 et seq.; the Oil
Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; the Emergency Planning and the
Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq.; the Hazardous
Material Transportation Act, 49 U.S.C. § 1801 et seq. and the Occupational
Safety and Health Act, 29 U.S.C. § 651 et seq.; and any state and local or
foreign analogues, counterparts or equivalents, in each case as amended from
time to time.

 

 - 11 - 

 

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

 

“ERISA Affiliate” means any corporation or trade or business that, together with
Sellers or Guarantors is treated as a single employer under Section 414(b) or
(c) of the Code or solely for purposes of Section 302 of ERISA and Section 412
of the Code is treated as a single employer described in Section 414 of the
Code.

 

“Escrow Instruction Letter” means the Escrow Instruction Letter from Underlying
Repurchase Counterparty to the Settlement Agent, in the form of Exhibit I
hereto, as the same may be modified, supplemented and in effect from time to
time.

 

“Escrow Payments” means, with respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.

 

“Event of Default” has the meaning specified in Section 15 hereof.

 

“Event of Termination” means with respect to Underlying Repurchase Counterparty,
Seller Parties or Guarantors (a) with respect to any Plan, a reportable event,
as defined in Section 4043 of ERISA, as to which the PBGC has not by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified with 30
days of the occurrence of such event, or (b) the withdrawal of Underlying
Repurchase Counterparty, Seller Parties, Guarantors or any ERISA Affiliate
thereof from a Plan during a plan year in which it is a substantial employer, as
defined in Section 4001(a)(2) of ERISA, or (c) the failure by Seller Parties,
Guarantors or any ERISA Affiliate thereof to meet the minimum funding standard
of Section 412 of the Code or Section 302 of ERISA with respect to any Plan,
including, without limitation, the failure to make on or before its due date a
required installment under Section 412(m) of the Code (or Section 430 (j) of the
Code as amended by the Pension Protection Act) or Section 302(e) of ERISA (or
Section 303 (j) of ERISA, as amended by the Pension Protection Act), or (d) the
distribution under Section 4041 of ERISA of a notice of intent to terminate any
Plan or any action taken by Underlying Repurchase Counterparty, Seller Parties,
Guarantors or any ERISA Affiliate thereof to terminate any plan, or (e) the
failure to meet requirements of Section 436 of the Code resulting in the loss of
qualified status under Section 401(a)(29) of the Code, or (f) the institution by
the PBGC of proceedings under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Plan, or (g) the receipt by
Underlying Repurchase Counterparty, Seller Parties, Guarantors or any ERISA
Affiliate thereof of a notice from a Multiemployer Plan that action of the type
described in the previous clause (f) has been taken by the PBGC with respect to
such Multiemployer Plan, or (h) any event or circumstance exists which may
reasonably be expected to constitute grounds for Underlying Repurchase
Counterparty, Seller Parties, Guarantors or any ERISA Affiliate thereof to incur
liability under Title IV of ERISA or under Sections 412 (b) or 430 (k) of the
Code with respect to any Plan.

 

 - 12 - 

 

 

“Existing Indebtedness” has the meaning specified in Section 13(a)(23) hereof.

 

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

 

“FHA” means the Federal Housing Administration, an agency within the United
States Department of Housing and Urban Development, or any successor thereto,
and including the Federal Housing Commissioner and the Secretary of Housing and
Urban Development where appropriate under the FHA Regulations.

 

“FHA 203(k) Loan” means an FHA Loan that is eligible for FHA’s 203(k) loan
program.

 

“FHA Approved Mortgagee” means a corporation or institution approved as a
mortgagee by the FHA under the National Housing Act, as amended from time to
time, and applicable FHA Regulations, and eligible to own and service mortgage
loans such as the FHA Loans.

 

“FHA Loan” means a Mortgage Loan which is the subject of an FHA Mortgage
Insurance Contract.

 

“FHA Mortgage Insurance” means, mortgage insurance authorized under the National
Housing Act, as amended from time to time, and provided by the FHA.

 

“FHA Mortgage Insurance Contract” means the contractual obligation of the FHA
respecting the insurance of a Mortgage Loan.

 

“FHA Regulations” means the regulations promulgated by HUD under the National
Housing Act, as amended from time to time and codified in 24 Code of Federal
Regulations, and other Department of Housing and Urban Development issuances
relating to FHA Loans, including the related handbooks, circulars, notices and
mortgagee letters.

 

“FICO” means Fair Isaac & Co., or any successor thereto.

 

“Fidelity Insurance” shall mean insurance coverage with respect to employee
errors, omissions, dishonesty, forgery, theft, disappearance and destruction,
robbery and safe burglary, property (other than money and securities) and
computer fraud in an aggregate amount acceptable to a Seller’s regulators.

 

 - 13 - 

 

 

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

 

“GAAP” means generally accepted accounting principles in effect from time to
time in the United States of America and applied on a consistent basis.

 

“GNMA” means the Government National Mortgage Association and any successor
thereto.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions over Underlying Repurchase
Counterparty, Seller Parties, Guarantors or Buyer, as applicable.

 

“Governmental Event” means (i) a Seller Party’s or Underlying Repurchase
Counterparty’s failure to obtain licensing from any Governmental Authority where
it is required to be licensed and such failure to be licensed and requirement to
be licensed continue for 30 days following notice to or knowledge thereof by a
Seller Party or Underlying Repurchase Counterparty, (ii) the imposition of
material sanctions on a Seller Party or Underlying Repurchase Counterparty from
any Governmental Authority, or (iii) any material dispute, litigation,
investigation, proceeding or suspension between a Seller Party or Underlying
Repurchase Counterparty and any Governmental Authority or any Person.

 

“Gross Margin” means, with respect to each adjustable rate Mortgage Loan, the
fixed percentage amount set forth in the related Mortgage Note.

 

“Guarantee” means, as to any Person, any obligation of such Person directly or
indirectly guaranteeing any Indebtedness of any other Person or in any manner
providing for the payment of any Indebtedness of any other Person or otherwise
protecting the holder of such Indebtedness against loss (whether by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, or to take-or-pay or otherwise); provided that the term
“Guarantee” shall not include (a) endorsements for collection or deposit in the
ordinary course of business, or (b) obligations to make servicing advances for
delinquent taxes and insurance or other obligations in respect of a Mortgaged
Property, to the extent required by Buyer. The amount of any Guarantee of a
Person shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith. The terms
“Guarantee” and “Guaranteed” used as verbs shall have correlative meanings.

 

“Guarantor” means PennyMac Mortgage Investment Trust and PennyMac Operating
Partnership, L.P., each in its capacity as guarantor under the Guaranty.

 

“Guaranty” means the amended and restated guaranty of the Guarantors dated as of
the date hereof as the same may be amended from time to time, pursuant to which
each Guarantor fully and unconditionally guarantees the obligations of each
Seller Party hereunder.

 

 - 14 - 

 

 

“High Cost Mortgage Loan” means a Mortgage Loan classified as (a) a “high cost”
loan under the Home Ownership and Equity Protection Act of 1994 or (b) a “high
cost,” “threshold,” “covered,” or “predatory” loan under any other applicable
state, federal or local law (or a similarly classified loan using different
terminology under a law, regulation or ordinance imposing heightened regulatory
scrutiny or additional legal liability for residential mortgage loans having
high interest rates, points and/or fees).

 

“High LTV Loan” means a Mortgage Loan having a Loan to Value Ratio in excess of
(a) with respect to FHA Loans or VA Loans, 97.75% (other than Streamlined
Mortgage Loans); (b) with respect to all other Mortgage Loans, 95%; or (c) such
lower percentage as may be set forth in the Underwriting Guidelines.

 

“HUD” means the United States Department of Housing and Urban Development or any
successor thereto.

 

“Improvements” means all buildings, structures, improvements, parking areas,
landscaping, fixtures and articles of property now erected on, attached to, or
used or adapted for use in the operation of any Rental Property, including,
without limitation, all heating, air conditioning and incinerating apparatus and
equipment, all boilers, engines, motors, dynamos, generating equipment, piping
and plumbing fixtures, water heaters, ranges, cooking apparatus and mechanical
kitchen equipment, refrigerators, freezers, cooling, ventilating, sprinkling and
vacuum cleaning systems, fire extinguishing apparatus, gas and electric
fixtures, carpeting, floor covering, underpadding, storm sashes, awnings, signs,
furnishings of public spaces, halls and lobbies, and shrubbery and plants.

 

“Income” means, without duplication, with respect to any Purchased Mortgage
Loan, REO Subsidiary Interest or Contributed Asset, all principal and income or
dividends or distributions received with respect to such Purchased Mortgage
Loan, REO Subsidiary Interest or Contributed Asset, including any sale or
liquidation premiums, Liquidation Proceeds, insurance proceeds, interest,
dividends, Rental Proceeds, Security Deposits or other distributions payable
thereon or any fees or payments of any kind received by the related Servicer.

 

“Indebtedness” means, for any Person: at any time, and only to the extent
outstanding at such time: (a) obligations created, issued or incurred by such
Person for borrowed money (whether by loan, the issuance and sale of debt
securities or the sale of Property to another Person subject to an understanding
or agreement, contingent or otherwise, to repurchase such Property from such
Person); (b) obligations of such Person to pay the deferred purchase or
acquisition price of Property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business, so long as such trade accounts payable are payable
within 90 days of the date the respective goods are delivered or the respective
services are rendered; (c) Indebtedness of others secured by a Lien on the
Property of such Person, whether or not the respective Indebtedness so secured
has been assumed by such Person; (d) obligations (contingent or otherwise) of
such Person in respect of letters of credit or similar instruments issued or
accepted by banks and other financial institutions for the account of such
Person; (e) Capital Lease Obligations of such Person; (f) obligations of such
Person under repurchase agreements, sale/buy-back agreements or like
arrangements, including, without limitation, any Indebtedness arising hereunder;
(g) Indebtedness of others Guaranteed by such Person; (h) all obligations of
such Person incurred in connection with the acquisition or carrying of fixed
assets by such Person; (i) Indebtedness of general partnerships of which such
Person is a general partner and (j) with respect to clauses (a)-(i) above both
on and off balance sheet.

 

 - 15 - 

 

 

“Index” means, with respect to any adjustable rate Mortgage Loan, the index
identified on the Asset Schedule and set forth in the related Mortgage Note for
the purpose of calculating the applicable Mortgage Interest Rate.

 

“Interest Only Adjustment Date” means, with respect to each Interest Only Loan,
the date, specified in the related Mortgage Note on which the Monthly Payment
will be adjusted to include principal as well as interest.

 

“Interest Only Loan” means a Mortgage Loan which only requires payments of
interest for a period of time specified in the related Mortgage Note.

 

“Interest Rate Adjustment Date” means the date on which an adjustment to the
Mortgage Interest Rate with respect to each Mortgage Loan becomes effective.

 

“Interest Rate Protection Agreement” means, with respect to any or all of the
Purchased Mortgage Loans, any short sale of a U.S. Treasury Security, or futures
contract, or mortgage related security, or Eurodollar futures contract, or
options related contract, or interest rate swap, cap or collar agreement or
Take-out Commitment, or similar arrangement providing for protection against
fluctuations in interest rates or the exchange of nominal interest obligations,
either generally or under specific contingencies, entered into by a Seller and
an Affiliate of Buyer or such other party acceptable to Buyer in its sole
discretion, which agreement is acceptable to Buyer in its sole discretion.

 

“Lease Agreement” means, with respect to any Rental Property, a lease or rental
agreement entered into between the REO Subsidiary (or Property Manager acting as
agent for the REO Subsidiary) and a Tenant providing for the rental of such
Rental Property to such Tenant, including any renewal or extension of an
existing lease or rental, which lease or rental agreement is in form and
substance reasonably acceptable to Buyer.

 

“Leasing Criteria” means the standards, procedures and guidelines of the REO
Subsidiary for any Lease Agreement, which are set forth in the written policies
and procedures of the REO Subsidiary, a copy of which have been provided to
Buyer and such other criteria as are identified to and approved in writing by
Buyer.

 

“Lien” means any mortgage, lien, pledge, charge, security interest or similar
encumbrance.

 

“Liquidated Asset” means (i) a Purchased Mortgage Loan that has been sold or
refinanced or was subject to a short sale or with respect to which the Mortgaged
Property has been sold or for which a prepayment in full was received or (ii) a
Rental Property or REO Property that has been sold.

 

 - 16 - 

 

 

“Liquidation Proceeds” means, for any Purchased Mortgage Loan or Contributed
Asset that becomes a Liquidated Asset, the proceeds received on account of the
liquidation of such Purchased Mortgage Loan or Contributed Asset or the amount
of the prepayment in full.

 

“Loan to Value Ratio” or “LTV” means with respect to any Mortgage Loan, the
ratio of the original outstanding principal amount of such Mortgage Loan to the
lesser of (a)(i) with respect to a New Origination Mortgage Loan, the Appraised
Value of the Mortgaged Property at origination or (ii) with respect to a
Seasoned Mortgage Loan, the BPO value or (b) with respect to New Origination
Mortgage Loans, if the Mortgaged Property was purchased within 12 months of the
origination of such Mortgage Loan, the purchase price of the Mortgaged Property.

 

“Low Percentage Margin Call” has the meaning specified in Section 6(b) hereof.

 

“Margin Call” has the meaning specified in Section 6(a) hereof.

 

“Margin Deadline” has the meaning specified in Section 6(b) hereof.

 

“Margin Deficit” has the meaning specified in Section 6(a) hereof.

 

“Market Value” has the meaning assigned to such term in the Pricing Side Letter.

 

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, condition (financial
or otherwise) or prospects of Underlying Repurchase Counterparty, any Seller
Party, any Guarantor or any Affiliate that is a party to any Program Agreement
taken as a whole; (b) a material impairment of the ability of any Seller Party,
any Guarantor or any Affiliate that is a party to any Program Agreement to
perform under any Program Agreement and to avoid any event of default; (c) a
material impairment of the ability of Underlying Repurchase Counterparty to
perform under Underlying Repurchase Documents and to avoid any event of default
thereunder; or (d) a material adverse effect upon the legality, validity,
binding effect or enforceability of any Program Agreement against any Seller
Party, any Guarantor or any Affiliate that is a party to any Program Agreement
or against Underlying Repurchase Counterparty that is a party to any Underlying
Repurchase Documents, in each case as determined by the Buyer in its sole good
faith discretion.

 

“Maximum Committed Purchase Price” means the “Maximum Roll-Up Committed Purchase
Price” as defined in the Pricing Side Letter.

 

“Maximum Purchase Price” means the “Maximum Roll-Up Purchase Price” as defined
in the Pricing Side Letter.

 

“MERS” means Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.

 

“MERS System” means the system of recording transfers of mortgages
electronically maintained by MERS.

 

 - 17 - 

 

 

“Modified Loan” means a Purchased Mortgage Loan that has been modified by a
Seller or the Servicer from the original terms.

 

“Monthly Lease Payment” means, with respect to any Lease Agreement, the lease
payment that is actually payable by the related Tenant from time to time under
the terms of such Lease Agreement, after giving effect to any provision of such
Lease Agreement providing for periodic increases in such fixed or base rent.

 

“Monthly Payment” means the scheduled monthly payment of principal and/or
interest on a Mortgage Loan.

 

“Moody’s” means Moody’s Investors Service, Inc. or any successors thereto.

 

“Mortgage” means each mortgage, deed of trust, deed to secure debt or similar
instrument creating and evidencing a lien on real property and other property
and rights incidental thereto, unless such Mortgage is granted in connection
with a Co-op Loan, in which case the first lien position is in the stock of the
subject cooperative association and in the tenant’s rights in the cooperative
lease relating to such stock.

 

“Mortgage Interest Rate” means the rate of interest borne on a Mortgage Loan
from time to time in accordance with the terms of the related Mortgage Note.

 

“Mortgage Interest Rate Cap” means, with respect to an adjustable rate Mortgage
Loan, the limit on each Mortgage Interest Rate adjustment as set forth in the
related Mortgage Note.

 

“Mortgage Loan” means any first lien closed Pooled Mortgage Loan, New
Origination Mortgage Loan or Seasoned Mortgage Loan which is a fixed or
floating-rate, one-to-four-family residential mortgage loan evidenced by a
promissory note and secured by a first lien mortgage.

 

“Mortgage Note” means the promissory note or other evidence of the indebtedness
of a Mortgagor secured by a Mortgage.

 

“Mortgaged Property” means the real property or other Co-op Loan collateral
securing repayment of the debt evidenced by a Mortgage Note.

 

“Mortgagor” means the obligor or obligors on a Mortgage Note, including any
person who has assumed or guaranteed the obligations of the obligor thereunder.

 

“Multiemployer Plan” means a multiemployer plan defined as such in Section 3(37)
of ERISA to which contributions have been or are required to be made by any
Seller Party or any ERISA Affiliate and that is covered by Title IV of ERISA.

 

“Net Income” means, for any period and any Person, the net income of such Person
for such period as determined in accordance with GAAP.

 

 - 18 - 

 

 

“Net Worth” means, with respect to any Person, an amount equal to, on a
consolidated basis, such Person’s stockholder equity (determined in accordance
with GAAP).

 

“New Origination Mortgage Loan” means (i) any Non-Agency QM Mortgage Loan, (ii)
any Agency Mortgage Loan, in each case and (iii) any New Origination Performing
Mortgage Loan, that was originated no more than 90 days prior to the related
Purchase Date.

 

“Non-Agency QM Mortgage Loan” means a New Origination Mortgage Loan that that is
neither a Non-Performing Mortgage Loan nor Re-Performing Mortgage Loan and that
(a) does not meet the criteria for an Agency Mortgage Loan; (b) meets all
applicable criteria as set forth in the Underwriting Guidelines and (c) is
otherwise acceptable to Buyer in its sole discretion.

 

“New Origination Performing Mortgage Loan” means a first lien Mortgage Loan (i)
originated by a Seller in accordance with the criteria of an Agency except such
Mortgage Loan is not eligible for sale to an Agency and is not a Qualified
Mortgage Loan, (ii) no payment under which is nor has been delinquent at any
time since the origination, and (iii) is acceptable to Buyer in its sole
discretion.

 

“Non-Performing Mortgage Loan” means any Mortgage Loan for which any payment of
principal or interest is thirty (30) days or more past due. For the avoidance of
doubt, a Mortgage Loan that is a Non-Performing Mortgage Loan shall be deemed a
Non-Performing Mortgage Loan until it satisfies the requirements set forth in
the definition of Re-Performing Mortgage Loan.

 

“Non-Recourse Debt” shall mean Indebtedness payable solely from the assets sold
or pledged to secure such Indebtedness and under which Indebtedness no party has
recourse to Sellers, Guarantors or any of their Affiliates if such assets are
inadequate or unavailable to pay off such Indebtedness, and neither Sellers,
Guarantors nor any of their Affiliates effectively has any obligation to
directly or indirectly pay any such deficiency.

 

“Obligations” means (a) all of Seller Parties’ indebtedness, obligations to pay
the Repurchase Price on the Repurchase Date, the Price Differential on each
Payment Date, and other obligations and liabilities, to Buyer, its Affiliates or
Custodian arising under, or in connection with, the Program Agreements, whether
now existing or hereafter arising; (b) any and all sums paid by Buyer or on
behalf of Buyer in order to preserve any Purchased Asset and/or Contributed
Asset or its interest therein; (c) in the event of any proceeding for the
collection or enforcement of any of a Seller Parties’ indebtedness, obligations
or liabilities referred to in clause (a), the reasonable expenses of retaking,
holding, collecting, preparing for sale, selling or otherwise disposing of or
realizing on any Purchased Asset and/or Contributed Asset, or of any exercise by
Buyer of its rights under the Program Agreements, including, without limitation,
attorneys’ fees and disbursements and court costs; and (d) all of any Seller
Parties’ indemnity obligations to Buyer or Custodian or both pursuant to the
Program Agreements.

 

“OFAC” has the meaning set forth in Section 13(a)(27) hereof.

 

“Optional Partial Prepayment” has the meaning specified in Section 4(b) hereof.

 

“Optional Partial Prepayment Date” has the meaning specified in Section 4(b)
hereof.

 

 - 19 - 

 

 

“Payment Date” means, with respect to a Purchased Asset, the 5th day of the
month following the month of the related Purchase Date and each succeeding 5th
day of the month thereafter; provided, that, with respect to such Purchased
Asset, the final Payment Date shall be the related Repurchase Date; and
provided, further, that if any such day is not a Business Day, the Payment Date
shall be the next succeeding Business Day.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.

 

“Pension Protection Act” means the Pension Protection Act of 2006.

 

“Person” means an individual, partnership, corporation (including a business
trust), limited liability company, joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.

 

“Plan” means an employee benefit or other plan established or maintained by any
Seller Party or any ERISA Affiliate and covered by Title IV of ERISA, other than
a Multiemployer Plan.

 

“Pooled Mortgage Loan” means any Purchased Mortgage Loan that is subject to a
Transaction hereunder and is part of a pool of Purchased Mortgage Loans
certified by Custodian to an Agency to be either (a) purchased by such Agency or
(b) swapped for an Agency Security backed by such pool, in each case, in
accordance with the terms of the guidelines issued by the applicable Agency.

 

“Post-Default Rate” has the meaning assigned to such term in the Pricing Side
Letter.

 

“Power of Attorney” means the power of attorney in the form of Exhibit D,
Exhibit E-1, or Exhibit E-2 delivered by each Seller Party, PennyMac Loan
Services, LLC and the REO Subsidiary, as applicable.

 

“Price Differential” means, with respect to any Transaction hereunder as of any
date, the aggregate amount obtained by daily application of, for each Purchased
Mortgage Loan and/or Contributed Asset, the Pricing Rate (or, during the
continuation of an Event of Default, by daily application of the Post-Default
Rate) for such Purchased Mortgage Loan and/or Contributed Asset to the Purchase
Price allocated to such Purchased Mortgage Loan and/or Contributed Asset on a
360 day per year basis for the actual number of days during the period
commencing on (and including) the Purchase Date for such Purchased Mortgage Loan
and/or Contributed Asset and ending on (but excluding) the Repurchase Date or
the Optional Partial Prepayment Date with respect to such Purchased Mortgage
Loan and/or Contributed Asset. The Price Differential accrued during any Accrual
Period shall be due and payable on the following Payment Date.

 

“Pricing Rate” has the meaning assigned to such term in the Pricing Side Letter.

 

 - 20 - 

 

 

“Pricing Side Letter” means the consolidated, amended and restated letter
agreement dated as of the date hereof, among Buyer, Seller Parties and the
Guarantors as the same may be amended from time to time.

 

“Program Agreements” means, collectively, this Agreement, the Pricing Side
Letter, the Guaranty, the Custodial Agreement, the Underlying Electronic
Tracking Agreement, the Securities Account Control Agreement, the Collection
Account Control Agreement, the REO Subsidiary Account Control Agreements, the
Power of Attorney, the Servicing Agreement, if any, each Subsidiary Agreement,
the Servicer Notice and Pledge, the Property Management Agreement and the
Property Management Agreement Side Letter.

 

“Prohibited Person” has the meaning set forth in Section 13(a)(27) hereof.

 

“Property” means any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible.

 

“Property Level Reporting Period” means, as of the date of determination, the
most recently ended calendar quarter of each calendar year.

 

“Property Management Agreement” means the Servicing Agreement or a property
management agreement approved by Buyer in its sole discretion between a Property
Manager and the REO Subsidiary, as the same may be amended, supplemented, or
otherwise modified from time to time.

 

“Property Management Agreement Side Letter” means the side letter substantially
in the form of Exhibit C hereto.

 

“Property Management Rights” means rights of any Person (including a Property
Manager) to administer, manage, service or subservice, the Rental Property or to
possess related Records.

 

“Property Manager” means, with respect to any Rental Property, any property
manager approved by Buyer in its sole discretion.

 

“Property Manager Termination Event” means (i) a material default by Property
Manager under the Property Management Agreement, (ii) there shall occur or exist
any fraud, gross negligence, willful misconduct or misappropriation of funds by
Property Manager in connection with the Program Agreements or Property
Management Agreement or (iii) an Act of Insolvency shall have occurred with
respect to Property Manager, subject to Section 15.d hereof.

 

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

 

“Purchase Date” means the date on which a Purchased Asset is to be transferred
by a Seller to Buyer or a Purchase Price Increase Date.

 

“Purchase Price” means, without duplication: (a) with respect to REO Subsidiary
Interests, the aggregate Purchase Price of all Contributed Assets, as
applicable, and (b) with respect to each Purchased Mortgage Loan or Contributed
Asset, the price at which such Purchased Mortgage Loan or Contributed Asset, as
applicable, is made subject to a Transaction hereunder, which shall equal:

 

 - 21 - 

 

 

(a) on the Purchase Date of the Purchased Mortgage Loans or Contributed Assets,
the Asset Value of such Purchased Mortgage Loans or Contributed Assets as of the
Purchase Date;

 

(b) on any day after the Purchase Date, except where Buyer and such Seller agree
otherwise, the amount determined under the immediately preceding clause (a) (i)
solely with respect to the Eligible REO Subsidiary Interest, without
duplication, increased or decreased upon the acquisition or disposition of
Contributed Assets by the REO Subsidiary, pursuant to Sections 3(b) and 4
hereof, and (ii) decreased by the amount of any cash transferred by such Seller
to Buyer pursuant to Section 6 hereof.

 

“Purchase Price Increase” means an increase in the Purchase Price for the REO
Subsidiary Interests based upon the REO Subsidiary acquiring additional
Contributed Assets, to which such portion of the Purchase Price is allocated, as
requested by a Seller pursuant to Section 3(b) hereof.

 

“Purchase Price Increase Date” means the date on which a Contributed Asset is
transferred to the REO Subsidiary, and/or a Purchase Price Increase is made with
respect thereto.

 

“Purchase Price Increase Request” means a request via email from a Seller to
Buyer requesting a Purchase Price Increase for REO Subsidiary Interests based
upon the acquisition of additional Contributed Assets by the REO Subsidiary and
indicating that it is a Purchase Price Increase Request under this Agreement.

 

“Purchase Price Percentage” has the meaning assigned to such term in the Pricing
Side Letter.

 

“Purchased Assets” means the collective reference to Purchased Mortgage Loans
and REO Subsidiary Interests (including for the avoidance of doubt, the related
Underlying Repurchase Assets) together with the Repurchase Assets related to
such REO Subsidiary Interests transferred by Sellers to Buyer in a Transaction
hereunder, listed on the related Asset Schedule attached to the related
Transaction Request which such Asset Files and REO Subsidiary Interests the
Custodian has been instructed to hold pursuant to the Custodial Agreement;
provided, that, in the case of the transfer of REO Subsidiary Interests under
any Transaction, Purchased Assets shall be deemed to include all such portion(s)
of the REO Subsidiary Interests allocable to the Purchase Price or Purchase
Price Increase, as applicable, that correspond to the related Contributed Assets
owned by the REO Subsidiary, and as related to such Purchase Price or Purchase
Price Increase, as applicable.

 

“Purchased Mortgage Loan” means a Mortgage Loan which is subject to a
Transaction under this Agreement.

 

 - 22 - 

 

 

“Qualified Insurer” means an insurance company duly authorized and licensed
where required by law to transact insurance business and approved as an insurer
by Fannie Mae or Freddie Mac.

 

“Qualified Originator” means, with respect to New Origination Mortgage Loans, an
originator of Mortgage Loans which is acceptable under the Underwriting
Guidelines.

 

“Records” means all instruments, agreements and other books, records, and
reports and data generated by other media for the storage of information
maintained by Seller Parties, Servicer, Guarantors, Custodian, Underlying
Repurchase Counterparty, or any other person or entity with respect to a
Purchased Asset or Contributed Asset. Records shall include the Mortgage Notes,
any Mortgages, the Asset Files, the credit files related to the Purchased Asset,
and any other instruments necessary to document or service a Purchased Mortgage
Loan. For Contributed Assets, Records shall include the Asset Files and any
other instruments necessary to document or manage a Contributed Asset.

 

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

 

“REIT” means a real estate investment trust, as defined in Section 856 of the
Code.

 

“Rental Proceeds” means all payments made by Tenants and received in respect of
any Rental Property, including Monthly Lease Payments and fees, but excluding
Security Deposits.

 

“Rental Property” means a parcel of residential real property that is wholly
owned by or acquired by REO Subsidiary and the fee title to which is held by REO
Subsidiary, together with all Improvements thereon and all other rights,
benefits and proceeds arising from and in connection with such property, that is
subject to an Eligible Lease with an Eligible Tenant and satisfies each of the
applicable representations and warranties set forth on Schedule 1, Part VI with
respect thereto.

 

“REO Property” means (a) real property acquired by or transferred to REO
Subsidiary, including a Mortgaged Property acquired through foreclosure of a
Mortgage Loan or by deed in lieu of such foreclosure, the fee title of which is
held by REO Subsidiary, which shall include, for the avoidance of doubt Rental
Property, and (b) Unrecorded REO Property.

 

“REO Subsidiary” means PMC REO Financing Trust, a wholly owned Subsidiary of PMC
that is a Special Purpose Entity formed for the sole purpose of holding REO
Property and Rental Property.

 

“REO Subsidiary Account” means each account as established pursuant to the
applicable Subsidiary Agreement for the benefit of the REO Subsidiary, into
which PennyMac Loan Services, LLC shall direct all REO Subsidiary Income
received with respect to the assets owned by the REO Subsidiary.

 

 - 23 - 

 

 

“REO Subsidiary Account Control Agreement” means the letter agreement among the
REO Subsidiary, PennyMac Loan Services, LLC, PennyMac Corp., Buyer, City
National Securities, Inc. and Bank in form and substance reasonably acceptable
to Buyer, as it may be amended, supplemented or otherwise modified from time to
time.

 

“REO Subsidiary Account Required Balance” shall mean an amount equal to the
total payments and Security Deposits on the account of the Rental Properties
expected to be received in such calendar month plus such Security Deposits
previously collected and expected to be continued to be held for such month, as
determined on the first day of each calendar month based on Sellers’ monthly
report of rental property performance, in form and substance acceptable to
Buyer.

 

“REO Subsidiary Income” means, with respect to assets owned by the REO
Subsidiary (including Unrecorded REO Property), all principal and income
received with respect to such assets, including any sale or liquidation
premiums, Liquidation Proceeds, insurance proceeds, interest, dividends or other
distributions payable thereon or any fees or payments of any kind received by
the REO Subsidiary.

 

“REO Subsidiary Interests” means any and all of any Seller’s interests, as the
case may be, in the Capital Stock in REO Subsidiary.

 

“Re-Performing Mortgage Loan” means, as of any date of determination, a Mortgage
Loan that was a Non-Performing Mortgage Loan, but with respect to which the
related Mortgagor has made all Monthly Payments for the three (3) months prior
to such date of determination.

 

“Reporting Date” means the 5th day of each month or, if such day is not a
Business Day, the next succeeding Business Day.

 

“Repurchase Assets” has the meaning assigned thereto in Section 8 hereof.

 

“Repurchase Date” means the earliest of (a) the Termination Date, (b) the date
determined by application of Section 16 hereof, (c) any other date requested by
a Seller upon one (1) Business Day's prior written notice subject to Section 4
hereof, (d) with respect to the Specified Mortgage Loan Pool, the Specified
Mortgage Loan Pool Repurchase Date and (e) with respect to Rental Properties,
upon the occurrence of an Early Repurchase Trigger Event.

 

“Repurchase Price” means, without duplication, the price at which Purchased
Assets are to be transferred from Buyer to Sellers, or at which the REO
Subsidiary Interests are to be reduced in value with respect to Contributed
Assets released therefrom upon a Partial Prepayment Date or termination of a
Transaction, which will be determined in each case (including Transactions
terminable upon demand) as (a) with respect to Purchased Mortgage Loans and
Contributed Assets, the Allocated Repurchase Price as of the date of such
determination and (b) with respect to the Subsidiary Certificate, the aggregate
Allocated Repurchase Price of all Contributed Assets owned by the REO
Subsidiary.

 

 - 24 - 

 

 

“Request for Certification” means a notice sent to the Custodian reflecting that
one or more of the Mortgage Loans, Rental Properties or REO Properties shall be
made subject to a Transaction with the Buyer hereunder.

 

“Requirement of Law” means, as to any Person, any law, treaty, rule, regulation,
procedure or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject, and includes
all federal, state, county, municipal and other governmental statutes, laws,
rules, orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities, whether now or hereafter enacted and in force, and all
permits, licenses and authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to a Seller Party, at any time in force
affecting such Seller Party, any Rental Property, Mortgage Loan or REO Property
or any part thereof, including, without limitation, any which may (a) require
repairs, modifications or alterations in or to a Rental Property or any part
thereof, or (b) in any way limit the leasing, use and enjoyment of a Contributed
Asset.

 

“Responsible Officer” means as to any Person, the chief executive officer or,
with respect to financial matters, the chief financial officer of such Person.
The Responsible Officers of Seller Parties as of the date hereof are listed on
Schedule 2 hereto.

 

“Restricted Cash” means for any Person, any amount of cash of such Person that
is contractually required to be set aside, segregated or otherwise reserved.

 

“S&P” means Standard & Poor’s Ratings Services, or any successor thereto.

 

“Seasoned Mortgage Loan” means any Mortgage Loan that is not a New Origination
Mortgage Loan and is a Non-Performing Mortgage Loan or Re-Performing Mortgage
Loan.

 

“SEC” means the Securities and Exchange Commission, or any successor thereto.

 

“Securities Account” has the meaning assigned to such term in the Securities
Account Control Agreement.

 

“Securities Account Control Agreement” means the agreement dated as of March 29,
2012, among Buyer, Sellers, Servicer, Bank and City National Securities, Inc., a
California corporation, as the same may be amended from time to time.

 

“Security Deposits” means, any payments made by Tenants and received in respect
of any Rental Property that is in the nature of a security deposit.

 

“Sellers” means, collectively, PennyMac Corp., PennyMac Holdings, LLC and
PennyMac Operating Partnership, L.P., or their respective permitted successors
and assigns.

 

“Seller Parties” means, collectively, the Sellers and the REO Subsidiary, and
their respective permitted successors and assigns.

 

 - 25 - 

 

 

“Servicer” means PennyMac Loan Services, LLC or any other servicer approved by
Buyer in its sole discretion, which may be a Seller or the applicable Underlying
Repurchase Counterparty.

 

“Servicer Account” means that certain clearing account in the name of the
applicable Servicer into which all sale proceeds of a Seasoned Mortgage Loan or
REO Property (unless otherwise agreed pursuant to the Program Agreements) are
remitted and that clearing account where Rental Proceeds are received.

 

“Servicer Notice and Pledge” means the notice to and pledge by the Servicer
substantially in the form of Exhibit J hereto.

 

“Servicing Agreement” means that certain Second Amended and Restated Flow
Servicing Agreement, dated as of March 1, 2013, by and between PennyMac
Operating Partnership, L.P. and Servicer, as the same may be amended from time
to time.

 

“Servicing Rights” means rights of any Person to administer, service or
subservice, the Purchased Mortgage Loans or REO Properties or to possess related
Records.

 

“Settlement Agent” means, with respect to any Transaction the subject of which
is a Wet-Ink Mortgage Loan, the entity approved by Buyer, in its sole good-faith
discretion, which may be a title company, escrow company or attorney in
accordance with local law and practice in the jurisdiction where the related
Wet-Ink Mortgage Loan is being originated. A Settlement Agent is deemed approved
unless Buyer notifies Sellers otherwise at any time electronically or in
writing.

 

“SFR Property Documents” means, with respect to any Rental Property, those
documents executed in connection with, evidencing or governing such Rental
Property, which include with respect to such Rental Property: (i) the Deed (or
true copy thereof) with evidence of recording thereon evidencing the ownership
of the related Rental Property by the REO Subsidiary, (ii) the original (or true
copy thereof) title insurance policy insuring such Rental Property, (iii) a true
copy of the related Lease Agreement, if any, (iv) a Tenant estoppel certificate
and subordination, non-disturbance and attornment agreements, if any, to the
extent in the possession of the REO Subsidiary, in which the related Tenant
acknowledges that such Lease Agreement is in full force and effect, that such
Tenant is not in default under the terms of such Lease Agreement, and that no
circumstances currently exist that would give such Tenant the right to abate or
offset its rent, (v) any Rental Property zoning reports, (vi) a copy of the
related Survey and (vii) evidence of all insurance required to be maintained
under such Lease Agreement, including but not limited to, with respect to any
environmental insurance policy, the original or a copy of each such
environmental insurance policy, if any.

 

“SIPA” means the Securities Investor Protection Act of 1970, as amended from
time to time.

 

“Special Purpose Entity” means a Person, other than an individual, which is
formed or organized solely for the purpose of holding, directly or indirectly,
an ownership interest in one or more Rental Properties or REO Properties, does
not engage in any business unrelated to the Rental Properties or REO Properties,
does not have any assets other than as otherwise expressly permitted by this
Agreement, has its own separate books and records and will not commingle its
funds in each case which are separate and apart from the books and records of
any other Person, and is subject to all of the limitations on the powers set
forth in the organizational documentation of REO Subsidiary as in effect on the
date hereof, and holds itself out as a Person separate and apart from any other
Person and otherwise complies with all of the covenants set forth in Section
14(gg).

 

 - 26 - 

 

 

“Specified Mortgage Loan Pool” has the meaning assigned to such term in the
Pricing Side Letter.

 

“Specified Mortgage Loan Pool Repurchase Date” has the meaning assigned to such
term in the Pricing Side Letter.

 

“State Specific Foreclosure Aging Timeline” means the state specific foreclosure
timeline as of the date of the Agreement as set forth for each state on Exhibit
M hereto.

 

“State Specific REO Disposition Timeline” means the state specific disposition
timeline for REO Properties as of the date of the Agreement as set forth for
each state on Exhibit N hereto.

 

“State Specific REO Recording Timeline” means the state specific recording
timeline for REO Properties as of the date of the Agreement as set forth for
each state on Exhibit O hereto.

 

“Stock Certificate” means, with respect to a Co-op Loan, the certificates
evidencing ownership of the Co-op Shares issued by the Co-op Corporation.

 

“Stock Power” means, with respect to a Co-op Loan, an assignment of the Stock
Certificate or an assignment of the Co-op Shares issued by the Co-op
Corporation.

 

“Streamlined Mortgage Loan” means an FHA Loan originated in accordance with
FHA’s streamlined mortgage loan refinance program as set forth in FHA’s
Underwriting Guidelines.

 

“Subordinated Debt” means, Indebtedness of a Seller which is (a) unsecured, (b)
no part of the principal of such Indebtedness is required to be paid (whether by
way of mandatory sinking fund, mandatory redemption, mandatory prepayment or
otherwise) prior to the date which is one year following the Termination Date
and (c) the payment of the principal of and interest on such Indebtedness and
other obligations of a Seller in respect of such Indebtedness are subordinated
to the prior payment in full of the principal of and interest (including
post-petition obligations) on the Transactions and all other obligations and
liabilities of a Seller to Buyer hereunder on terms and conditions approved in
writing by Buyer and all other terms and conditions of which are satisfactory in
form and substance to Buyer.

 

“Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, trust 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, limited
liability company, partnership, trust 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, limited liability company, partnership, trust 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 or by such Person and one
or more Subsidiaries of such Person.

 

 - 27 - 

 

 

“Subsidiary Agreement” means the organizing documents governing REO Subsidiary
as contemplated by this Agreement, as the same may be modified from time to
time.

 

“Subsidiary Certificates” means, collectively, the certificates evidencing 100%
of the REO Subsidiary Interests for REO Subsidiary.

 

“Subsidiary Owned Assets” means all property including Mortgage Loan, Rental
Property and REO Property and shall include any Subsidiary Repurchase Asset
related to the foregoing subject to a Transaction, owned by the REO Subsidiary,
including those listed on the related Asset Schedule attached to the related
Transaction Request.

 

“Subsidiary Repurchase Assets” has the meaning set forth in Section 8(a) hereof.

 

“Survey” means a survey prepared by a surveyor licensed in the state where the
Rental Property is located and satisfactory to Buyer and the company or
companies issuing ALTA owner’s title insurance policy, and containing a
certification of such surveyor satisfactory to Buyer.

 

“Take-out Commitment” means a commitment of Underlying Repurchase Counterparty
to either (a) sell one or more identified Mortgage Loans or REO Properties to a
Take-out Investor or (b) (i) swap one or more identified Mortgage Loans or REO
Properties with a Take-out Investor that is an Agency for an Agency Security,
and (ii) sell the related Agency Security to a Take-out Investor, and in each
case, the corresponding Take-out Investor’s commitment back to Underlying
Repurchase Counterparty to effectuate any of the foregoing, as applicable. With
respect to any Take-out Commitment with an Agency, the applicable agency
documents list Buyer as the subscriber to the Agency Security and such Agency
Security is delivered to an account specified by Buyer.

 

“Take-out Investor” means (a) an Agency, (b) PennyMac Loan Services, LLC or (c)
any other institution which has made a Take-out Commitment and has been approved
by Buyer.

 

“Tenant” means the tenant of a Rental Property named on the related Lease
Agreement, together with any guarantor of such tenant’s obligations under such
Lease Agreement.

 

“Tenant Instruction Notice” means, with respect to a Rental Property that is
subject to a Lease Agreement, upon request from Buyer to provide such notice,
the written notice in the form of Exhibit A hereto that is executed by a
Property Manager and may be delivered by Buyer following the occurrence of an
Event of Default or a Property Manager Termination Event and termination of a
Property Manager in accordance with Section 12 to each related Tenant informing
such Tenant that Buyer or a replacement property manager has replaced the
Property Manager.

 

 - 28 - 

 

 

“Tenant Underwriting Criteria” means the standards, procedures and guidelines of
the REO Subsidiary for the approval of any Tenant, which are set forth in the
written policies and procedures of the REO Subsidiary, a copy of which have been
provided to Buyer and such other criteria as are identified to and approved in
writing by Buyer.

 

“Termination Date” means the earliest of (a) March 30, 2017, and (b) the date of
the occurrence of an Event of Default.

 

“Test Period” means any one fiscal quarter.

 

“TILA-RESPA Integrated Disclosure Rule” means the Truth-in-Lending Act and Real
Estate Settlement Procedures Act Integrated Disclosure Rule, adopted by the
Consumer Finance Protection Bureau, which is effective for residential mortgage
loan applications received on or after October 3, 2015.

 

“Trade Assignment” means an assignment to Buyer of a forward trade between a
Take-out Investor and Underlying Repurchase Counterparty with respect to one or
more Purchased Mortgage Loans that are Pooled Mortgage Loans substantially in
the form of Exhibit L hereto.

 

“Transaction” has the meaning set forth in Section 1 hereof.

 

“Transaction Request” means a request via email from a Seller to Buyer notifying
Buyer that such Seller wishes to enter into a Transaction hereunder that
indicates that it is a Transaction Request under this Agreement.

 

“Trust Receipt” means, with respect to any Transaction as of any date, a receipt
in the form attached as an exhibit to the Custodial Agreement.

 

“Underlying Electronic Tracking Agreement” means, to the extent applicable, an
Electronic Tracking Agreement among an Underlying Repurchase Counterparty,
Buyer, Sellers, MERS and MERSCORP Holdings, Inc., as the same may be amended
from time to time.

 

“Underlying Interest Rate Protection Agreement” means, with respect to any or
all of the Purchased Mortgage Loans, any short sale of a US Treasury Security,
or futures contract, or mortgage related security, or Eurodollar futures
contract, or options related contract, or interest rate swap, cap or collar
agreement, or similar arrangement providing for protection against fluctuations
in interest rates or the exchange of nominal interest obligations, either
generally or under specific contingencies, entered into by Underlying Repurchase
Counterparty.

 

“Underlying Repurchase Agreement” shall mean the repurchase agreement among PMC,
Sellers and Servicer dated as of March 29, 2012 in the form approved by Buyer in
writing in its sole discretion with any material modifications approved by Buyer
in writing in its sole discretion (excluding provisions related to the price or
pricing rate of such Underlying Repurchase Transactions, which shall not be
subject to Buyer review or approval), as amended, restated, supplemented or
otherwise modified from time to time.

 

 - 29 - 

 

 

“Underlying Repurchase Asset” shall mean, in connection with an Underlying
Repurchase Transaction, the Mortgage Loans and the REO Subsidiary Interests sold
by a Seller, including PMC to another Seller, including POP and Pennymac
Holdings, thereunder.

 

“Underlying Repurchase Counterparty” means PennyMac Corp. or any other Affiliate
of Sellers approved by Buyer in writing in its sole discretion and that is
joined as a party to the Program Agreements, that has sold, or concurrently with
a purchase of a Mortgage Loan by Buyer hereunder, will sell, such Mortgage Loan
to Sellers.

 

“Underlying Repurchase Counterparty DE Compare Report” means, with respect to
any Underlying Repurchase Counterparty, the top of the three rows of the report
entitled “Neighborhood Watch Early Warning System – Single Lender – Direct
Endorsement Lender” and found at https://entp.hud.gov/sfnw/public/. Such report
shall be generated using the following criteria: Mortgagee Selections: “Direct
Endorsement Lender;” Delinquent Choices: “Seriously Delinquent;” and 2 Year
Performance Period: “Data as of [END OF MOST RECENT PRIOR MONTH].”

 

“Underlying Repurchase Counterparty Institution Compare Ratio” has the meaning
set forth in the Underlying Repurchase Counterparty Institution Compare Report.

 

“Underlying Repurchase Counterparty Institution Compare Report” means, with
respect to any Underlying Repurchase Counterparty, the report entitled
“Neighborhood Watch Early Warning System – Single Lender – Originator by
Institution” and found at https://entp.hud.gov/sfnw/public/. Such report shall
be generated using the following criteria: Mortgagee Selections: “Originator by
Institution;” Delinquent Choices: “Seriously Delinquent;” and 2 Year Performance
Period: “Data as of [END OF MOST RECENT PRIOR MONTH].”

 

“Underlying Repurchase Documents” means the Underlying Repurchase Agreement,
pricing letter, confirmations and all documents ancillary thereto that evidence
an Underlying Repurchase Transaction in the form approved by Buyer in writing in
its sole discretion with any material modifications approved by Buyer in writing
in its sole discretion (excluding provisions related to the price or pricing
rate of such Underlying Repurchase Transactions, which shall not be subject to
Buyer review or approval).

 

“Underlying Repurchase Transaction” means a transaction between a Seller and an
Underlying Repurchase Counterparty whereby the Underlying Repurchase
Counterparty sells one or more Mortgage Loans and REO Subsidiary Interests to
such Seller against the transfer of funds by such Seller, with the simultaneous
agreement by such Seller to transfer to such Underlying Repurchase Counterparty
such Mortgage Loans and REO Subsidiary Interests at a date certain against the
transfer of funds by such Underlying Repurchase Counterparty, which Mortgage
Loans and REO Subsidiary Interests are concurrently or consecutively purchased
by Buyer hereunder.

 

 - 30 - 

 

 

“Underwriting Guidelines” means, with respect to New Origination Mortgage Loans,
the standards, procedures and guidelines of the applicable Underlying Repurchase
Counterparty for underwriting Mortgage Loans, as set forth in the written
policies and procedures of such Underlying Repurchase Counterparty, copies of
which have been provided to Buyer, and, as applicable, the Fannie Mae
Single-Family Selling and Servicing Guide, the Freddie Mac Single-Family
Seller/Servicer Guide, FHA Underwriting Guidelines or VA Underwriting Guidelines
and such other guidelines as are identified and approved in writing by Buyer.

 

“Uniform Commercial Code” means 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.

 

“Unrecorded REO Property” means REO Property for which the Custodian has not
received a copy of the Deed recorded or submitted for recording into the name of
REO Subsidiary, and otherwise meets the criteria set forth in this Agreement.

 

“USDA Loan” means a first lien Mortgage Loan originated in accordance with the
criteria established by and guaranteed by the United States Department of
Agriculture.

 

“VA” means the U.S. Department of Veterans Affairs, an agency of the United
States of America, or any successor thereto including the Secretary of Veterans
Affairs.

 

“VA Approved Lender” means a lender which is approved by the VA to act as a
lender in connection with the origination of VA Loans.

 

“VA Loan” means a Mortgage Loan which is subject of a VA Loan Guaranty Agreement
as evidenced by a loan guaranty certificate, or a Mortgage Loan which is a
vendor loan sold by the VA.

 

“VA Loan Guaranty Agreement” means 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, as
amended.

 

“Warehouse Facility” means a mortgage loan or REO property warehouse facility,
warehouse line of credit (including both on and off balance sheet facilities),
and any other such facility with terms and conditions similar to the terms and
conditions of this Agreement and the purpose of which is to fund the origination
and/or purchase of newly originated Mortgage Loans or REO Properties pending
sale or securitization.

 

“Wet-Ink Documents” means, with respect to any Wet-Ink Mortgage Loan, the (a)
Transaction Request and (b) the Asset Schedule.

 

“Wet-Ink Mortgage Loan” means a New Origination Mortgage Loan which a Seller is
selling to Buyer simultaneously with the origination thereof.

 

 - 31 - 

 

 

3. Program; Initiation of Transactions

 

a. Initiation. On each Purchase Date, Buyer will purchase from POP and PennyMac
Holdings the Purchased Assets (accompanied by a pledge of the related Mortgage
Loans that have been either originated by such Sellers or purchased by such
Sellers from other originators). On the initial Purchase Date, PMC and POP have
each pledged their rights in and to the REO Subsidiary Interests to Buyer. From
time to time, Seller may request and Buyer may fund additional Purchase Price
Increases in connection with the conveyance of REO Properties or Rental
Properties to the REO Subsidiary and the corresponding increases of the Purchase
Price on account of the REO Subsidiary Interests. This Agreement is a commitment
by Buyer to enter into Transactions and Purchase Price Increases with Sellers
for an aggregate amount equal to the Maximum Committed Purchase Price. This
Agreement is not a commitment by Buyer to enter into Transactions or Purchase
Price Increases with Sellers for amounts exceeding the Maximum Purchase Price,
but rather, sets forth the procedures to be used in connection with periodic
requests for Buyer to enter into Transactions or Purchase Price Increases with
Sellers. Each Seller hereby acknowledges that, beyond the applicable Maximum
Committed Purchase Price, Buyer is under no obligation to agree to enter into,
or to enter into, any Transaction or Purchase Price Increase pursuant to this
Agreement. All Purchased Mortgage Loans and Contributed Assets shall exceed or
meet the Underwriting Guidelines or Acquisition Guidelines, as applicable, and
all Purchased Mortgage Loans and REO Property shall be serviced by a Seller or
Servicer, as applicable. All Rental Properties shall be managed by a Property
Manager and shall exceed or meet the Leasing Criteria and Tenant Underwriting
Criteria. The aggregate Purchase Price (adjusted for any Purchase Price
Increases or reductions in Purchase Price, as applicable) of then-outstanding
Transactions shall not exceed the Maximum Purchase Price.

 

b. Requests for Transactions. Sellers shall request that Buyer enter into a
Transaction or Purchase Price Increase by delivering to Buyer a Transaction
Request or Purchase Price Increase Request, as applicable, and with respect to
Seasoned Mortgage Loans and REO Property, summary results of due diligence
delivered in connection with Section 10(b)(1) of this Agreement, compliance
diligence information and upon request of Buyer, BPO valuation and valuation
date for each Mortgage Loan or Contributed Asset, as applicable, a copy of the
BPO and BPO results, in each case in the format mutually agreed to by Buyer and
Sellers (i) on or before 3:00 p.m. (New York City time) on the Purchase Date for
Transactions involving Wet-Ink Mortgage Loans and (ii) on or before 12:00 p.m.
(New York City time) (A) five (5) Business Days with respect to Seasoned
Mortgage Loans and Contributed Assets, and (B) one (1) Business Day with respect
to New Origination Mortgage Loans, prior to the proposed Purchase Date or
Purchase Price Increase Date, as applicable, for Transactions involving all
Mortgage Loans other than Wet-Ink Mortgage Loans; provided that if such REO
Property is related to a Purchased Mortgage Loan that is a Seasoned Mortgage
Loan, Sellers shall not be required to deliver an additional BPO at the time of
such Purchase Price Increase, and Sellers shall deliver either (x) to Buyer and
Custodian a Request for Certification and related Asset Schedule, in accordance
with the Custodial Agreement or (y) to the extent that such Purchase Price
Increase is a result of a change of Category for a Purchased Mortgage Loan to a
REO Property, evidence of such change in Category. In the event the Asset
Schedule provided by Sellers contains erroneous computer data, is not formatted
properly or the computer fields are otherwise improperly aligned, Buyer shall
provide written or electronic notice to the applicable Seller describing such
error and the applicable Seller shall correct the computer data, reformat or
properly align the computer fields itself and resubmit the Asset Schedule as
required herein. With respect to Seasoned Mortgage Loans and Contributed Assets,
Buyer shall review and advise the applicable Seller in writing of Buyer’s Market
Value within four (4) Business Days of receipt of a Transaction Request or
Purchase Price Increase Request, as applicable. Upon Buyer and Sellers’ mutual
agreement of the Market Value, Buyer and the applicable Seller shall enter into
a Transaction or Purchase Price Increase, as applicable, within one (1) Business
Day of such agreement as set forth in Section 3(i) hereto

 

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c. Transfer of Interests. Upon the satisfaction of the applicable conditions
precedent set forth in Section 10 hereof, all of the applicable Seller’s
interest in the Repurchase Assets shall pass to or be pledged to Buyer, against
the transfer of the Purchase Price for the related Purchased Assets to Sellers.
Upon transfer of (i) the Purchased Mortgage Loans to Buyer, (ii) Unrecorded REO
Property to Sellers, the applicable Servicer or any prior owner or prior
servicer for whom the applicable Servicer is contractually permitted to act, all
for the benefit of REO Subsidiary, which shall be for the benefit of Buyer, or
(iii) Contributed Assets to the REO Subsidiary, in each case, as set forth in
this Section and until termination of any related Transactions or the release of
Purchased Mortgage Loans and/or Contributed Assets as set forth in Sections 4 or
16 of this Agreement, beneficial ownership in the related Purchased Mortgage
Loans and Contributed Assets, including each document in the related Asset File
and Records, is vested in Buyer; provided that, prior to the recordation by the
Custodian as provided for in the Custodial Agreement (i) with respect to
Purchased Mortgage Loans, record title in the name of Underlying Repurchase
Counterparty to each Mortgage shall be retained by Underlying Repurchase
Counterparty in trust, for the benefit of Buyer, for the sole purpose of
facilitating the servicing and the supervision of the servicing of the Purchased
Mortgage Loans, (ii) with respect to Contributed Assets, record title in the
name of the REO Subsidiary to each Contributed Asset shall be retained by the
REO Subsidiary in trust pursuant to the applicable Subsidiary Agreement for the
benefit of Buyer, as owner of the REO Subsidiary Interests, for the sole purpose
of facilitating the administration of the Contributed Asset, (iii) with respect
to each Unrecorded REO Property, in which the legal title may be in the name of
Sellers, Servicers or any prior owner or prior servicer for whom the applicable
Servicer is contractually permitted to act, all for the benefit of the REO
Subsidiary, and (iv) with respect to each Contributed Asset other than
Unrecorded REO Property, upon transfer of such Contributed Asset to the REO
Subsidiary as set forth in this Section and until termination of the Transaction
(or release of the Contributed Asset upon payment of the related Optional
Partial Prepayment) as set forth in Sections 4 or 16 of this Agreement,
ownership of such Contributed Asset, including each document in the related
Asset File and Records, is vested in the REO Subsidiary; provided that, prior to
the recordation as provided for in the Custodial Agreement (a) with respect to
Contributed Assets other than Unrecorded REO Properties, record title in the
name of the REO Subsidiary to each Contributed Asset shall be retained by the
REO Subsidiary in accordance with the applicable Subsidiary Agreement and (b)
with respect to Unrecorded REO Property, record title in the name of the
applicable Seller, Servicer or any prior owner or prior servicer for whom the
applicable Servicer is contractually permitted to act to each REO Property shall
be retained in trust for the REO Subsidiary, and promptly transferred to the REO
Subsidiary to be held in accordance with the applicable Subsidiary Agreement but
subject to the requirements of this Agreement.

 

 - 33 - 

 

 

d. Delivery of Asset File. With respect to Mortgage Loans that are not Wet-Ink
Mortgage Loans, Sellers shall cause the delivery of the Asset File to the
Custodian, as more particularly set forth in the Custodial Agreement.

 

e. Delivery of Asset File with respect to Wet-Ink Mortgage Loans. With respect
to each Wet-Ink Mortgage Loan, by no later than the seventh (7th) Business Day
following the applicable Purchase Date, Sellers shall cause the related
Settlement Agent to deliver to the Custodian the remaining documents in the
Asset File, as more particularly set forth in the Custodial Agreement.

 

f. Ownership of REO Subsidiary Interests. Upon transfer of the REO Subsidiary
Interests to Buyer as set forth herein and until termination of such Transaction
as set forth herein, ownership of the REO Subsidiary Interests is vested in the
Buyer, and record title (i) to each Contributed Asset (subject to exceptions
permitted for Unrecorded REO Property) shall be retained by REO Subsidiary, and
(ii) to each Unrecorded REO Property shall be retained by the applicable
Servicer, a Seller, or any prior owner or prior servicer for whom the applicable
Servicer is contractually permitted to act in trust, for the benefit of REO
Subsidiary, which shall be for the benefit of Buyer provided that with respect
to any Unrecorded REO Property in the name of a Seller, the applicable Servicer,
or any prior owner or prior servicer for whom the applicable Servicer is
contractually permitted to act, Sellers shall deliver or cause to be delivered
to the applicable county recorder’s office (with a copy to Custodian) a Deed in
the name of REO Subsidiary within the period of time generally necessary in the
applicable jurisdiction for the applicable Servicer, acting in accordance with
the Servicing Guidelines, to (i) receive the Deed into the name of such party,
(ii) review such Deed and perform all necessary title work with respect to the
related property and (iii) prepare the new Deed to REO Subsidiary.

 

g. Underlying Repurchase Transactions.

 

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(1) With respect to a Mortgage Loan that is subject to a Transaction, in the
event that such Mortgage Loan is sold by an Underlying Repurchase Counterparty
to a Seller under the Underlying Repurchase Documents, such Mortgage Loan may be
sold under the Underlying Repurchase Documents as an Underlying Repurchase Asset
and such Seller shall provide notice thereof to Buyer, and from and after the
related Purchase Date, the selling Seller shall be deemed to have paid the
Repurchase Price of such Mortgage Loan hereunder, the selling Seller shall be
deemed to have sold such Underlying Repurchase Asset to the Underlying
Repurchase Counterparty under the Underlying Repurchase Documents, Buyer shall
be deemed to have paid the Purchase Price for such Mortgage Loan as a Purchased
Mortgage Loan to the purchasing Seller hereunder and the Transaction governing
such Purchased Mortgage Loan shall be between such purchasing Seller and Buyer
hereunder. For the avoidance of doubt, any Mortgage Loan made subject to a
Transaction by a Seller and Buyer that is subsequently sold by such Seller to
Underlying Repurchase Counterparty, and thereafter becomes subject to a
Underlying Repurchase Transaction under the Underlying Repurchase Documents as a
Underlying Repurchase Asset shall, on the related Purchase Date, be replaced by
such Underlying Repurchase Asset as the Purchased Mortgage Loan, which
Underlying Repurchase Asset shall automatically become subject to the
Transaction to which the Mortgage Loan was subject.

 

(2) On each Purchase Date with respect to any Mortgage Loan or REO Subsidiary
Interest subject to an Underlying Repurchase Transaction, the related Seller
will be deemed to make the representations and warranties hereto with respect to
such Mortgage Loan or REO Subsidiary Interest as set forth in Schedule 1, Part
II attached hereto.

 

(3) Each Seller hereby agrees and acknowledges that any Underlying Repurchase
Transaction is subject to and subordinate to Buyer’s rights hereunder and
Buyer’s security interest in the Purchased Mortgage Loans, the REO Subsidiary
Interests and Buyer’s rights under the related Transaction.

 

4. Repurchase

 

a. Sellers shall repurchase from Buyer the related Purchased Assets on each
related Repurchase Date. Such obligation to repurchase exists without regard to
any prior or intervening liquidation or foreclosure with respect to any
Purchased Mortgage Loan or Contributed Asset (but liquidation or foreclosure
proceeds received by Buyer shall be applied to reduce the Repurchase Price for
the related Purchased Mortgage Loans or REO Subsidiary Interests on each Payment
Date except as otherwise provided herein). Sellers are obligated to repurchase
and take physical possession of the Purchased Mortgage Loans and Contributed
Assets, as applicable, from Buyer or its designee (including the Custodian) then
in Buyer’s or its designee’s possession at Sellers’ expense on the related
Repurchase Date.

 

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b. When the Purchased Mortgage Loans or the Contributed Assets supporting a
portion of the Purchase Price of the Transaction related to the REO Subsidiary
Interests are desired by a Seller to be released, sold or otherwise liquidated,
such Seller shall make payment to Buyer in order to prepay the Allocated
Repurchase Price (a “Optional Partial Prepayment”) in an amount equal to the
Allocated Repurchase Price on each date such Purchased Mortgage Loan Contributed
Asset is desired to be sold or otherwise liquidated (each, a “Optional Partial
Prepayment Date”). Such payment shall serve as a partial prepayment of the
Repurchase Price in connection with the Transaction in respect of the Purchased
Mortgage Loans or REO Subsidiary Interests, as applicable, in order to avoid a
Margin Deficit. Such obligation to pay the Optional Partial Prepayment exists
without regard to any prior or intervening liquidation or foreclosure with
respect to any Purchased Mortgage Loan or Contributed Asset. Sellers are
obligated to pay the Optional Partial Prepayment and take physical possession of
the Purchased Mortgage Loans or Contributed Assets, as applicable, giving rise
to the Optional Partial Prepayment, from in the case of Contributed Assets, the
REO Subsidiary or its designee (including the Custodian) at Sellers’ expense on
the related Optional Partial Prepayment Date.

 

c. Provided that no Default shall have occurred and is continuing, and Buyer has
received the related Repurchase Price upon repurchase of the Purchased Assets or
release of Contributed Assets from the REO Subsidiary, Buyer agrees to release
(or permit the release of), as applicable, its ownership interest hereunder in
the Purchased Mortgage Loans, or lien on the Contributed Assets or REO
Subsidiary Interests, or the Repurchase Assets related thereto, as applicable.
The applicable Purchased Mortgage Loans, Contributed Assets or the Repurchase
Assets related thereto, as applicable, shall be retransferred by delivery to the
applicable Seller or the designee of such Seller free and clear of any lien,
encumbrance or claim of Buyer. Provided that no Default shall have occurred and
be continuing, and Buyer has received the applicable Optional Partial
Prepayment, Buyer agrees to permit the release from the REO Subsidiary of the
Contributed Asset attributable to such Optional Partial Prepayment (including,
the Repurchase Assets related thereto) at the request of Sellers. The applicable
Purchased Mortgage Loan or Contributed Asset and the Repurchase Assets related
thereto, shall be delivered to the applicable Seller or the designee of such
Seller free and clear of any lien, encumbrance or claim of Buyer or REO
Subsidiary.

 

d. With respect to a Liquidated Asset, Sellers agree to (i) provide Buyer with a
copy of a report from the related Servicer indicating that such Purchased
Mortgage Loan or Contributed Asset has been liquidated, (ii) cause the
applicable Servicer to, (x) if such Liquidated Asset is a Purchased Mortgage
Loan, remit to the Servicer Account, immediately upon the applicable Servicer’s
receipt of the proceeds, the Repurchase Price, with respect to such Liquidated
Asset and thereafter cause the applicable Servicer to remit such proceeds to the
Collection Account within two (2) Business Days and (y) if such Liquidated Asset
is a Contributed Asset remit the Optional Partial Prepayment in accordance with
Section 4(b) and (iii) provide Buyer a notice specifying each Purchased Mortgage
Loan or Contributed Asset that has been liquidated. Buyer agrees to release its
lien on such Liquidated Asset and permit the release of the Liquidated Asset
from REO Subsidiary concurrently with receipt of confirmation that proceeds have
been received by the applicable Servicer. All amounts on deposit in the REO
Subsidiary Accounts shall be remitted to the Collection Account on each Payment
Date in accordance with the terms of the applicable Subsidiary Agreement.

 

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e. Promptly upon a Purchased Mortgage Loan becoming an REO Property, (a) Sellers
shall (i) notify Buyer in writing that such Purchased Mortgage Loan has become a
REO Property and the value attributed to such REO Property by Sellers, (ii)
deliver to Buyer and Custodian an Asset Schedule with respect to such REO
Property, (iii) be deemed to make the representations and warranties listed on
Schedule 1, Part IV hereto with respect to such REO Property; and (iv) without
limiting the requirements set forth in the definition of Market Value, deliver
to Buyer a true and complete copy of a BPO of such REO Property no less
frequently than once per 180 day period, and (b) solely with respect to a
Purchased Mortgage Loan becoming a REO Property (i) such REO Property shall
automatically and immediately be deemed contributed or sold by the Seller that
owns it to the REO Subsidiary, and (ii) such REO Property shall be deemed a REO
Property owned by the REO Subsidiary hereunder and its Market Value as
determined by Buyer shall be included in the Market Value of the REO Subsidiary
Interests. The acquisition of such REO Property by the REO Subsidiary shall
result in an increase in the value of the REO Subsidiary Interests (as
determined in accordance with the definition of Market Value) of the REO
Subsidiary against a decrease in value of the Purchased Mortgage Loan and any
Purchase Price Increase or Margin Deficit attributed to any change in Category
shall be paid by the Buyer or Sellers as applicable, in accordance with this
Agreement.

 

f. Promptly upon a REO Property becoming a Rental Property, Sellers shall (i)
notify Buyer in writing that such REO Property has become a Rental Property and
the value attributed to such Rental Property by Sellers, (ii) deliver to Buyer
and Custodian an Asset Schedule with respect to such Rental Property, (iii) be
deemed to make the representations and warranties listed on Schedule 1, Part VI
hereto with respect to such Rental Property; (iv) without limiting the
requirements set forth in the definition of Asset Value, deliver to Buyer a true
and complete copy of a BPO of such Rental Property no less frequently than once
per 180 day period. The conversion of such Rental Property shall result in an
applicable change in the value of the REO Subsidiary Interests (as determined in
accordance with the definition of Asset Value) of such REO Subsidiary and any
Margin Deficit attributed to any change in Category shall be paid by the Buyer
or Sellers, as applicable.

 

5. Price Differential

 

a. On each Business Day that a Transaction is outstanding, the Pricing Rate
shall be reset and, unless otherwise agreed, the accrued and unpaid Price
Differential shall be settled in cash on each related Payment Date. Two (2)
Business Days prior to the Payment Date, Buyer shall give Sellers written or
electronic notice of the amount of the Price Differential due on such Payment
Date. On the Payment Date, Sellers shall pay to Buyer the Price Differential for
such Payment Date (along with any other amounts to be paid pursuant to Sections
7 and 34 hereof), by wire transfer in immediately available funds.

 

 - 37 - 

 

 

b. If Sellers fail to pay all or part of the Price Differential by 3:00 p.m.
(New York City time) on the related Payment Date, with respect to any Purchased
Mortgage Loan or Contributed Asset, Sellers shall be obligated to pay to Buyer
(in addition to, and together with, the amount of such Price Differential)
interest on the unpaid Repurchase Price at a rate per annum equal to the
Post-Default Rate until the Price Differential is received in full by Buyer.

 

6. Margin Maintenance

 

a. If at any time the outstanding Purchase Price of any Purchased Mortgage Loan
or allocated to any Contributed Asset underlying a REO Subsidiary Interest
subject to a Transaction is greater than the Asset Value of such Purchased
Mortgage Loan or Contributed Asset underlying a REO Subsidiary Interest subject
to a Transaction (a “Margin Deficit”), then Buyer may by notice to Sellers
require Sellers to transfer to Buyer cash in an amount at least equal to the
Margin Deficit subject to or related to a Transaction or solely with the consent
of Buyer in its sole discretion, additional Mortgage Loans or Contributed Assets
with an Asset Value equal to such Margin Deficit (such requirement, a “Margin
Call”).

 

b. Notice delivered pursuant to Section 6(a) may be given by any written or
electronic means. With respect to a Margin Call in the amount of less than 5% of
the Purchase Price for all Transactions (a “Low Percentage Margin Call”), any
notice given before 5:00 p.m. (New York City time) on a Business Day shall be
met, and the related Margin Call satisfied, no later than 5:00 p.m. (New York
City time) on the following Business Day; notice given after 5:00 p.m. (New York
City time) on a Business Day shall be met, and the related Margin Call
satisfied, no later than 5:00 p.m. (New York City time) on the second Business
Day following the date of such notice. With respect to all Margin Calls other
than Low Percentage Margin Calls, any notice given before 10:00 a.m. (New York
City time) on a Business Day shall be met, and the related Margin Call
satisfied, no later than 5:00 p.m. (New York City time) on such Business Day;
notice given after 10:00 a.m. (New York City time) on a Business Day shall be
met, and the related Margin Call satisfied, no later than 5:00 p.m. (New York
City time) on the following Business Day (the foregoing time requirements for
satisfaction of a Margin Call are referred to as the “Margin Deadlines”). The
failure of Buyer, on any one or more occasions, to exercise its rights
hereunder, shall not change or alter the terms and conditions to which this
Agreement is subject or limit the right of Buyer to do so at a later date. Each
Seller and Buyer each agree that a failure or delay by Buyer to exercise its
rights hereunder shall not limit or waive Buyer’s rights under this Agreement or
otherwise existing by law or in any way create additional rights for a Seller.

 

 - 38 - 

 

 

c. In the event that a Margin Deficit exists with respect to any Purchased
Mortgage Loan or Contributed Asset, Buyer may retain any funds received by it to
which the Sellers would otherwise be entitled hereunder, which funds (i) shall
be held by Buyer against the related Margin Deficit for a Purchased Mortgage
Loan or Contributed Asset and (ii) will be applied by Buyer against the
Allocated Repurchase Price related to such Purchased Mortgage Loan or
Contributed Asset for which the related Margin Deficit remains otherwise
unsatisfied. Notwithstanding the foregoing, the Buyer retains the right, in its
sole discretion, to make a Margin Call in accordance with the provisions of this
Section 6.

 

d. In the event that Sellers reasonably believe that the Asset Value of all
Purchased Assets exceeds the aggregate Purchase Price of all Purchased Assets by
more than $3,000,000, Sellers may request that Buyer remit additional Purchase
Price with respect to specific Purchased Assets to be identified by Sellers to
Buyer, and Buyer will consider such request; provided that Buyer will make such
determination in its sole discretion. Any additional Purchase Price remitted by
Buyer to Sellers hereunder (and in the case of Contributed Assets, Purchase
Price Increase) shall be added to the Purchase Price for the applicable
Purchased Assets. For the avoidance of doubt, Buyer shall have no obligation to
advance additional Purchase Price hereunder, and Buyer’s agreement to do so in
any instance, shall not be deemed as Buyer’s agreement to do so in the future.

 

7. Income Payments

 

a. All Income received on account of the Purchased Mortgage Loans, Contributed
Assets or Subsidiary Certificates during the term of a Transaction shall be the
property of Buyer. Sellers shall and shall cause (i) the applicable Servicer to
deposit all Income with respect to Purchased Mortgage Loans other than New
Origination Mortgage Loans into the Collection Account within two (2) Business
Days following receipt by any Seller, the Underlying Repurchase Counterparty or
the applicable Servicer and the Underlying Repurchase Counterparty, (ii) the
applicable Servicer to deposit all REO Subsidiary Income into the REO Subsidiary
Account within two (2) Business Days following receipt by REO Subsidiary or a
Servicer, as applicable, and (iii) the Property Manager to deposit all Income
received with respect to the Subsidiary Certificates for the REO Subsidiary and
Rental Properties during the immediately preceding calendar month into the REO
Subsidiary Account within five (5) Business Days of receipt thereof; provided,
however, that notwithstanding the foregoing, the applicable Servicer shall be
entitled to retain Ancillary Income to which it is entitled under the applicable
Servicing Agreement, without any obligation to deposit such Income into the
Collection Account or a REO Subsidiary Account.

 

b. Provided no Event of Default has occurred and is continuing, on each Payment
Date, (i) Buyer shall cause the Seller Parties or Property Manager, as
applicable, to remit all amounts collected on account of Rental Properties and
the REO Subsidiary Account to the Collection Account, and (ii) Buyer shall, or
shall direct the Bank to, remit amounts with respect to Contributed Assets and
Seasoned Mortgage Loans, on deposit in the Collection Account as follows:

 

 - 39 - 

 

 

(1) first, to Buyer in payment of any accrued and unpaid Price Differential, to
the extent not paid by Sellers to Buyer pursuant to Section 5;

 

(2) second, to Buyer in reduction of the Repurchase Price or Allocated
Repurchase Price of any Liquidated Asset, an amount equal to the lesser of (x)
Liquidation Proceeds received on or with respect to such Liquidated Asset or (y)
Repurchase Price or Allocated Repurchase Price of such Liquidated Asset;

 

(3) third, without limiting the rights of Buyer under Section 6 of this
Agreement, to Buyer, in the amount of any unpaid Margin Deficit;

 

(4) fourth, to the payment of all other costs and fees payable to Buyer pursuant
to this Agreement; and

 

(5) fifth, to deposit into the REO Subsidiary Account, an amount equal to the
REO Subsidiary Account Required Balance;

 

(6) sixth, only to the extent of amounts then remaining on deposit in the
Collection Account, to the payment of reasonable and actual fees and
unreimbursed advances of the applicable Servicer attributable to the Purchased
Mortgage Loans, Rental Properties or REO Properties, as applicable; and

 

(7) seventh, to Sellers, any remaining amounts.

 

c. Notwithstanding any provision to the contrary in this Section 7, within two
(2) Business Days of receipt by Sellers or Underlying Repurchase Counterparty of
any prepayment of principal in full, with respect to a Purchased Mortgage Loan,
Sellers shall remit or cause to be remitted such amount to Buyer and Buyer shall
immediately apply any such amount received by Buyer to reduce the amount of the
Repurchase Price due upon termination of the related Transaction.

 

d. Notwithstanding any provision to the contrary in this Section 7, upon the
occurrence and continuance of an Event of Default or on the Termination Date all
Income shall be remitted to Buyer for application to the aggregate Repurchase
Price and any Obligations as Buyer deems appropriate.

 

8. Security Interest

 

a. Security Interest.

 

 - 40 - 

 

 

(1) On the applicable Purchase Date on or prior to the date hereof, Sellers
sold, assigned, and conveyed all right, title and interest in REO Subsidiary
Interests and all Purchased Assets identified on a Transaction Request and/or
Trust Receipt, including, without limitation, the beneficial interest in
Purchased Mortgage Loans and Contributed Assets identified on the related Asset
Schedule, and the related Repurchase Assets. On each subsequent Purchase Date,
Sellers hereby sell, assign and convey all right, title and interest in all
Purchased Assets identified on a Transaction Request and/or Trust Receipt and
the related Repurchase Assets, including, without limitation, the beneficial
interest in Purchased Mortgage Loans and Contributed Assets identified on the
related Asset Schedule, and the related Repurchase Assets. Although the parties
intend that all Transactions hereunder be sales and purchases and not loans, in
the event any such Transactions are deemed to be loans, and in any event, each
Seller hereby pledges to Buyer as security for the performance of the
Obligations and hereby grants, assigns and pledges to Buyer a fully perfected
first priority security interest in the Purchased Assets, including, without
limitation, the beneficial interest in Purchased Mortgage Loans and Contributed
Assets identified on the related Asset Schedule, any Agency Security or right to
receive such Agency Security when issued to the extent backed by any of the
Purchased Mortgage Loans and Contributed Assets, the Records (including, without
limitation, any other collateral pledged or otherwise relating to the Rental
Properties, together with all files, material documents, instruments, surveys,
certificates, correspondence, appraisals, computer records, computer storage,
accounting records and other books and records relating thereto), and all
related Servicing Rights, Property Management Rights, the Program Agreements (to
the extent such Program Agreements and each Seller’s right thereunder relate to
the Purchased Mortgage Loans or Contributed Assets), all SFR Property Documents
relating to the Rental Property, all Lease Agreements relating to the Rental
Property, any related Take-out Commitments, the Collection Account, the REO
Subsidiary Account, the Deposit Account, the Securities Account and all amounts
deposited therein, the obligations of each Seller to deliver and convey each
Contributed Asset to REO Subsidiary, any Property relating to the Purchased
Mortgage Loans or Contributed Assets, all insurance policies and insurance
proceeds relating to any Purchased Mortgage Loans or Contributed Assets, or the
related Mortgaged Property, including, but not limited to, any payments or
proceeds under any related primary insurance, hazard insurance and FHA Mortgage
Insurance Contracts and VA Loan Guaranty Agreements (if any), Income, Underlying
Interest Rate Protection Agreements to the extent of the Purchased Assets
protected thereby, accounts (including any interest of each Seller in escrow
accounts) related to the Purchased Assets, all of each Seller’s right, title and
interest in, to and under the Underlying Repurchase Transactions and all of each
Seller’s rights against and in respect of the Underlying Repurchase
Counterparties related to the Underlying Repurchase Transactions, and any other
contract rights, instruments, accounts, payments, rights to payment (including
payments of interest or finance charges), dividends, general intangibles and
other assets relating to the Purchased Mortgage Loans or Contributed Assets,
(including, without limitation, any other accounts) or any interest in the
Purchased Mortgage Loans or Contributed Assets, and any proceeds (including the
related securitization proceeds) and distributions with respect to any of the
foregoing and any other property, rights, title or interests as are specified on
a Transaction Request and/or Trust Receipt, in all instances, whether now owned
or hereafter acquired, now existing or hereafter created (collectively, the
“Seller Repurchase Assets”).

 

 - 41 - 

 

 

(2) In order to further secure the Obligations hereunder, PMC hereby grants,
assigns and pledges to Buyer a fully perfected first priority security interest
in all of PMC’s right, title and interest in, to and under the Underlying
Repurchase Assets subject to an Underlying Repurchase Transaction, Repurchase
Assets (as such term is defined in the Underlying Repurchase Documents), any
Agency Security or right to receive such Agency Security when issued to the
extent backed by any of the Underlying Repurchase Assets, the Records
(including, without limitation, any other collateral pledged or otherwise
relating to the Rental Properties, together with all files, material documents,
instruments, surveys, certificates, correspondence, appraisals, computer
records, computer storage, accounting records and other books and records
relating thereto), and all related Servicing Rights, Property Management Rights,
the Program Agreements (to the extent such Program Agreements and each Seller’s
right thereunder relate to the Purchased Assets), all documents relating to the
Rental Property, all Lease Agreements relating to the Rental Property, any
related Take-out Commitments, the Collection Account, the REO Subsidiary
Account, the Deposit Account, the Securities Account and all amounts deposited
therein, any Property relating to the Underlying Repurchase Assets, all
insurance policies and insurance proceeds relating to any Underlying Repurchase
Asset or the related Mortgaged Property, including, but not limited to, any
payments or proceeds under any related primary insurance, hazard insurance and
FHA Mortgage Insurance Contracts and VA Loan Guaranty Agreements (if any),
Income, Underlying Interest Rate Protection Agreements to the extent of the
Underlying Repurchase Assets protected thereby, accounts (including any interest
of PMC in escrow accounts) related to the Underlying Repurchase Assets, and any
other contract rights, instruments, accounts, payments, rights to payment
(including payments of interest or finance charges), dividends, general
intangibles and other assets relating to the Underlying Repurchase Assets
(including, without limitation, any other accounts) or any interest in the
Underlying Repurchase Assets, and any proceeds (including the related
securitization proceeds) and distributions with respect to any of the foregoing
and any other property, rights, title or interests as are specified on a
Transaction Request and/or Trust Receipt, in all instances, whether now owned or
hereafter acquired, now existing or hereafter created (collectively, the
“Underlying Transaction Repurchase Assets”).

 

 - 42 - 

 

 

(3) In order to further secure the Obligations hereunder, REO Subsidiary hereby
grants, assigns and pledges to Buyer a fully perfected first priority security
interest in the Subsidiary Owned Assets, the Records (including, without
limitation, any other collateral pledged or otherwise relating to the Rental
Properties, together with all files, material documents, instruments, surveys,
certificates, correspondence, appraisals, computer records, computer storage,
accounting records and other books and records relating thereto), and all
related Servicing Rights, Property Management Rights, the Security Deposits, the
Program Agreements (to the extent such Program Agreements and each Seller’s
right thereunder relate to the Purchased Assets), all SFR Property Documents
relating to the Rental Property, all Lease Agreements relating to the Rental
Property, any related Take-out Commitments, the Collection Account, the REO
Subsidiary Account, the Deposit Account, the Securities Account and all amounts
deposited therein, the obligations of each Seller to deliver and convey each
Contributed Asset to REO Subsidiary, any Property relating to the Subsidiary
Owned Assets, all insurance policies and insurance proceeds relating to any
Subsidiary Owned Asset or the related Mortgaged Property, including, but not
limited to, any payments or proceeds under any related primary insurance, hazard
insurance and FHA Mortgage Insurance Contracts and VA Loan Guaranty Agreements
(if any), Income, Underlying Interest Rate Protection Agreements to the extent
of the Subsidiary Owned Assets protected thereby, accounts (including any
interest of REO Subsidiary in escrow accounts) related to the Subsidiary Owned
Assets, and any other contract rights, instruments, accounts, payments, rights
to payment (including payments of interest or finance charges), dividends,
general intangibles and other assets relating to the Subsidiary Owned Assets
(including, without limitation, any other accounts) or any interest in the
Subsidiary Owned Assets, and any proceeds (including the related securitization
proceeds) and distributions with respect to any of the foregoing and any other
property, rights, title or interests as are specified on a Transaction Request
and/or Trust Receipt, in all instances, whether now owned or hereafter acquired,
now existing or hereafter created (collectively, the “Subsidiary Repurchase
Assets”, together with the Seller Repurchase Assets and the Underlying
Transaction Repurchase Assets, the “Repurchase Assets”).

 

b. Release of Servicing Rights. The Sellers and Guarantors each acknowledge that
none of them, nor any Underlying Repurchase Counterparty has rights to service
the Purchased Mortgage Loans or REO Properties but only has rights as a party to
any Servicing Agreement. Without limiting the generality of the foregoing and in
the event that the Sellers or Guarantors are deemed to retain any residual
Servicing Rights, and for the avoidance of doubt, each of Sellers and Guarantors
grants, assigns and pledges to Buyer a security interest in the Servicing Rights
and proceeds related thereto and in all instances, whether now owned or
hereafter acquired, now existing or hereafter created.

 

c. Intent. The foregoing provisions (a) and (b) are intended to constitute a
security agreement or other arrangement or other credit enhancement related to
this Agreement and Transactions hereunder as defined under Sections
101(47)(A)(v) and 741(7)(A)(xi) of the Bankruptcy Code.

 

 - 43 - 

 

 

d. Financing Statements. Each Seller Party agrees to execute, deliver and/or
file such documents and perform such acts as may be reasonably necessary to
fully perfect Buyer’s security interest created hereby. Furthermore, each Seller
Party hereby authorizes the Buyer to file financing statements relating to the
Repurchase Assets, as the Buyer, at its option, may deem appropriate. The
Sellers shall pay the filing costs for any financing statement or statements
prepared pursuant to this Section 8. For the avoidance of doubt, the parties
hereto agree that no mortgage on real property will be filed with respect to
such security interest.

 

e. Subordination. Each Seller acknowledges and agrees that its rights with
respect to the Repurchase Assets (including without limitation its security
interest in the Purchased Assets and Contributed Assets and any other collateral
purchased by such Seller in an Underlying Repurchase Transaction and in which a
security interest is granted to Buyer pursuant to this Section 8) are and shall
continue to be at all times junior and subordinate to the rights of Buyer under
this Agreement. Each Seller agrees that it will provide notice of any action it
takes with respect to the Repurchase Assets at any time any such Repurchase
Assets are owned by or pledged to Buyer under this Agreement. In furtherance of
the foregoing, each Seller acknowledges and agrees that the grants given by REO
Subsidiary are directly in favor of Buyer and no Seller that is party to an
Underlying Repurchase Transaction has any claim to the assets of REO Subsidiary
granted hereunder.

 

f. Acquisition of REO Property. If the Sellers shall acquire, or contemplate the
acquisition of, any REO Property, or desire to extinguish any Mortgage Note in
connection with the foreclosure of the related Mortgage Loan, a transfer of the
real property underlying the Mortgage Note in lieu of foreclosure or other
transfer of such real property, the Sellers shall cause such real property to be
taken by deed, or by means of such instruments as is provided by the
Governmental Authority governing the transfer, or right to request transfer and
issuance of the deed, or such instrument as is provided by the related
Governmental Authority, or to be acquired through foreclosure sale in the
jurisdiction in which the REO Property is located, in the name of the REO
Subsidiary; provided that each Seller or the applicable Servicer may achieve
this by initially taking such REO Property in its own name or in the name of any
prior owner or prior servicer for whom the applicable Servicer is contractually
permitted to act, and then transferring (and hereby covenants to transfer) such
REO Property to the REO Subsidiary by deed within the period of time generally
necessary in the applicable jurisdiction for the applicable Servicer.

 

g. REO Subsidiary Interests as Securities. The parties acknowledge and agree
that the REO Subsidiary Interests shall constitute and remain “securities” as
defined in Section 8-102 of the Uniform Commercial Code; PMC covenants and
agrees that (i) the REO Subsidiary Interests are not and will not be dealt in or
traded on securities exchanges or securities markets, and (ii) the REO
Subsidiary Interests are not and will not be investment company securities
within the meaning of Section 8-103 of the Uniform Commercial Code. PMC shall,
at Sellers’ sole cost and expense, take all steps as may be reasonably necessary
in connection with the indorsement, transfer, delivery and pledge of all REO
Subsidiary Interests to Buyer.

 

 - 44 - 

 

 

h. Additional Interests. If PMC shall, as a result of ownership of the REO
Subsidiary Interests become entitled to receive or shall receive any certificate
evidencing any REO Subsidiary Interest or other equity interest, any option
rights, or any equity interest in REO Subsidiary, whether in addition to, in
substitution for, as a conversion of, or in exchange for the REO Subsidiary
Interests, or otherwise in respect thereof, PMC shall accept the same as agent
for Buyer, hold the same in trust for the Buyer and deliver the same forthwith
to the Buyer in the exact form received, duly indorsed by PMC to the Buyer, if
required, together with an undated transfer power, if required, covering such
certificate duly executed in blank, to be held by the Buyer subject to the terms
hereof as additional security for the Obligations. Any sums paid upon or in
respect of the REO Subsidiary Interests upon the liquidation or dissolution of
REO Subsidiary shall be paid over to the Buyer as additional security for the
Obligations. If following the occurrence and during the continuation of an Event
of Default any sums of money or property so paid or distributed in respect of
the REO Subsidiary Interests shall be received by PMC, PMC shall, until such
money or property is paid or delivered to the Buyer, hold such money or property
in trust for the Buyer segregated from other funds of PMC as additional security
for the Obligations.

 

i. Voting Rights. Subject to this Section, Buyer as the holder shall exercise
all voting and member rights with respect to the Repurchase Assets, provided
that, unless an Event of Default has occurred and is continuing, Buyer (i) shall
not exercise any voting or member right with respect to the Repurchase Assets
without giving Sellers prior written notice (which may be in the form of an
email transmission and which notice shall describe the contemplated action);
provided that, to the extent that any voting or member action is in response to
a request by a Seller or an Affiliate of Seller, such notice may be in the form
of a response to such request; and provided further that Buyer shall not be
liable to the Seller for any failure to deliver such notice to the extent that
such failure is not due to bad faith or willful misconduct on the part of the
Buyer, and (ii) shall exercise all such voting and member rights as instructed
by Sellers unless Buyer shall determine in its good faith discretion that such
exercise in accordance with such instruction would otherwise result in a breach
of a provision of this Agreement, an Event of Default under this Agreement or
would adversely affect the Buyer’s rights or interests under this Agreement or
with respect to the REO Subsidiary Interests or Repurchase Assets. Without
limiting the generality of the foregoing, Buyer may in its sole discretion (x)
remove a Servicer or Program Manager, as applicable, or terminate a Servicing
Agreement or Program Management Agreement, as applicable, in connection with a
default by a Servicer or Program Manager, as applicable, or (y) consent or
refuse to consent to a waiver of a material breach or consent or refuse to
consent to a material modification of a Servicing Agreement or Program
Management Agreement, as applicable. In no event shall Buyer be required to cast
any vote or exercise any member right or take other action which would impair
the Repurchase Assets or the REO Subsidiary Interests, as applicable, or which
would be inconsistent with or result in a violation of any provision of this
Agreement. Without limiting the generality of the foregoing, Buyer shall have no
obligation to (a) vote to enable, or take any other action to permit REO
Subsidiary to issue any interests of any nature or to issue any other interests
convertible into or granting the right to purchase or exchange for any interests
of such entity, or (b) sell, assign, transfer, exchange or otherwise dispose of,
or grant any option with respect to the REO Subsidiary Interests or (c) create,
incur or permit to exist any Lien or option in favor of, or any claim of any
Person with respect to, the Sellers’ or REO Subsidiary’s interest in the
Repurchase Assets except for the Lien provided for by this Agreement, or (d)
except as provided in this Agreement, enter into any agreement or undertaking
restricting the right or ability of Sellers or REO Subsidiary to sell, assign or
transfer the Repurchase Assets.

 

 - 45 - 

 

 

j. REO Subsidiary Interests. Notwithstanding any provision to the contrary
herein or in any other Program Agreement, the Seller Parties and Buyer hereby
acknowledge and agree that (i) the issuance or reissuance of the REO Subsidiary
Interests in Buyer’s name is for the sole purpose of perfecting Buyer’s security
interest hereunder in the REO Subsidiary Interests (by means of “control” under
Section 8-106(b)(2) of the Uniform Commercial Code) and for otherwise exercising
its rights as permitted under this Agreement, and (ii) the security interest in
the REO Subsidiary Interests granted hereunder shall constitute a security
interest in all legal and beneficial interest in and to such REO Subsidiary
Interests but not a sale or transfer of such legal and beneficial interest in
and to such REO Subsidiary Interest.

 

9. Payment and Transfer

 

Unless otherwise mutually agreed in writing, all transfers of funds to be made
by Sellers hereunder shall be made in Dollars, in immediately available funds,
without deduction, set-off or counterclaim, to Buyer at the following account
maintained by Buyer: Account No. 30910312, for the account of CSFB
Buyer/PennyMac Holdings, LLC/PennyMac Operating Partnership, L.P.-Inbound
Account, Citibank, ABA No. 021 000 089 or such other account as Buyer shall
specify to Sellers in writing. Each Seller acknowledges that it has no rights of
withdrawal from the foregoing account. All Purchased Assets transferred by one
party hereto to the other party shall be in the case of a purchase by Buyer in
suitable form for transfer or shall be accompanied by duly executed instruments
of transfer or assignment in blank and such other documentation as Buyer may
reasonably request. All Purchased Assets and Contributed Assets shall be
evidenced by a Trust Receipt. Any Repurchase Price received by Buyer after 2:00
p.m. (New York City time) shall be deemed received on the next succeeding
Business Day.

 

10. Conditions Precedent

 

a. Effective Date. As conditions precedent to the Effective Date, Buyer shall
have received on or before the day of entering into additional Transactions the
following, in form and substance satisfactory to Buyer and duly executed by each
Seller Party, Guarantors and each other party thereto:

 

 - 46 - 

 

 

(1) Program Agreements. The Program Agreements duly executed and delivered by
the parties thereto and being in full force and effect, free of any
modification, breach or waiver.

 

(2) Security Interest. Evidence that all other actions necessary or, in the
opinion of Buyer, desirable to perfect and protect Buyer’s interest in the
Purchased Assets, Purchased Mortgage Loans, Contributed Assets and other
Repurchase Assets have been taken, including, without limitation, (i) duly
authorized and filed Uniform Commercial Code financing statements on Form UCC-1
and Form UCC-3 and (ii) delivery to the Custodian of the original Subsidiary
Certificate re-registered into the name of the Buyer and evidence that any REO
Subsidiary Interests are evidenced by a certificate in a registered form.

 

(3) Organizational Documents. A certificate of the duly authorized person of
each Seller Party, each Guarantor and PennyMac GP OP, Inc., attaching certified
copies of each Seller’s certificate of formation and operating agreement,
PennyMac Mortgage Investment Trust’s declaration of trust, PennyMac Operating
Partnership, L.P.’s limited partnership certificate, REO Subsidiary’s Subsidiary
Agreement and in each case resolutions approving the Program Agreements and
transactions thereunder (either specifically or by general resolution) and all
documents evidencing other necessary action or governmental approvals as may be
required in connection with the Program Agreements.

 

(4) Good Standing Certificate. A certified copy of a good standing certificate
from the jurisdiction of organization of Sellers and Guarantors, dated as of no
earlier than the date ten (10) Business Days prior to the date hereof.

 

(5) Incumbency Certificate. An incumbency certificate of each Seller,
administrator and authorized signatory for REO Subsidiary, and Guarantors,
certifying the names, true signatures and titles of the representatives duly
authorized to request transactions hereunder and to execute the Program
Agreements.

 

(6) Opinion of Counsel. An opinion of Seller Parties’ and Guarantors’ counsel,
in form and substance acceptable to Buyer as to (i) general corporate matters,
(ii) enforceability, (iii) creation and perfection, (iv) bankruptcy safe
harbors, (v) matters of Delaware law with respect to REO Subsidiary, and (vi)
Investment Company Act of 1940, as amended (the “Investment Company Act”),
indicating that no Guarantor, Seller nor REO Subsidiary is an “investment
company”, within the meaning of the Investment Company Act and that it is not
necessary for REO Subsidiary to register under the Investment Company Act
because REO Subsidiary is not required to be registered as an “investment
company” within the meaning of the Investment Company Act as it is outside the
definitions of “investment company” under Section 3(a)(1)(A), (B) and (C) of the
Investment Company Act or, alternatively, it is not required to be registered as
an “investment company” within the meaning of the Investment Company Act in
reliance upon the exceptions under Sections 3(c)(5)(C) and 3(c)(6).

 

 - 47 - 

 

 

(7) Underwriting Guidelines, Acquisition Guidelines, Leasing Criteria, Tenant
Underwriting Criteria. A true and correct copy of the Underwriting Guidelines,
Acquisition Guidelines, Leasing Criteria and Tenant Underwriting Criteria, each
certified by an officer of the Underlying Repurchase Counterparty.

 

(8) Fees. Payment of any fees due to Buyer hereunder.

 

(9) Insurance. Evidence that Sellers have added Buyer as an additional loss
payee under the Sellers’ Fidelity Insurance.

 

(10) Underlying Repurchase Documents. Fully executed and delivered Underlying
Repurchase Documents.

 

(11) REO Subsidiary Interests. Sellers shall deliver an original of each
Subsidiary Certificate or other similar indicia of ownership of the REO
Subsidiary Interests, however denominated, re-registered in Buyer’s name.

 

b. All Transactions and Purchase Price Increases. The obligation of Buyer to
enter into each Transaction or Purchase Price Increase pursuant to this
Agreement is subject to the following conditions precedent:

 

(1) Due Diligence Review. Without limiting the generality of Section 36 hereof,
Buyer shall have completed, to its satisfaction, its due diligence review of the
related Purchased Assets, Mortgage Loans, Contributed Assets, Underlying
Repurchase Counterparty, Property Manager, Seller Parties, Guarantors and the
applicable Servicer. In addition to the foregoing, at least five (5) Business
Days prior to the related Purchase Date with respect to Seasoned Mortgage Loans,
Sellers shall have delivered to Buyer summary results of the due diligence
Sellers performed in connection with the acquisition of Mortgage Loans by
Sellers and Contributed Assets by REO Subsidiary and Buyer shall have excluded
such assets as it deemed appropriate in its sole discretion.

 

(2) Required Documents.

 

(a) With respect to each Mortgage Loan which is not a Wet-Ink Mortgage Loan and
REO Property, the Asset File has been delivered to the Custodian in accordance
with the Custodial Agreement;

 

 - 48 - 

 

 

(b) With respect to each Wet-Ink Mortgage Loan, the Wet-Ink Documents have been
delivered to Buyer or Custodian, as the case may be, in accordance with the
Custodial Agreement;

 

(c) The Buyer has, in its sole discretion, approved the Property Manager and has
delivered and executed the Property Management Agreement and the Buyer has
received evidence that, with respect to Transactions relating to Rental
Properties, the Property Manager has added Buyer as an additional loss payee
under Property Manager’s Fidelity Insurance; and

 

(d) With respect to each of the Purchased Mortgage Loans and Contributed Assets,
(x) all applicable Servicers have delivered a fully executed Servicer Notice and
Pledge and (y) the Property Manager have delivered fully executed Property
Management Agreement Side Letter.

 

(3) Transaction Documents. Buyer or its designee shall have received on or
before the day of such Transaction or Purchase Price Increase (unless otherwise
specified in this Agreement) the following, in form and substance satisfactory
to Buyer and (if applicable) duly executed:

 

(a) A Transaction Request or Purchase Price Increase Request, as applicable, and
Asset Schedule or other information required to be delivered by the applicable
Seller pursuant to Section 3(b) or 3(c) hereof.

 

(b) The Request for Certification and the related Asset Schedule delivered by a
Seller, and the Trust Receipt and Custodial Asset Schedule delivered by
Custodian.

 

(c) With respect to Rental Properties, such other documents as Buyer may
reasonably request, in form and substance reasonably acceptable to Buyer,
including but not limited to the following: (x) the SFR Property Documents, (y)
current rent roll (including actual and expected rents), if applicable, and (z)
Tenant credit information, as may be required by Buyer in its reasonable
discretion.

 

(d) Such certificates, opinions of counsel or other documents as Buyer may
reasonably request.

 

(4) No Default. No Default, Event of Default or, with solely respect to new
Transactions involving Rental Properties, no Early Repurchase Trigger Event
shall have occurred and be continuing;

 

(5) Requirements of Law. Buyer shall not have determined that the introduction
of or a change in any Requirement of Law or in the interpretation or
administration of any Requirement of Law applicable to Buyer has made it
unlawful, and no Governmental Authority shall have asserted that it is unlawful,
for Buyer to enter into Transactions or remit Purchase Price Increases with a
Pricing Rate based on the Base Rate.

 

 - 49 - 

 

 

(6) Representations and Warranties. Both immediately prior to the related
Transaction or Purchase Price Increase, as applicable, and also after giving
effect thereto and to the intended use thereof, the representations and
warranties made by Seller Parties in each Program Agreement shall be true,
correct and complete on and as of such Purchase Date in all material respects
with the same force and effect as if made on and as of such date (or, if any
such representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date).

 

(7) Electronic Tracking Agreement. To the extent any Purchased Mortgage Loans
are registered on the MERS® System, an Underlying Electronic Tracking Agreement
entered into, duly executed and delivered by the parties thereto and being in
full force and effect, free of any modification, breach or waiver; provided
that, executed signature pages by MERS and MERSCORP Holdings, Inc. may be
provided following the date hereof.

 

(8) Material Adverse Change. None of the following shall have occurred and/or be
continuing:

 

(a) Credit Suisse AG, New York Branch’s corporate bond rating as calculated by
S&P or Moody’s has been lowered or downgraded to a rating below investment grade
by S&P or Moody’s;

 

(b) an event or events shall have occurred in the good faith determination of
Buyer resulting in the effective absence of a “repo market” or comparable
“lending market” for financing debt obligations secured by mortgage loans or
securities or an event or events shall have occurred resulting in Buyer not
being able to finance Purchased Mortgage Loans and/or Contributed Assets through
the “repo market” or “lending market” with traditional counterparties at rates
which would have been reasonable prior to the occurrence of such event or
events; or

 

(c) an event or events shall have occurred resulting in the effective absence of
a “securities market” for securities backed by mortgage loans or an event or
events shall have occurred resulting in Buyer not being able to sell securities
backed by mortgage loans at prices which would have been reasonable prior to
such event or events; or

 

(d) there shall have occurred a material adverse change in the financial
condition of Buyer which affects (or can reasonably be expected to affect)
materially and adversely the ability of Buyer to fund its obligations under this
Agreement.

 

(9) Pooled Mortgage Loans. Solely with respect to Transactions the subject of
which are Pooled Mortgage Loans, Buyer shall have received the related Trade
Assignment on or prior to the Purchase Date with respect thereto.

 

(10) Underlying Repurchase Documents. Sellers shall provide a Transaction
Request (as defined in the Underlying Repurchase Documents), which shall
reference the applicable Asset Schedule which shall describe the Purchased
Mortgage Loans and Contributed Assets. All Underlying Repurchase Documents
applicable to each Purchased Mortgage Loan and Contributed Asset have been duly
executed and delivered by Sellers and the Underlying Repurchase Counterparty and
are in form and substance satisfactory to Buyer in all material respects, in its
sole discretion.

 

 - 50 - 

 

 

(11) Acceptable Underlying Repurchase Transaction. Such Mortgage Loan is sold to
a Seller by an Underlying Repurchase Counterparty pursuant to an Acceptable
Underlying Repurchase Transaction.

 

(12) Escrow Instruction Letter. With respect to each Wet-Ink Mortgage Loan,
evidence that an Escrow Instruction Letter has been delivered by Underlying
Repurchase Counterparty to the related Settlement Agent.

 

(13) Underlying Repurchase Counterparty Compare Ratio. With respect to the
applicable Mortgage Loan, the related Underlying Repurchase Counterparty Compare
Ratio with respect to each of its Underlying Repurchase Counterparty DE Compare
Report and Underlying Repurchase Counterparty Institution Compare Report does
not exceed 150%.

 

(14) Delivery of Broker’s Price Opinion.

 

(a) With respect to each Seasoned Mortgage Loan and REO Property, Sellers shall
have delivered to Buyer a BPO valuation and valuation date, and such other
information as may be required by Buyer pursuant to Section 3(b) for such
Purchased Asset.

 

(b) With respect to each Rental Property, the REO Subsidiary shall have
delivered to Buyer a true and complete copy of an internal BPO for such Rental
Property dated no more than sixty (60) days prior to the requested Purchase
Price Increase Date or the Conversion Date.

 

(15) Licensing. Buyer shall not be required to obtain any “mortgage banker”,
“broker”, “lender” or other similar state license in order to enter into
Transactions with respect to such Rental Properties or in connection with the
SFR Property Documents for such Rental Properties.

 

(16) DE Compare Ratio. Sellers’ DE Compare Ratio shall be less than 250%.

 

(17) No HUD Suspension. HUD shall not have suspended PMC’s ability to originate
FHA Loans in any jurisdiction.

 

(18) REO Subsidiary Account Required Balance. Solely with respect to new
Transactions involving Rental Properties, the Sellers shall maintain a minimum
balance in the REO Subsidiary Account of at least the REO Subsidiary Account
Required Balance.

 

 - 51 - 

 

 

11. Program; Costs

 

a. Sellers shall pay the fees and expenses of Buyer’s counsel in connection with
the original preparation and execution of the Program Agreements. Sellers shall
reimburse Buyer for any of Buyer’s reasonable out-of-pocket costs, including due
diligence review costs and reasonable attorney’s fees incurred by Buyer in
determining the acceptability to Buyer of any Mortgage Loans. Sellers shall also
pay, or reimburse Buyer if Buyer shall pay, any termination fee, which may be
due any servicer. Legal fees for any subsequent amendments to this Agreement or
related documents shall be borne by Sellers. Sellers shall pay ongoing custodial
fees and expenses as set forth in the Custodial Agreement, and any other ongoing
fees and expenses under any other Program Agreement.

 

b. If Buyer determines that, due to the introduction of, any change in, or
required change in compliance by Buyer with (i) any eurocurrency reserve
requirement or (ii) the interpretation of any law, regulation or any guideline
or request from any central bank or other Governmental Authority (whether or not
having the force of law), there shall be an increase in the cost to Buyer in
engaging in the present or any future Transactions or remitting Purchase Price
Increases, then Sellers agree to pay to Buyer, from time to time, upon demand by
Buyer (with a copy to Custodian) the actual cost of additional amounts as
specified by Buyer to compensate Buyer for such increased costs; provided that
this Section 11(b) shall only apply to the extent that such increased costs are
not reflected in Buyer’s calculation of the Base Rate.

 

c. With respect to any Transaction or Purchase Price Increase, as applicable,
Buyer may conclusively rely upon, and shall incur no liability to Sellers in
acting upon, any request or other communication that Buyer reasonably believes
to have been given or made by a person authorized to enter into a Transaction or
request a Purchase Price Increase, as applicable, on any Seller’s behalf,
whether or not such person is listed on the certificate delivered pursuant to
Section 10(a)(6) hereof. In each such case, each Seller hereby waives the right
to dispute Buyer’s record of the terms of the request or other communication.

 

d. Notwithstanding the assignment of the Program Agreements with respect to each
Repurchase Asset to Buyer, each Seller Party agrees and covenants with Buyer to
enforce diligently such Seller Party’s rights and remedies set forth in the
Program Agreements.

 

e.     (i) Any payments made by Sellers or Guarantor to Buyer hereunder shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if a Seller or Guarantor shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (A) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
11(e)(i)) the Buyer receives an amount equal to the sum it would have received
had no such deductions been made, (B) the Sellers shall make such deductions,
(C) the Sellers shall pay the full amount deducted to the relevant official body
in accordance with applicable Law, and (D) the Sellers shall notify the Buyer of
the amount paid and shall provide evidence of such payment within ten days
thereafter. Sellers and Guarantor shall otherwise indemnify Buyer for any
Indemnified Taxes or Other Taxes imposed on Buyer.

 

 - 52 - 

 

 

(ii) Buyer and any Buyer assignee shall deliver to each of the Sellers and the
Guarantor (A) in the case of a Buyer or Buyer assignee which is a “U.S. Person”
as defined in section 7701(a)(30) of the Code, a properly completed and executed
Internal Revenue Service (“IRS”) Form W-9 certifying that it is not subject to
backup withholding, and (B) in the case of a Buyer or Buyer assignee which is
not a “U.S. Person” as defined in Code section 7701(a)(30), a properly completed
and executed IRS Form W-8BEN or W-8ECI, as appropriate, evidencing entitlement
to a zero percent rate of U.S. federal income tax withholding on any payments
made hereunder and, in the case of such non-U.S. Person claiming exemption from
the withholding of U.S. federal income tax under Code sections 871(h) or 881(c)
with respect to payments of “portfolio interest,” a duly executed certificate to
the effect that such non-U.S. Person is not (A) a “bank” within the meaning of
Code section 881(c)(3)(A), (B) a “10 percent shareholder” of any Seller,
Guarantor of affiliate thereof, within the meaning of Code section 881(c)(3)(B),
or (C) a “controlled foreign corporation” described in Code section
881(c)(3)(C).

 

f. (i) Any indemnification payable by Sellers to Buyer or any Buyer assignee for
Indemnified Taxes or Other Taxes that are imposed on Buyer or a Buyer assignee,
as described in Section 11(e)(i) hereof, shall be paid by Sellers within thirty
(30) days after written demand therefor. As part of any such written demand for
payment, the Buyer or the relevant Buyer assignee shall deliver a certificate to
Sellers (along with a copy of the applicable documents from the relevant
Governmental Authority) setting forth a calculation of the amount of Indemnified
Taxes or Other Tax for which the demand is made, which calculated amount shall
be conclusive absent manifest error. The Buyer or relevant Buyer assignee also
shall timely deliver to the Sellers a receipt (or other evidence reasonably
satisfactory to the Sellers) of the actual payment of Indemnified Taxes or Other
Taxes with respect to which the indemnification request relates.

 

(ii) In addition, as soon as practicable after any payment of Indemnified Taxes
or Other Taxes by a Seller to a Governmental Authority pursuant to Section
11(e)(i), such Seller shall deliver to the Buyer or the relevant Buyer assignee
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to Buyer or the
relevant Buyer assignee.

 

The applicable IRS forms referred to above shall be delivered by each applicable
Buyer or Buyer assignee on or prior to the date on which such person becomes a
Buyer or Buyer assignee under this Agreement, as the case may be, and upon the
obsolescence or invalidity of any IRS form previously delivered by it hereunder.

 

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12. Servicing; Property Management

 

a. Servicing.

 

(1) Pursuant to the Servicing Agreement, Seller Parties have contracted with
Servicer to service the Purchased Mortgage Loans and REO Properties consistent
with the degree of skill and care that Seller Parties customarily require with
respect to similar Mortgage Loans and REO Properties owned or managed by it and
in accordance with Accepted Servicing Practices. The Seller Parties and Servicer
shall (i) comply with all applicable Federal, State and local laws and
regulations, (ii) maintain all state and federal licenses necessary for it to
perform its servicing responsibilities hereunder and (iii) not impair the rights
of Buyer in any Mortgage Loans and REO Properties or any payment thereunder.
Buyer may terminate the servicing of any Mortgage Loan or REO Property with the
then-existing servicer in accordance with Section 12(a)(5) hereof.

 

(2) Seller Parties shall and shall cause the Servicer to hold or cause to be
held all escrow funds collected by Seller Parties and Servicer with respect to
any Purchased Mortgage Loans and REO Properties in trust accounts and shall
apply the same for the purposes for which such funds were collected.

 

(3) Seller Parties shall and shall cause the Servicer to deposit all collections
received by Servicer on the Purchased Mortgage Loans and REO Property in
accordance with Section 7 hereof.

 

(4) Seller Parties shall provide to Buyer a Servicer Notice and Pledge addressed
to and agreed to by the Servicer of the related Purchased Mortgage Loans and REO
Properties, advising such 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 REO Properties 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 Purchased Mortgage Loans
and REO Properties and any related Income with respect thereto.

 

(5) Upon the occurrence and continuation of an Event of Default hereunder, Buyer
shall have the right to immediately terminate the Servicer’s right to service
the Purchased Mortgage Loans and REO Properties without payment of any penalty
or termination fee under the Servicing Agreement. Seller Parties and the
Servicer shall cooperate in transferring the servicing of the Purchased Mortgage
Loans and REO Properties to a successor servicer appointed by Buyer in its sole
discretion. For the avoidance of doubt, any termination of the Servicer’s rights
to service by the Buyer as a result of 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.

 

 - 54 - 

 

 

(6) If Seller Parties should discover that, for any reason whatsoever, Seller
Parties or any entity responsible to Seller Parties for managing or servicing
any such Purchased Mortgage Loan or REO Property has failed to perform fully
Seller Parties’ obligations under the Program Agreements or any of the
obligations of such entities with respect to the Purchased Mortgage Loans and
REO Properties, Seller Parties shall promptly notify Buyer.

 

(7) Reserved.

 

(8) For the avoidance of doubt, no Seller Party retains economic rights to the
servicing of the Purchased Mortgage Loans and REO Properties; provided that the
Seller Parties shall and shall cause the Servicer to continue to service the
Purchased Mortgage Loans and REO Properties hereunder as part of the Obligations
hereunder. As such, each Seller Party expressly acknowledges that the REO
Properties are transferred to REO Subsidiary and pledged to Buyer on a
“servicing released” basis.

 

b. Property Management.

 

(1) Pursuant to the Property Management Agreement, the Sellers, on Buyer’s
behalf, shall contract with the Property Managers to manage the Rental Property
consistent with the degree of skill and care that such Property Managers
customarily require with respect to similar Rental Property owned or managed by
such Property Managers and in accordance with Accepted Property Management
Practices. Property Manager shall (i) comply in all material respects with all
applicable Federal, State and local laws and regulations, (ii) maintain all
state and federal licenses necessary for it to perform its management
responsibilities hereunder and (iii) not impair the rights of Buyer in any
Rental Property or any payment thereunder. Buyer may terminate the management of
any Rental Property with the then existing Property Managers in accordance with
Section 12(b)(5) hereof.

 

(2) Upon request from Buyer, each Seller shall provide to Custodian, as part of
the Asset File, an executed Tenant Instruction Notice addressed to and agreed to
by the Eligible Tenant, advising Eligible Tenants of such matters as Buyer may
reasonably request, including, without limitation, recognition by the Eligible
Tenants of Buyer’s interest in such Rental Properties and each Eligible Tenant’s
agreement that upon receipt of notice of an Event of Default or a Property
Manager Termination Event from Buyer, it will follow the instructions of Buyer
with respect to the Rental Property and any related Income with respect thereto.

 

(3) Upon prior written notice following the occurrence and during the
continuance of an Event of Default or Property Manager Termination Event, Buyer
shall have the right to immediately terminate the Property Manager’s right to
manage the Rental Properties without payment of any penalty or termination fee
under the Property Management Agreement. Upon receipt of such notice, each
Seller and the Property Manager shall cooperate in transferring the management
of the Rental Properties to a successor property manager appointed by Buyer in
its sole discretion. For the avoidance of doubt, any termination of a Property
Manager’s rights to manage by the Buyer as a result of an Event of Default or
Property Manager Termination Event shall be deemed part of an exercise of the
Buyer’s rights to cause the liquidation, termination or acceleration of this
Agreement.

 

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(4) If any Seller should discover that, for any reason whatsoever, any Seller or
any entity responsible to such Seller for managing any such Rental Property has
failed to perform fully such Seller’s material obligations under the Program
Agreements or any of the material obligations of such entities with respect to
the Rental Properties, such Seller shall promptly notify Buyer.

 

13. Representations and Warranties

 

a. Except as otherwise specifically set forth below, each of Seller Parties and
Guarantors represents and warrants to Buyer as of the date hereof and as of each
Purchase Date for any Transaction or Purchase Price Increase Date, as
applicable, that:

 

(1) Seller Parties and Guarantors Existence. PMC has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Delaware. PennyMac Holdings, LLC has been duly organized and is validly
existing as a limited liability company in good standing under the laws of the
State of Delaware. PennyMac Mortgage Investment Trust has been duly organized
and is validly existing as a real estate investment trust in good standing under
the laws of the State of Maryland. PennyMac Operating Partnership, L.P. has been
duly organized and is validly existing as a limited partnership in good standing
under the laws of the State of Delaware. REO Subsidiary has been duly organized
and is validly existing and in good standing under the laws of the State of
Delaware.

 

(2) Licenses. Each Seller Party and each Guarantor is duly licensed or is
otherwise qualified in each jurisdiction in which it transacts business for the
business which it conducts and is not in default of any applicable federal,
state or local laws, rules and regulations unless, in either instance, the
failure to take such action is not reasonably likely (either individually or in
the aggregate) to cause a Material Adverse Effect. Each Seller Party and each
Guarantor has the requisite power and authority, legal right and necessary
licenses (including from VA and FHA, if applicable) to originate and purchase
Mortgage Loans and/or REO Property, lease Rental Property (as applicable) and to
own, sell and grant a lien on all of its right, title and interest in and to the
Mortgage Loans, Rental Properties and REO Property, and to execute and deliver,
engage in the transactions contemplated by, and perform and observe the terms
and conditions of, each Program Agreement and any Transaction Request or
Purchase Price Increase Request, as applicable.

 

 - 56 - 

 

 

(3) Power. Each Seller Party and each Guarantor has all requisite corporate or
other power, and has all governmental licenses, authorizations, consents and
approvals necessary to own its assets and carry on its business as now being or
as proposed to be conducted, except where the lack of such licenses,
authorizations, consents and approvals would not be reasonably likely to have a
Material Adverse Effect.

 

(4) Due Authorization. Each Seller Party and each Guarantor has all necessary
corporate or other power, authority and legal right to execute, deliver and
perform its obligations under each of the Program Agreements, as applicable.
Each Program Agreement has been (or, in the case of Program Agreements not yet
executed, will be) duly authorized, executed and delivered by Seller Parties and
Guarantors, all requisite or other corporate action having been taken, and each
is valid, binding and enforceable against Seller Parties and Guarantors in
accordance with its terms except as such enforcement may be affected by
bankruptcy, by other insolvency laws, or by general principles of equity.

 

(5) Financial Statements. Each of PMIT, PMC and PennyMac Holdings have
heretofore furnished to Buyer a copy of (a) its consolidated balance sheets for
the fiscal year ended December 31, 2014 and the related consolidated statements
of income and retained earnings and of cash for such fiscal year, with the
opinion thereon of Deloitte & Touche LLP and (b) its consolidated balance sheets
for the quarterly fiscal periods ended June 30, 2015 and September 30, 2015 and
the related consolidated statements of income and retained earnings and of cash
flows for it and its consolidated Subsidiaries for such quarterly fiscal
periods. All such financial statements are complete and correct and fairly
present, in all material respects, the consolidated financial condition of PMIT,
PMC or PennyMac Holdings and their consolidated Subsidiaries, as applicable and
the consolidated results of their operations as at such dates and for such
fiscal periods, all in accordance with GAAP (other than monthly financial
statements solely with respect to footnotes, year-end adjustments and cash flow
statements) applied on a consistent basis. Each of PMIT, PMC, and PennyMac
Holdings has, on the date of the statements delivered pursuant to this Section
(the “Statement Date”) no liabilities, direct or indirect, fixed or contingent,
matured or unmatured, known or unknown, or liabilities for taxes, long-term
leases or unusual forward or long-term commitments not disclosed by, or reserved
against in, said balance sheet and related statements, and at the present time
there are no material unrealized or anticipated losses from any loans, advances
or other commitments of Sellers except as heretofore disclosed to Buyer in
writing.

 

(6) Event of Default. There exists no Event of Default under Section 15(b)
hereof, which default gives rise to a right to accelerate indebtedness as
referenced in Section 15(b) hereof, under any mortgage, borrowing agreement or
other instrument or agreement pertaining to indebtedness for borrowed money or
to the repurchase of mortgage loans or securities.

 

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(7) Solvency. Each Seller Party and each Guarantor is solvent and will not be
rendered insolvent by any Transaction or Purchase Price Increase and, after
giving effect to such Transaction or Purchase Price Increase, will not be left
with an unreasonably small amount of capital with which to engage in its
business. No Seller Party nor any Guarantor intends to incur, nor believes that
it has incurred, debts beyond their ability to pay such debts as they mature and
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 such entity or any of its
assets. The amount of consideration being received by each Seller upon the sale
of the Purchased Assets to Buyer constitutes reasonably equivalent value and
fair consideration for such Purchased Assets. No Seller is transferring any
Purchased Assets or any Contributed Asset to the REO Subsidiary with any intent
to hinder, delay or defraud any of its creditors. Each transfer of Contributed
Assets to REO Subsidiary constitutes reasonably equivalent value and fair
consideration for such Contributed Assets

 

(8) No Conflicts. The execution, delivery and performance by each of each Seller
Party and each Guarantor of each Program Agreement do not conflict with any term
or provision of the formation documents or by-laws of Seller Parties or
Guarantors or any law, rule, regulation, order, judgment, writ, injunction or
decree applicable to any Seller Party or any Guarantor of any court, regulatory
body, administrative agency or governmental body having jurisdiction over any
Seller Party or any Guarantor, which conflict would have a Material Adverse
Effect and will not result in any violation of any such mortgage, instrument,
agreement or obligation to which any Seller Party or any Guarantor is a party.

 

(9) True and Complete Disclosure. All information, reports, exhibits, schedules,
financial statements or certificates of Seller Parties, Guarantors, any Property
Manager, or any Affiliate thereof or any of their officers furnished or to be
furnished to Buyer in connection with the initial or any ongoing due diligence
of Seller Parties, Guarantors, any Underlying Repurchase Counterparty, any
Property Manager, or any Affiliate or officer thereof, negotiation, preparation,
or delivery of the Program Agreements are true and complete and do not omit to
disclose any material facts necessary to make the statements herein or therein,
in light of the circumstances in which they are made, not misleading. All
financial statements have been prepared in accordance with GAAP (other than
monthly financial statements solely with respect to footnotes, year-end
adjustments and cash flow statements).

 

 - 58 - 

 

 

(10) Approvals. No consent, approval, authorization or order of, registration or
filing with, or notice to any governmental authority or court is required under
applicable law in connection with the execution, delivery and performance by any
Seller Party or any Guarantor of each Program Agreement. For the avoidance of
doubt, the parties acknowledge that certain details, excluding pricing details,
of the Program Agreements will be filed in the Guarantor’s 8-K filing.

 

(11) Litigation. There is no action, proceeding or investigation pending with
respect to which any Seller Party or either Guarantor has received service of
process or, to the best of such Seller Party’s or either Guarantor’s knowledge
threatened against it before any court, administrative agency or other tribunal
(A) asserting the invalidity of any Program Agreement, (B) seeking to prevent
the consummation of any of the transactions contemplated by any Program
Agreement, (C) making a claim individually or in the aggregate in an amount
greater than (x) $10,000,000 against any Seller, Underlying Repurchase
Counterparty or any of their Affiliates or (y) $250,000 against REO Subsidiary,
(D) which requires filing with the Securities and Exchange Commission in
accordance with the 1934 Act or any rules thereunder or (E) which might
materially and adversely affect the validity of the Purchased Assets, Mortgage
Loans or Contributed Assets or the performance by it of its obligations under,
or the validity or enforceability of any Program Agreement.

 

(12) Material Adverse Change. There has been no material adverse change in the
business, operations, financial condition, properties or prospects of Underlying
Repurchase Counterparty, Seller Parties, Guarantors or their Affiliates since
the date set forth in the most recent financial statements supplied to Buyer as
determined by Buyer in its sole good faith discretion.

 

(13) Ownership. Upon (a) payment of the Purchase Price and the filing of the
financing statement and delivery of the Asset Files to the Custodian and
delivery to Custodian of the originals of the Subsidiary Certificates
re-registered in Buyer’s name and the Custodian’s receipt of the related Request
for Certification, Buyer shall become the sole owner of the Purchased Assets and
have a Lien on the related Repurchase Assets, (b) transfer of each REO Property,
the REO Subsidiary shall become the sole owner of the REO Properties, and (c)
transfer of each Rental Property to the REO Subsidiary shall become the sole
owner of the Rental Properties, in each case, free and clear of all liens and
encumbrances. No Seller Party has assigned, pledged, or otherwise conveyed or
encumbered any Purchased Asset or Contributed Asset to any other Person, (other
than to the Underlying Repurchase Counterparty under the Underlying Repurchase
Documents provided such liens are subordinate in all respects to the liens
hereunder), and immediately prior to the sale and backup pledge of such
Purchased Asset, Mortgage Loan or Contributed Asset to Buyer, such Seller Party
was the sole owner thereof and had good and marketable title thereto, free and
clear of all Liens. No Seller Party has assigned, pledged, or otherwise conveyed
or encumbered any Program Agreement to any other Person and such Seller Party is
the sole owner thereof, free and clear of all Liens.

 

 - 59 - 

 

 

(14) Underwriting Guidelines, Acquisition Guidelines, Leasing Criteria, Tenant
Underwriting Criteria. The Underwriting Guidelines, Acquisition Guidelines,
Leasing Criteria and Tenant Underwriting Criteria provided to Buyer are the true
and correct Underwriting Guidelines, Acquisition Guidelines, Leasing Criteria
and Tenant Underwriting Criteria of the Underlying Repurchase Counterparty.

 

(15) Taxes. Seller Parties, Guarantors and their Subsidiaries have timely filed
all tax returns that are required to be filed by them and have paid all taxes,
except for any such taxes as are being appropriately contested in good faith by
appropriate proceedings diligently conducted and with respect to which adequate
reserves have been provided. The charges, accruals and reserves on the books of
Seller Parties, Guarantors and their Subsidiaries in respect of taxes and other
governmental charges are, in the opinion of Seller Parties or Guarantors, as
applicable, adequate.

 

(16) Investment Company. None of any Seller, any Guarantor or REO Subsidiary is
required to register as an “investment company,” within the meaning of the
Investment Company Act of 1940, as amended (the “Investment Company Act”), and
it is not necessary for REO Subsidiary to register under the Investment Company
Act for specified reasons other than the exemption provided by Section 3(c)(1)
or Section 3(c)(7) of the Investment Company Act; provided, however, that any
entity that is under the management of PNMAC Capital Management LLC in its
capacity as an “investment adviser” within the meaning of the Investment
Advisers Act of 1940 and is otherwise not directly or indirectly owned or
controlled by a Seller shall not be deemed a “Subsidiary” for the purposes of
this Section 13(a)(16).

 

(17) Chief Executive Office; Jurisdiction of Organization. On the Effective
Date, each Seller Party’s chief executive office, is, and has been, located at
6101 Condor Drive, Moorpark, CA 93021. On the Effective Date, each Seller
Party’s jurisdiction of organization is the State of Delaware. Seller Parties
shall provide Buyer with thirty days advance notice of any change in any Seller
Party’s principal office or place of business or jurisdiction; provided,
however, that no additional notice is required that such addresses shall change
on or about March 14, 2016 to 3043 Townsgate Road, Westlake Village, California
91361. No Seller Party has a trade name. During the preceding five years, no
Seller Party has been known by or done business under any other name, corporate
or fictitious, and has not filed or had filed against it any bankruptcy
receivership or similar petitions nor has it made any assignments for the
benefit of creditors.

 

(18) Location of Books and Records. The location where each Seller Party keeps
its books and records, including all computer tapes and records relating to the
Purchased Assets, Mortgage Loans and Contributed Assets and the related
Repurchase Assets is its chief executive office or in the custody of the
Servicer of the Property Manager, as applicable.

 

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(19) Adjusted Tangible Net Worth. On the Effective Date, Underlying Repurchase
Counterparty’s, each Seller’s and PennyMac Mortgage Investment Trust’s Adjusted
Tangible Net Worth are not less than the amounts set forth in Section
14dd.(i)(C) hereof.

 

(20) ERISA. Each Plan to which Seller Parties, Guarantors or their Subsidiaries
make direct contributions, and, to the knowledge of Seller Parties, each other
Plan and each Multiemployer Plan, is in compliance in all material respects
with, and has been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other federal or state law.

 

(21) Adverse Selection. No Seller has selected the Purchased Assets, Mortgage
Loans or Contributed Assets in a manner so as to adversely affect Buyer’s
interests.

 

(22) Agreements. No Seller Party nor any Subsidiary of any Seller is a party to
any agreement, instrument, or indenture or subject to any restriction materially
and adversely affecting its business, operations, assets or financial condition,
except as disclosed in the financial statements described in Section 13(a)(5)
hereof. No Seller Party nor any Subsidiary of any Seller Party is in default in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement, instrument, or indenture which default
could have a material adverse effect on the business, operations, properties, or
financial condition of any Seller Party as a whole. No holder of any
indebtedness of any Seller Party or of any of its Subsidiaries has given notice
of any asserted default thereunder.

 

(23) Other Indebtedness. All Indebtedness (other than Indebtedness evidenced by
this Agreement) of Sellers existing on the date hereof is listed on Exhibit H
hereto (the “Existing Indebtedness”).

 

(24) Agency Approvals. With respect to each Agency Security and to the extent
necessary, each of PMC and Underlying Repurchase Counterparty is an FHA Approved
Mortgagee, a VA Approved Lender and/or a GNMA Approved Lender. On and after
approval by the Agencies, each of PMC and Underlying Repurchase Counterparty
will be, to the extent necessary, approved by Fannie Mae as an approved lender
and Freddie Mac as an approved seller/servicer, and, to the extent necessary,
approved by the Secretary of Housing and Urban Development pursuant to Sections
203 and 211 of the National Housing Act. On and after approval by the Agencies,
each of PMC and Underlying Repurchase Counterparty is in good standing, with no
event having occurred or PMC or Underlying Repurchase Counterparty, as
applicable, having any reason whatsoever to believe or suspect will occur prior
to the issuance of the Agency Security or the consummation of the Take-out
Commitment, as the case may be, including, without limitation, a change in
insurance coverage which would either make PMC or Underlying Repurchase
Counterparty, as applicable, 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. If, on and after approval by the Agencies,
either PMC or Underlying Repurchase Counterparty for any reason ceases to
possess all such applicable approvals, or should notification to the relevant
Agency or to HUD, FHA or VA be required, Sellers or Guarantors shall so notify
Buyer immediately in writing.

 

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(25) No Reliance. Each Seller Party and each Guarantor has made its own
independent decisions to enter into the Program Agreements and each Transaction
or request a Purchase Price Increase, as applicable, and as to whether such
Transaction or request a Purchase Price Increase, as applicable, is appropriate
and proper for it based upon its own judgment and upon advice from such advisors
(including without limitation, legal counsel and accountants) as it has deemed
necessary. No Seller Party nor any Guarantor is relying upon any advice from
Buyer as to any aspect of the Transactions or Purchase Price Increases, as
applicable, including without limitation, the legal, accounting or tax treatment
of such Transactions or Purchase Price Increases, as applicable.

 

(26) Plan Assets. Neither Seller Parties nor Guarantors are an employee benefit
plan as defined in Section 3 of Title I of ERISA, or a plan described in Section
4975(e)(1) of the Code, and the Purchased Assets, Mortgage Loans and REO
Properties are not “plan assets” within the meaning of 29 CFR §2510.3 101 as
amended by Section 3(42) of ERISA, in the Sellers’ hands, and transactions by or
with Underlying Repurchase Counterparty, Seller Parties or Guarantors are not
subject to any state or local statute regulating investments or fiduciary
obligations with respect to governmental plans within the meaning of Section
3(32) of ERISA.

 

(27) No Prohibited Persons. Neither the Seller Parties nor Guarantors, nor any
of their Affiliates, officers, directors, partners or members, is an entity or
person (or to the Sellers Parties’ or Guarantors’ knowledge, owned or controlled
by an entity or person): (i) that is listed in the Annex to, or is otherwise
subject to the provisions of Executive Order 13224 issued on September 24, 2001
(“EO13224”); (ii) whose name appears on the United States Treasury Department’s
Office of Foreign Assets Control (“OFAC”) most current list of “Specifically
Designated National and Blocked Persons” (which list may be published from time
to time in various mediums including, but not limited to, the OFAC website,
http:www.treas.gov/ofac/t11sdn.pdf); (iii) who commits, threatens to commit or
supports “terrorism”, as that term is defined in EO13224; or (iv) who is
otherwise affiliated with any entity or person listed above (any and all parties
or persons described in clauses (i) through (iv) above are herein referred to as
a “Prohibited Person”).

 

 - 62 - 

 

 

(28) Servicing and Property Management. Seller Parties have adequate financial
standing and, through the Servicing Agreement or Property Management, as
applicable, with Servicer or Property Manager, as applicable, access to adequate
servicing and management facilities, procedures and experienced personnel
necessary for the sound servicing and management of mortgage loans, REO
properties and rental properties of the same types as may from time to time
constitute Mortgage Loans and Contributed Assets and in accordance with Accepted
Servicing Practices and Accepted Property Management Practices, as applicable.

 

(29) Real Estate Investment Trust. PennyMac Mortgage Investment Trust is a REIT.

 

(30) True Sale. Each Rental Property was acquired by the REO Subsidiary from a
transferor on a legal true sale or true contribution basis pursuant to a market
standard purchase and/or sale agreement between the REO Subsidiary and such
transferor.

 

b. With respect to (i) every Purchased Asset and Contributed Asset, each Seller
represents and warrants to Buyer as of the applicable Purchase Date for any
Transaction as of any Purchase Price Increase Date, as applicable, and each date
thereafter that each representation and warranty set forth on Parts I, III, IV
and V of Schedule 1, as applicable, is true and correct in all material respects
and (ii) every Underlying Repurchase Transaction, Underlying Repurchase Document
and Underlying Repurchase Counterparty, as applicable, each Seller represents
and warrants to Buyer as of the applicable Purchase Date for any Transaction and
each date thereafter that each representation and warranty set forth on Part II
of Schedule 1 is true and correct in all material respects.

 

c. The representations and warranties set forth in this Agreement shall survive
transfer of the Purchased Assets to Buyer and the pledge of the REO Subsidiary
Interests and Contributed Assets to the Buyer and shall continue for so long as
the Purchased Assets and Contributed Asset are subject to this Agreement. Upon
discovery by Seller Parties, Servicer or Buyer of any breach of any of the
representations or warranties set forth in this Agreement, the party discovering
such breach shall promptly give notice of such discovery to the others. Buyer
has the right to require, in its unreviewable discretion, Sellers to repurchase
within one (1) Business Day after receipt of notice from Buyer any Purchased
Asset, or pay the Allocated Repurchase Price for any Contributed Asset, or cause
REO Subsidiary to transfer any Contributed Asset at the Allocated Repurchase
Price for which a breach of one or more of the representations and warranties
referenced in Section 13(b) exists and which breach has a material adverse
effect on the value of such Purchased Asset or Contributed Asset or the
interests of Buyer.

 

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14. Covenants

 

Each Seller Party and each Guarantor covenants with Buyer that, during the term
of this facility:

 

a. Litigation. Each Seller Party and each Guarantor, as applicable, will
promptly, and in any event within ten (10) days after service of process on any
of the following, give to Buyer notice of all litigation, actions, suits,
arbitrations, investigations (including, without limitation, any of the
foregoing which are threatened or pending) or other legal or arbitrable
proceedings affecting Seller Parties, Guarantors or any of their Subsidiaries or
affecting any of the Property of any of them before any Governmental Authority
that (i) questions or challenges the validity or enforceability of any of the
Program Agreements or any action to be taken in connection with the transactions
contemplated hereby, (ii) makes a claim individually or in the aggregate in an
amount greater than $10,000,000 (other than with respect to the REO Subsidiary,
which amount shall be $250,000), or (iii) which, individually or in the
aggregate, if adversely determined, could be reasonably likely to have a
Material Adverse Effect. Each Seller Party and each Guarantor, as applicable,
will promptly provide notice of any judgment, which with the passage of time,
could cause an Event of Default hereunder.

 

b. Prohibition of Fundamental Changes. No Seller Party shall enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation, winding up or dissolution) or sell
all or substantially all of its assets; provided, that such Seller Party may
merge or consolidate with (a) any wholly owned subsidiary of such Seller Party
(other than REO Subsidiary), or (b) any other Person if such Seller Party is the
surviving corporation; and provided further, that if after giving effect
thereto, no Default would exist hereunder.

 

c. Servicing; Property Management. No Seller Party shall cause the Mortgage
Loans or Contributed Assets to be serviced by any servicer or property manager,
as applicable, other than a servicer or property manager, as applicable,
expressly approved in writing by Buyer, which approval shall be deemed granted
by Buyer with respect to Servicer and Property Manager, as applicable, with the
execution of this Agreement.

 

d. Insurance.

 

(1) The Sellers or Guarantors shall continue to maintain, for Sellers and their
Subsidiaries, Fidelity Insurance in an aggregate amount at least equal to
$300,000. The Sellers or Guarantors shall maintain, for Sellers and their
Subsidiaries and each Underlying Repurchase Counterparty, Fidelity Insurance in
respect of its officers, employees and agents, with respect to any claims made
in connection with all or any portion of the Repurchase Assets. The Sellers or
Guarantors shall notify the Buyer of any material change in the terms of any
such Fidelity Insurance. REO Subsidiary shall continue to maintain homeowners or
other liability insurance covering each REO Property as contemplated by the
applicable Servicing Agreement. The REO Subsidiary and Property Manager shall
continue to maintain homeowners or other liability insurance covering each
Rental Property as contemplated by the Property Management Agreement; and

 

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(2) REO Subsidiary shall:

 

(i) and shall cause each Property Manager to keep all Rental Property useful and
necessary in its business in good working order and condition (ordinary wear and
tear and casualty and condemnation events excepted);

 

(ii) obtain and maintain, or cause to be obtained and maintained, insurance for
itself and each Rental Property (and its related Improvements and personal
property) owned by it providing at least the following coverages:

 

(a) REO Subsidiary shall maintain, comprehensive all risk insurance including,
but not limited to, loss caused by any type of windstorm or hail, (A) in an
amount equal to 100% of the current fair market value as agreed with the
insurers, subject to a loss limit equal to $1,000,000 per occurrence; (B)
containing an agreed amount endorsement with respect to the Improvements at any
Rental Property waiving all co-insurance provisions or to be written on a no
co-insurance form furnished by the Sellers and/or REO Subsidiary; (C) providing
for no deductible in excess of $25,000 for all such insurance coverage for any
one casualty or insured event; provided, however with respect to windstorm and
earthquake coverage, no deductible in excess of 5% of the insurable value for
each location, and (D) if any portion of a Rental Property is currently or at
any time in the future located in a federally designated “special flood hazard
area”, flood hazard insurance, with no more than $25,000 deductible per
occurrence, in an amount equal to the maximum amount of such insurance available
under the National Flood Insurance Act of 1968, the Flood Disaster Protection
Act of 1973 or the National Flood Insurance Reform Act of 1994, as each may be
amended, plus excess amounts as Buyer shall require. Coverage for demolition
costs and increased costs of construction in a combined amount not less than
$25,000 per location. The wind and hail insurance coverage shall not exclude
named storms. In addition,  with respect to Rental Property located in
California, it shall obtain earthquake insurance for the current fair market
value of the property with deductible not exceeding $50,000 per property;

 

(b) REO Subsidiary shall maintain, at all times during which structural
construction, repairs or alterations are being made with respect to the
Improvements on any Rental Property and only if and to the extent each of the
property coverage form and the liability insurance coverage form does not
otherwise apply (A) owner’s contingent or protective liability insurance,
otherwise known as owner contractor’s protective liability (or its equivalent),
covering claims not covered by or under the terms or provisions of the above
mentioned commercial general liability insurance policy; provided however, that
such insurance shall only be required at all times during which a material
structural loss occurs and is continuing and (B) the insurance provided for in
subsection (i) above written in a so-called builder’s risk completed value form
(1) on a non-reporting basis, (2) against all risks insured against pursuant to
subsection (i) above, (3) including permission to occupy the Property and (4)
with an agreed amount endorsement waiving co-insurance provisions;

 

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(c) REO Subsidiary shall maintain and shall cause each Property Manager to
collectively maintain, commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon, in or
about any Rental Property, such insurance (A) to be on the so-called
“occurrence” form with a limit of not less than five million dollars
($5,000,000) per occurrence per location; two million dollars ($2,000,000) in
the aggregate for each policy year and an excess coverage of three million
dollars ($3,000,000) per policy year; (B) to continue at not less than the
aforesaid limit until required to be changed by the Buyer in writing by reason
of changed economic conditions making such protection inadequate and (C) to
cover at least the following hazards: (1) premises and operations; (2) products
and completed operations on an “if any” basis; (3) independent contractors and
(4) blanket contractual liability for all insured contracts;

 

(d) if applicable, REO Subsidiary shall maintain and shall cause each Property
Manager to maintain, worker’s compensation subject to the worker’s compensation
laws of the applicable state, and employer’s liability in amounts reasonably
acceptable to the Buyer;

 

(e) REO Subsidiary shall cause each Property Manager for itself but not for each
Rental Property to collectively maintain, umbrella and excess liability
insurance in an amount not less than twenty-five million dollars ($25,000,000)
per occurrence and in the aggregate on terms consistent with, and providing
coverage in excess of the coverage provided by, the commercial general liability
insurance policy required hereunder and including employer liability and
automobile liability, if required;

 

Each insurance policy provided for or contemplated by this clause (b) shall
contain a standard insured party clause naming the Sellers, REO Subsidiary, each
Property Manager (as applicable) and their successors and assigns as insured
parties and, except with respect to the coverage required by clauses (d) and
(e), the Buyer as additional insured and loss payee, and all premiums thereon.

 

e. No Adverse Claims. Each Seller Party warrants and will defend, and shall
cause any Servicer, the Property Manager and each Underlying Repurchase
Counterparty to defend, the right, title and interest of (i) Buyer in and to all
Purchased Assets, Mortgage Loans and Contributed Assets and the related
Repurchase Assets, (ii) REO Subsidiary in and to all REO Properties and Rental
Properties held by it, in each case, against all adverse claims and demands.

 

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f. Assignment. Except as permitted herein, no Seller Party nor any Servicer
shall sell, assign, transfer or otherwise dispose of, or grant any option with
respect to, or pledge, hypothecate or grant a security interest in or lien on or
otherwise encumber (except pursuant to the Program Agreements), any of the
Purchased Assets, Mortgage Loans or Contributed Assets or any interest therein,
provided that this Section shall not prevent any transfer of Purchased Assets,
Mortgage Loans or Contributed Assets in accordance with the Program Agreements.
Except as set forth herein, no Seller Party shall assign any of its rights under
any Underlying Repurchase Documents to any Person.

 

g. Security Interest. Sellers shall do all things necessary to preserve the
Purchased Assets, Contributed Assets, Mortgage Loans and the related Repurchase
Assets, as applicable, so that they remain subject to a first priority perfected
security interest hereunder. Without limiting the foregoing, Seller Parties will
comply with all rules, regulations and other laws of any Governmental Authority
and cause the Purchased Assets, Mortgage Loans, Contributed Assets, Underlying
Repurchase Documents and the related Repurchase Assets, as applicable, to comply
with all applicable rules, regulations and other laws. Seller Parties will not
allow any default for which Seller Parties are responsible to occur under any
Purchased Assets or Contributed Assets, or the related Underlying Repurchase
Documents or the related Repurchase Assets or any Program Agreement and Seller
Parties shall fully perform or cause to be performed when due all of their
obligations under any Purchased Assets, Mortgage Loans and Contributed Assets or
the related Repurchase Assets and any Program Agreement.

 

h. Records.

 

(1) Seller Parties shall collect and maintain or cause to be collected and
maintained all Records relating to the Purchased Assets, Mortgage Loans and
Contributed Assets in accordance with industry custom and practice for assets
similar to the Purchased Assets, Mortgage Loans and Contributed Assets,
including those maintained pursuant to the preceding subparagraph, and all such
Records shall be in Custodian’s or each Property Manager’s possession unless
Buyer otherwise approves. Except in accordance with the Custodial Agreement,
Seller Parties will not allow any such papers, records or files that are an
original or an only copy to leave Custodian’s possession, except for individual
items removed in connection with servicing a specific Mortgage Loan or
Contributed Asset, in which event Seller Parties will obtain or cause to be
obtained a receipt from a financially responsible person for any such paper,
record or file. Seller Parties or the Servicer of the Mortgage Loans or
Contributed Assets will maintain all such Records not in the possession of
Custodian in good and complete condition in accordance with industry practices
for assets similar to the Purchased Assets, Mortgage Loans or Contributed Assets
and preserve them against loss.

 

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(2) For so long as Buyer has an interest in or lien on any Purchased Asset,
Mortgage Loan or Contributed Asset, Seller Parties will hold or cause to be held
all related Records in trust for Buyer. Seller Parties shall notify, or cause to
be notified, every other party holding any such Records of the interests and
liens in favor of Buyer granted hereby. For so long as REO Subsidiary has an
interest in or lien on any Contributed Asset, Sellers shall cause REO Subsidiary
to hold or cause to be held all related Records in trust for Buyer. Sellers
shall cause the REO Subsidiary to notify, or cause to be notified, every other
party holding any such Records of the interests and liens in favor of Buyer
granted hereby.

 

(3) Upon reasonable advance notice from Custodian or Buyer, Seller Parties shall
(x) make any and all such Records available to Custodian or Buyer to examine any
such Records, either by its own officers or employees, or by agents or
contractors, or both, and make copies of all or any portion thereof, and
(y) permit Buyer or its authorized agents to discuss the affairs, finances and
accounts of Seller Parties with its chief operating officer and chief financial
officer and to discuss the affairs, finances and accounts of Seller Parties with
its independent certified public accountants.

 

i. Books. Each Seller Party shall keep or cause to be kept in reasonable detail
books and records of account of its assets and business and shall clearly
reflect therein the transfer of Purchased Assets to Buyer. Sellers shall cause
REO Subsidiary to keep in reasonable detail books and records of account of its
assets and business and shall clearly reflect therein the transfer of
Contributed Assets to REO Subsidiary.

 

j. Approvals. Each Seller Party shall maintain all licenses, permits or other
approvals necessary for such Seller Party to conduct its business and to perform
its obligations under the Program Agreements, and such Seller Party shall
conduct its business in all material respects in accordance with applicable law.

 

k. Material Change in Business. No Seller Party nor any Guarantor shall make any
material change in the nature of its business as carried on at the date hereof.

 

l. Underwriting Guidelines; Acquisition Guidelines; Leasing Criteria; Tenant
Underwriting Criteria; Servicing Agreement. Without the prior written consent of
Buyer, no Seller shall amend or otherwise modify or permit the amendment or
modification of the Underwriting Guidelines, Acquisition Guidelines, Leasing
Criteria or Tenant Underwriting Criteria in any material respect. Without
limiting the foregoing, in the event that a Seller makes any amendment or
modification to the Underwriting Guidelines, Acquisition Guidelines, Leasing
Criteria or Tenant Underwriting Criteria, such Seller shall promptly deliver to
Buyer a complete copy of the amended or modified Underwriting Guidelines,
Acquisition Guidelines, Leasing Criteria or Tenant Underwriting Criteria, as
applicable, specifying in detail the amendments and modifications set forth
therein from the previous copy delivered. In the event that a Servicer makes any
amendment or modification to the applicable Servicing Agreement, Sellers shall
promptly deliver to Buyer a complete copy of such amended or modified Servicing
Agreement, specifying in detail the amendments and modifications set forth
therein from the previous copy delivered. Buyer shall not be bound by such
amended or modified Servicing Agreement unless Buyer provides written consent in
its sole discretion to any amendment or modification.

 

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m. Distributions. If an Event of Default has occurred and is continuing, no
Seller nor any Guarantor shall pay any dividends with respect to any capital
stock or other equity interests in such entity, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of Sellers or
Guarantors.

 

n. Applicable Law. Each Seller Party and each Guarantor shall comply in all
material respects with the requirements of all applicable laws, rules,
regulations and orders of any Governmental Authority.

 

o. Existence. Each Seller Party and each Guarantor shall preserve and maintain
their legal existence and all of their material rights, privileges, material
licenses and franchises.

 

p. Chief Executive Office; Jurisdiction of Organization. No Seller Party shall
move its chief executive office from the address referred to in Section
13(a)(17) or change its jurisdiction of organization from the jurisdiction
referred to in Section 13(a)(17) unless it shall have provided Buyer 30 days’
prior written notice of such change; provided, however, that no additional
notice is required that such addresses shall change on or about March 14, 2016
to 3043 Townsgate Road, Westlake Village, California 91361.

 

q. Taxes. Each Seller Party and each Guarantor shall timely file all tax returns
that are required to be filed by them and shall timely pay and discharge all
taxes, assessments and governmental charges or levies imposed on it or on its
income or profits or on any of its property prior to the date on which penalties
attach thereto, except for any such tax, assessment, charge or levy the payment
of which is being contested in good faith and by proper proceedings and against
which adequate reserves are being maintained.

 

r. Transactions with Affiliates. No Seller Party will enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate, other
than any contribution of Contributed Assets to REO Subsidiary, unless such
transaction is (a) otherwise permitted under the Program Agreements, (b) in the
ordinary course of such Seller Party’s business and (c) upon fair and reasonable
terms no less favorable to such Seller Party than it would obtain in a
comparable arm’s length transaction with a Person which is not an Affiliate, or
make a payment that is not otherwise permitted by this Section to any Affiliate.

 

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s. Guarantees. No Seller shall create, incur, assume or suffer to exist any
Guarantees, except (i) to the extent reflected in such Seller’s financial
statements or notes thereto and (ii) to the extent the aggregate Guarantees of
such Seller do not exceed $250,000.

 

t. Indebtedness. No Seller shall incur any additional material Indebtedness
(other than (i) the Existing Indebtedness specified on Exhibit H hereto; (ii)
usual and customary accounts payable for a mortgage company; (iii) Indebtedness
incurred in connection with new or existing secured lending facilities; and (iv)
Indebtedness incurred in connection with an intercompany lending agreement)
without the prior written consent of Buyer.

 

u. Hedging. Underlying Repurchase Counterparty has entered into Interest Rate
Protection Agreements with respect to the New Origination Mortgage Loans, having
terms with respect to protection against fluctuations in interest rates
acceptable to Buyer in its sole discretion. In the event that Underlying
Repurchase Counterparty intends to make any change to its policy regarding
Interest Rate Protection Agreements, Sellers shall notify Buyer in writing
thirty (30) days prior to Underlying Repurchase Counterparty implementing any
such change.

 

v. True and Correct Information. All information, reports, exhibits, schedules,
financial statements or certificates of each Underlying Repurchase Counterparty,
each Seller Party, each Guarantor, each Property Manager, any Affiliate thereof
or any of their officers furnished to Buyer hereunder and during Buyer’s
diligence of each Underlying Repurchase Counterparty, Seller Parties and
Guarantors are and will be true and complete and do not omit to disclose any
material facts necessary to make the statements herein or therein, in light of
the circumstances in which they are made, not misleading. All required financial
statements, information and reports delivered by Sellers to Buyer pursuant to
this Agreement shall be prepared in accordance with U.S. GAAP, or, if
applicable, to SEC filings, the appropriate SEC accounting regulations.

 

w. Agency Approvals. On and after approval by the Agencies, each Seller and
Underlying Repurchase Counterparty, as applicable, shall maintain its status
with Fannie Mae as an approved lender and Freddie Mac as an approved
seller/servicer, in each case in good standing (“Agency Approvals”). Servicer
shall service all Purchased Mortgage Loans which are Committed Mortgage Loans in
accordance with the applicable Agency guide. On and after approval by the
Agencies, if any Underlying Repurchase Counterparty or any Seller, as
applicable, for any reason, ceases to possess all such applicable Agency
Approvals, or should notification to the relevant Agency or to HUD, FHA or VA be
required, Sellers shall so notify Buyer immediately in writing. Notwithstanding
the preceding sentence, Sellers shall cause each Underlying Repurchase
Counterparty to take all necessary action to maintain all of its applicable
Agency Approvals at all times during the term of this Agreement and each
outstanding Transaction.

 

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x. Take-out Payments.

 

(1) With respect to each New Origination Mortgage Loans that are Committed
Mortgage Loan, Sellers shall arrange or caused to be arranged that all payments
under the related Take-out Commitment shall be paid directly to Buyer at the
account set forth in Section 9 hereof, or to an account approved by Buyer in
writing prior to such payment. With respect to any Agency Take-out Commitment,
if applicable, (1) with respect to the wire transfer instructions as set forth
in Freddie Mac Form 987 (Wire Transfer Authorization for a Cash Warehouse
Delivery) such wire transfer instructions are identical to Buyer’s wire
instructions or Buyer has approved such wire transfer instructions in writing in
its sole discretion, or (2) the Payee Number set forth on Fannie Mae Form 1068
(Fixed-Rate, Graduated-Payment, or Growing-Equity Asset Schedule) or Fannie Mae
Form 1069 (Adjustable-Rate Asset Schedule), as applicable, shall be identical to
the Payee Number that has been identified by Buyer in writing as Buyer’s Payee
Number or Buyer shall have previously approved the related Payee Number in
writing in its sole discretion; with respect to any Take-out Commitment with an
Agency, the applicable agency documents shall list Buyer as sole subscriber,
unless otherwise agreed to in writing by Buyer, in Buyer’s sole discretion.

 

(2) With respect to each Seasoned Mortgage Loan and/or Contributed Asset, for
Take-out Commitments with respect to the purchase of twenty-five (25) or more
Seasoned Mortgage Loans and/or Contributed Assets sold to the same Take-out
Investor, each Seller shall arrange that all payments under the related Take-out
Commitment shall be paid directly to the Collection Account or REO Subsidiary
Account, as applicable. All other remittances under Take-out Commitments shall
be handled in a manner consistent with Section 7 hereof.

 

y. REO Subsidiary Compliance. Sellers shall cause REO Subsidiary to comply with
all requirements and obligations imposed upon it under the applicable Subsidiary
Agreement. Other than with respect to Unrecorded REO Property, Sellers shall not
cause, or permit REO Subsidiary to cause any Contributed Asset to be taken in
the name of any Person other than REO Subsidiary without the consent of Buyer.

 

z. Plan Assets. None of the Underlying Repurchase Counterparty, Seller Parties
nor Guarantors shall be an employee benefit plan as defined in Section 3 of
Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code and the
Seller Parties shall not use “plan assets” within the meaning of 29 CFR §2510.3
101, as amended by Section 3(42) of ERISA to engage in this Agreement or any
Transaction hereunder. Transactions by or with Seller Parties or Guarantors
shall not be subject to any state or local statute regulating investments of or
fiduciary obligations with respect to governmental plans within the meaning of
Section 3(32) of ERISA.

 

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aa. Sharing of Information. The Seller Parties shall allow the Buyer to exchange
information related to the Seller Parties and the Transaction hereunder with
third party lenders and the Seller Parties shall permit each third party lender
to share such information with the Buyer.

 

bb. Rental Property Samples. On the last Business Day of each Property Level
Reporting Period, Seller Parties shall test, or caused to be tested, a random
sample of at least twenty five (25%) percent of the Rental Properties subject to
Transactions as of the first Business Day of such Property Level Reporting
Period to confirm that (i) they are owned by the REO Subsidiary; (ii) they have
no Liens (other than Permitted Liens) and (iii) they maintain valid title
insurance policies, or pro forma owner title policies, covering such Rental
Properties, all in accordance with the terms hereof.  Seller Parties shall use
commercially reasonable efforts to ensure that for any Property Level Reporting
Period they will sample Rental Properties not included in any of the three
immediately preceding Property Level Reporting Periods.  Notwithstanding the
foregoing, if more than 5% of the Rental Properties in any one Property Level
Reporting Period fail to meet the requirements set forth in clauses (i)-(iii)
above, Buyer shall have the right to increase the percentage of such sample in
its sole discretion at the sole cost and expense of the Sellers.

 

cc. Quality Control. Sellers shall cause each Underlying Repurchase Counterparty
to maintain an internal quality control program that verifies, on a regular
basis, the existence and accuracy of all legal documents, credit documents,
property appraisals, and underwriting decisions related to Mortgage Loans and
shall provide a report on the results of such quality control program in the
Officer’s Compliance Certificate provided pursuant to Section 17(b)(3). Such
program shall be capable of evaluating and monitoring the overall quality of a
Seller’s, or Underlying Repurchase Counterparty’s, as applicable, loan
production and servicing activities. Such program shall (i) ensure that the
Mortgage Loans are originated and serviced in accordance with prudent mortgage
banking practices and accounting principles; (ii) guard against dishonest,
fraudulent, or negligent acts; and (iii) guard against errors and omissions by
officers, employees, or other authorized persons.

 

dd. Financial Covenants. Sellers, PMIT and Underlying Repurchase Counterparty
shall at all times comply with all financial covenants and/or financial ratios
set forth below:

 

(i) Adjusted Tangible Net Worth. (A) Underlying Repurchase Counterparty shall
maintain an Adjusted Tangible Net Worth of at least $150,000,000, (B) PennyMac
Holdings shall maintain an Adjusted Tangible Net Worth of at least $250,000,000,
(C) PMIT shall maintain an Adjusted Tangible Net Worth of at least $860,000,000
and (D) POP shall maintain an Adjusted Tangible Net Worth of at least
$700,000,000.

 

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(ii) Indebtedness to Adjusted Tangible Net Worth Ratio. Underlying Repurchase
Counterparty’s ratio of Indebtedness (on and off balance sheet and excluding (A)
Non-Recourse Debt, including any securitization debt, and (B) any intercompany
debt eliminated in consolidation) to Adjusted Tangible Net Worth shall not
exceed 10:1. PennyMac Holdings’ ratio of Indebtedness (on and off balance sheet
and excluding (A) Non-Recourse Debt, including any securitization debt, and (B)
any intercompany debt eliminated in consolidation) to Adjusted Tangible Net
Worth shall not exceed 10:1. PMIT’s ratio of Indebtedness (on and off balance
sheet) to Adjusted Tangible Net Worth shall not exceed 5:1. POP’s ratio of
Indebtedness (on and off balance sheet and excluding (A) Non-Recourse Debt,
including any securitization debt, and (B) any intercompany debt eliminated in
consolidation) to Adjusted Tangible Net Worth shall not exceed 5:1.

 

(iii) Maintenance of Profitability. PMIT shall maintain profitability of at
least $1.00 in Net Income for at least one of the two prior Test Periods.

 

(iv) Maintenance of Liquidity. PennyMac Holdings, Underlying Repurchase
Counterparty, PennyMac Operating Partnership, L.P. and PMIT shall ensure that,
as of the end of each calendar month, they have consolidated cash and Cash
Equivalents other than Restricted Cash in amounts not less than (i) with respect
to the PennyMac Holdings, $10,000,000, (ii) with respect to the Underlying
Repurchase Counterparty, $10,000,000, (iii) with respect to PennyMac Holdings
and the Underlying Repurchase Counterparty, $25,000,000 in the aggregate, (iv)
with respect to PMIT, $40,000,000 and (v) with respect to POP, $40,000,000.

 

(v) Additional Warehouse Line. With respect to New Origination Mortgage Loans,
Seasoned Mortgage Loans and REO Properties, Sellers shall maintain at least one
additional warehouse or repurchase facility from unaffiliated entities with
respect to assets similar to the New Origination Mortgage Loans, Seasoned
Mortgage Loans and REO Properties, respectively, in a combined amount at least
equal to 50% of the applicable Concentration Limit set forth in the Pricing Side
Letter.

 

ee. Most Favored Status. Sellers, Guarantors and the Buyer each agree that
should a Seller enter into a Warehouse Facility with any Person other than the
Buyer or an Affiliate of the Buyer which by its terms provides more favorable
terms to the Buyer with respect to the financial covenants set forth in Section
14dd hereof (a “More Favorable Agreement”), the terms of this Agreement shall be
deemed automatically amended to include such more favorable terms contained in
such More Favorable Agreement; provided, that in the event that such More
Favorable Agreement is terminated, upon notice by the Sellers to the Buyer of
such termination, the original terms of this Agreement shall be deemed to be
automatically reinstated. The Sellers, the Guarantors, and the Buyer further
agree to execute and deliver any new agreements or amendments to this Agreement
evidencing such provisions, provided that the execution of such amendment shall
not be a precondition to the effectiveness of such amendment, but shall merely
be for the convenience of the parties hereto. Promptly upon a Seller entering
into a repurchase agreement or other credit facility with any Person other than
the Buyer, Sellers shall notify Buyer that it has entered into such repurchase
agreement or other credit facility and deliver to Buyer a summary of the
material terms related to the comparable financial covenants of such repurchase
agreement or other credit facility in form and substance acceptable to Buyer.

 

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ff. No Amendments/Waivers of Underlying Repurchase Documents. Without the prior
written consent of Buyer, Sellers shall not, and shall not agree, consent to or
suffer to exist any material amendment, modification, supplement, waiver or
forbearance with respect to any of the Underlying Repurchase Documents or any of
any Seller’s rights thereunder.

 

gg. Special Purpose Entity. Sellers shall cause REO Subsidiary to be a Special
Purpose Entity that shall (i) own no assets other than the assets specifically
contemplated by the Program Agreements, and will not engage in any business,
other than the assets and transactions specifically contemplated by the Program
Agreements; (ii) not incur any Indebtedness or obligation, secured or unsecured,
direct or indirect, absolute or contingent (including guaranteeing any
obligation), other than pursuant to the Program Agreements; (iii) not make any
loans or advances to any Affiliate or third party, and shall not acquire
obligations or securities of any Sellers’ Affiliates; (iv) pay its debts and
liabilities (including, as applicable, shared personnel expenses and overhead
expenses) only from its own assets; (v) comply with the provisions of its
organizational documents; (vi) do all things necessary to observe organizational
formalities and to preserve its existence, and not amend, modify or otherwise
change its organizational documents, or suffer same to be amended, modified or
otherwise changed, without the Buyer’s prior written consent which shall not be
unreasonably withheld; (vii) maintain all of its books, records and financial
statements separate from those of its Affiliates (except that such financial
statements may be to the extent consolidation is required under GAAP or as a
matter of applicable law; provided, that (A) appropriate notation shall be made
on such financial statements if prepared to indicate the separateness of the
Sellers from such Affiliate and to indicate that the Sellers’ assets and credit
are not available to satisfy the debts and other obligations of such Affiliate
or any other Person, (B) such assets shall also be listed on the applicable
Seller’s own separate balance sheet if prepared and (C) the Sellers shall file
its own tax returns if filed, except to the extent consolidation is required or
permitted under applicable law); (viii) be, and at all times will hold itself
out to the public as, a legal entity separate and distinct from any other entity
(including any Affiliate), shall correct any known misunderstanding regarding
its status as a separate entity, shall conduct business in its own name, shall
not identify itself or any of its Affiliates as a division or part of the other;
(ix) not enter into any transactions other than transactions specifically
contemplated by the Program Agreements with any Affiliates except on
commercially reasonable terms similar to those available to unaffiliated parties
in an arm’s length transaction; (x) maintain adequate capital in light of its
contemplated business purpose, transactions and liabilities; (xi) not engage in
or suffer any dissolution, winding up, liquidation, consolidation or merger or
transfer all or substantially all of its properties and assets to any Person
(except as contemplated herein); (xii) not commingle its funds or other assets
with those of any Affiliate or any other Person and shall maintain its
properties and assets in such manner that it would not be costly or difficult to
identify, segregate or ascertain its properties and assets from those of others;
(xiii) not institute against, or join any other Person in instituting against
REO Subsidiary any proceedings of the type referred to in the definition of Act
of Insolvency hereunder or seek to substantively consolidate REO Subsidiary in
connection with any Act of Insolvency with respect to any Seller; (xiv) will not
hold itself out to be responsible for the debts or obligations of any other
Person; (xv) not form, acquire or hold any Subsidiary or own any equity interest
in any other entity; (xvi) allocate fairly and reasonably any overhead for
shared office space and services performed by an employee of an Affiliate; and
(xvii) not pledge its assets to secure the obligations of any other Person.

 

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hh. Rental Property Obligations. With respect to Rental Property, the REO
Subsidiary shall (and shall cause the Property Manager to) not: (1)   (x) remove
demolish or materially alter any related fixtures, equipment, personal property
or Improvements with respect to any Rental Property outside of the ordinary
course of business, without the consent of Buyer, (y) commit or suffer any waste
of any Rental Property or take any action that might invalidate or give cause
for cancellation of any insurance policy, or do or permit to be done thereon
anything that may in any way impair the value of the Rental Properties, or (z)
permit any drilling or exploration for or extraction, removal, or production of
any minerals from the surface or the subsurface of the Rental Properties,
regardless of the depth thereof or the method of mining or extraction thereof
without the consent of Buyer;

 

(2) deliver to Buyer, promptly upon Buyer’s request, evidence reasonably
satisfactory to Buyer that all taxes, assessments, water rates, sewer rents,
governmental impositions, and other charges, including without limitation vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining the Rental Properties, now or hereafter levied or assessed or imposed
against the Rental Properties or any part thereof, all ground rents, maintenance
charges and similar charges, now or hereafter levied or assessed or imposed
against the Rental Properties or any part thereof, and all charges for utility
services provided to the Rental Properties prior to the same becoming
delinquent, have been so paid or are not then delinquent;

 

(3) shall use commercially reasonable efforts to prohibit other users (to the
extent the REO Subsidiary has knowledge thereof) of the Rental Properties to do
any act that materially increases the dangers to human health or the
environment, poses an unreasonable risk of harm to any person or entity (whether
on or off the Rental Property), impairs or may impair the value of the Rental
Properties, is contrary to any requirement of any insurer, constitutes a public
or private nuisance, constitutes waste, or violates any covenant, condition,
agreement or easement applicable to the Rental Properties; and

 

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(4) subject to the rights of Tenants, shall permit and shall cause the Property
Manager to permit, agents, representatives and employees of Buyer to inspect to
the Rental Properties proposed to be subject to any Purchase Price Increase, in
each case at reasonable hours and upon reasonable advance notice; provided that
such agents, representatives and employees shall not contact any such Tenants
directly.

 

ii. Leasing Matters.

 

(1) If the REO Subsidiary (or Property Manager on behalf of the REO Subsidiary)
enters into a Lease Agreement with respect to a Rental Property, the REO
Subsidiary shall ensure that such Lease Agreement (i) provides for rental rates
and terms comparable to existing local market rates and terms, (ii) is an
arms-length transaction with a bona fide, independent third party Tenant, (iii)
does not have a material adverse effect on the value or quality of the related
Rental Property, (iv) is written on one of the standard forms of lease approved
by Buyer, (v) provides for a rental term that is not less than twelve (12)
months and (vi) is in compliance with all applicable law in all material
respects. All proposed Lease Agreements which do not satisfy the requirements
set forth in this Section 14(ii)(1) shall be subject to the prior written
approval of Buyer. At Buyer’s request, the REO Subsidiary shall promptly deliver
to Buyer copies of all Lease Agreements which are entered into pursuant to this
Section 14(ii)(1) together with the REO Subsidiary’s certification that it has
satisfied all of the conditions of this Section 14(ii)(1).

 

(2) The REO Subsidiary shall (i) ensure that all of the obligations imposed upon
the lessee under the applicable Lease Agreements are observed and performed and
shall not do or permit to be done anything to impair the value of any of the
applicable Lease Agreements; (ii) enforce all of the material terms, covenants
and conditions contained in the applicable Lease Agreements upon the part of the
tenant thereunder to be observed or performed; (iii) promptly send copies to
Buyer of all notices of default or other material matters which the REO
Subsidiary sends or receives with respect to the applicable Lease Agreements and
(iv) not consent to any assignment of or subletting under any Lease Agreements
except in accordance with their respective terms.

 

(3) The REO Subsidiary shall not amend, modify or waive, or permit the
amendment, modification or waiver of, the provisions of any Lease Agreement or
terminate, reduce rents under, accept a surrender of space under, or shorten the
term of, any Lease Agreement (including any guaranty, letter of credit or other
credit support with respect thereto) without obtaining Buyer’s consent except
(i) with respect to any such action that does not have a material adverse effect
on the value of the related Rental Property taken as a whole or (ii) as the REO
Subsidiary (or Property Manager acting on behalf of the REO Subsidiary) may
otherwise determine in its reasonable business judgment, and provided that such
Lease Agreement, as amended, modified or waived, is otherwise in compliance with
the requirements of this Agreement. For the avoidance of doubt, a termination of
a Lease Agreement with a Tenant who is in default beyond applicable notice and
grace periods shall not be considered an action which has a material adverse
effect on the value of the related Rental Property taken as a whole. Any
amendment, modification, waiver, termination, rent reduction, space surrender or
term shortening which does not satisfy the requirements set forth in this
Section 14(ii)(3) shall be subject to the prior written approval of Buyer and
its counsel, at the REO Subsidiary’s expense. At Buyer’s request, the REO
Subsidiary shall promptly deliver to Buyer or its designee copies of all such
amendments, modifications and waivers which are entered into pursuant to this
Section 14(ii)(3).

 

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(4) The REO Subsidiary shall (a) cause each related Tenant, in accordance with
the terms of the applicable Lease Agreement to or shall itself, directly or
through Property Manager to maintain each Rental Property in good condition and
repair (except for ordinary wear and tear), (b) promptly repair, replace or
rebuild any part of any Rental Property which may be destroyed by any casualty
or become damaged, worn or dilapidated or which may be affected by any
condemnation; (c) complete and pay for any structure at any time in the process
of construction or repair on the related land of any Rental Property; and (d)
otherwise make all commercially reasonable efforts to preserve the value of each
Rental Property, including re-leasing, liquidating and selling such Rental
Property when appropriate in the REO Subsidiary’s reasonable business judgment.

 

(5) The REO Subsidiary shall use its reasonable best efforts to cause each
related Tenant, in accordance with the terms of the applicable Lease Agreement
to, or shall itself, directly or through Property Manager, ensure that: (x) all
uses and operations on or of the Rental Properties are free of Environmental
Issues and in compliance with permits issued pursuant thereto and (y) the Rental
Properties shall be kept free and clear of all Liens and other encumbrances that
may be imposed as a result of any Environmental Issue, whether due to any act or
omission of the REO Subsidiary, Tenant or any other person or entity.

 

(6) In the event that a Tenant under a Rental Property is replaced with a new
Tenant and upon request from Buyer, the REO Subsidiary shall deliver to
Custodian a Tenant Instruction Notice duly executed in blank for such new
Tenant, together with a copy of the related Lease Agreement for such new Tenant.

 

jj. Property Management. The REO Subsidiary shall not permit (i) the assignment
of Property Manager’s rights or obligations under the Property Management
Agreement, (ii) the removal of Property Manager, or (iii) the amendment,
modification, waiver, termination or revocation of the Property Management
Agreement without Buyer’s prior written consent, or except as otherwise
permitted in both the Program Management Agreement Side Letter and the Property
Management Agreement. The REO Subsidiary shall strictly enforce the terms and
provisions of the Program Management Agreement and shall not, without Buyer’s
prior written consent, waive the performance by Program Manager of any action,
or any default under the Program Management Agreement resulting from Program
Manager’s failure to perform any action, if the failure to perform such action
could reasonably be expected to adversely affect the REO Subsidiary, the Rental
Properties or Buyer in any material respect. The REO Subsidiary shall not and
shall not permit the Property Manager to enter into any other property
management agreement in respect of the Rental Properties other than the Property
Management Agreement.

 

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kk. REO Subsidiary Account. Sellers have established and shall maintain a REO
Subsidiary Account and shall ensure at all times that such REO Subsidiary
Account is subject to a REO Subsidiary Account Control Agreement. Sellers shall
maintain a balance in the REO Subsidiary Account at least equal to the REO
Subsidiary Account Required Balance, which will be held as cash margin and
additional collateral for all Obligations under this Agreement. Any interest on
funds deposited in the REO Subsidiary Account shall be deposited in the REO
Subsidiary Account. Upon the Termination Date and the payment of all amounts due
by the Sellers to the Buyer hereunder, all amounts on deposit in the REO
Subsidiary Account shall be remitted to the Sellers. Upon the occurrence and
continuance of an Event of Default, the distribution and application of funds on
deposit in the REO Subsidiary Account shall, at the direction of the Buyer, be
applied as determined by Buyer in its sole discretion.

 

15. Events of Default

 

Each of the following shall constitute an “Event of Default” hereunder:

 

a. Payment Failure. Failure of any Seller to (i) make any payment of Price
Differential or Repurchase Price or any other sum which has become due, on a
Payment Date, an Optional Partial Prepayment Period or a Repurchase Date or
otherwise, whether by acceleration or otherwise, under the terms of this
Agreement, any other warehouse and security agreement or any other document
evidencing or securing Indebtedness of any Seller to Buyer or to any Affiliate
of Buyer, or (ii) cure any Margin Deficit when due pursuant to Section 6 hereof.

 

b. Cross Default.

 

Any Seller Party, Underlying Repurchase Counterparty, any Guarantor or any
Affiliates thereof shall be in default under (i) any Indebtedness, in the
aggregate, in excess of $1.5 million of any Seller, Underlying Repurchase
Counterparty, any Guarantor or any Affiliate thereof or $500,000 of the REO
Subsidiary, which default (1) involves the failure to pay a matured obligation,
or (2) permits the acceleration of the maturity of obligations by any other
party to or beneficiary with respect to such Indebtedness, or (ii) any other
contract or contracts, in the aggregate in excess of $1.5 million to which any
Seller, Underlying Repurchase Counterparty, any Guarantor or any Affiliate
thereof or $500,000 to which the REO Subsidiary is a party which default (1)
involves the failure to pay a matured obligation, or (2) permits the
acceleration of the maturity of obligations by any other party to or beneficiary
of such contract.

 

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c. Assignment. Assignment or attempted assignment by any Seller Party or
Guarantor of this Agreement or any rights hereunder without first obtaining the
specific written consent of Buyer, or the granting by any Seller of any security
interest, lien or other encumbrances on any Purchased Assets, Mortgage Loans or
Contributed Assets, as applicable, to any person other than Buyer; or the
granting by REO Subsidiary of any security interest, lien or other encumbrances
on any Purchased Asset or Contributed Asset to any person other than Buyer or
nominee approved by Buyer.

 

d. Insolvency. An Act of Insolvency shall have occurred with respect to (i) any
Seller Party, Underlying Repurchase Counterparty, any Guarantor or any Affiliate
or (ii) solely to the extent the Property Manager is an Affiliate of a Seller,
to the Property Manager and Seller has not replaced the Property Manager and
appointed a successor Property Manager acceptable to Buyer within five (5)
Business Days of such Act of Insolvency.

 

e. Material Adverse Change. Any material adverse change in the Property,
business, financial condition or operations of any Seller Party, Underlying
Repurchase Counterparty, any Guarantor or any of their Affiliates shall occur,
in each case as determined by Buyer in its sole good faith discretion, or any
other condition shall exist which, in Buyer’s sole good faith discretion,
constitutes a material impairment of any Seller Party’s or any Guarantor’s
ability to perform its obligations under this Agreement or any other Program
Agreement or Underlying Repurchase Counterparty’s ability to perform under
Underlying Repurchase Documents.

 

f. Breach of Specified Representation or Covenant or Obligation. A breach by any
Seller Party or either Guarantor of any of the representations, warranties or
covenants or obligations set forth (i) in Sections 13(a)(1) (Seller Parties and
Guarantors Existence), 13(a)(7) (Solvency), 13(a)(12) (Material Adverse Change),
13(a)(19) (Adjusted Tangible Net Worth), 14b (Prohibition of Fundamental
Changes), 14m (Distributions), 14o (Existence), 14s (Guarantees), 14z (Plan
Assets), 14gg (Special Purpose Entity), 14ii (Rental Property Obligations), 14jj
(Leasing Matters) or 14kk (Property Management) of this Agreement or (ii)
Sections 13(a)(23) (Other Indebtedness), 14t (Indebtedness), 14dd (Financial
Covenants) or 14ee (Most Favored Status) of this Agreement and such breach
identified in this clause (ii) shall remain unremedied for one (1) Business Day.

 

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g. Breach of Take-out Payment Covenant. A breach by any Seller or any Guarantor
of the covenant set forth in Section 14x (Take-out Payments), if such breach is
not cured within one (1) Business Day.

 

h. Breach of Non-Specified Representation or Covenant. A breach by any Seller
Party or any Guarantor of any other representation, warranty or covenant set
forth in this Agreement in any material respect (and not otherwise specified in
Sections 15(f) and (g) above), if such breach is not cured within five (5)
Business Days (other than the representations and warranties set forth in
Schedule 1, which shall be considered solely for the purpose of determining the
Asset Value, the existence of a Margin Deficit and the obligation to repurchase
such Mortgage Loan or pay the Allocated Repurchase Price with respect to such
Contributed Asset, as applicable) unless (i) such party shall have made any such
representations and warranties with knowledge that they were materially false or
misleading at the time made, (ii) any such representations and warranties have
been determined by Buyer in its sole discretion to be materially false or
misleading on a regular basis, or (iii) Buyer, in its sole discretion,
determines that such breach of a material representation, warranty or covenant
materially and adversely affects (A) the condition (financial or otherwise) of
such party, its Subsidiaries or Affiliates; or (B) Buyer’s determination to
enter into this Agreement or Transactions or Purchase Price Increases, as
applicable, with such party, then such breach shall constitute an immediate
Event of Default and no Seller Party shall have any cure right hereunder).

 

i. Change of Control. The occurrence of a Change in Control without prior
consent of Buyer which consent shall be granted or withheld in its sole
discretion.

 

j. Failure to Transfer. Any Seller Party fails to either (i) transfer the
Purchased Assets to Buyer, or (ii) transfer the Contributed Assets to REO
Subsidiary, subject to the additional qualifications with respect to Unrecorded
REO Properties on or prior to the applicable Purchase Date (provided Buyer has
tendered the related Purchase Price).

 

k. Judgment. A final judgment or judgments for the payment of money in excess of
(i) $10,000,000 in the aggregate shall be rendered against any Seller,
Underlying Repurchase Counterparty or any of their Affiliates or (ii) $250,000
in the aggregate shall be rendered against REO Subsidiary, by one or more
courts, administrative tribunals or other bodies having jurisdiction and the
same shall not be satisfied, discharged (or provision shall not be made for such
discharge) or bonded, or a stay of execution thereof shall not be procured,
within 30 days from the date of entry thereof.

 

l. Government Action. Any Governmental Authority or any person, agency or entity
acting or purporting to act under governmental authority shall have taken any
action to condemn, seize or appropriate, or to assume custody or control of, all
or any substantial part of the Property of any Seller Party, Underlying
Repurchase Counterparty, Guarantors or any Affiliate thereof, or shall have
taken any action to displace the management of any Seller Party, Guarantors or
any Affiliate thereof or to curtail its authority in the conduct of the business
of any Seller Party, Underlying Repurchase Counterparty, Guarantors or any
Affiliate thereof, or takes any action in the nature of enforcement to remove,
limit or restrict the approval of any Seller Party, Underlying Repurchase
Counterparty, Guarantors or Affiliate as an issuer, buyer or a seller/servicer
of Purchased Assets, Contributed Assets or Mortgage Loans or securities backed
thereby, and such action provided for in this Section 15(l) shall not have been
discontinued or stayed within 30 days.

 

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m. Inability to Perform. A Responsible Officer of any Seller Party, Underlying
Repurchase Counterparty, or any Guarantor shall admit its inability to, or its
intention not to, perform any of the Obligations hereunder or any Guarantor’s
obligations hereunder or under the Guaranty or Underlying Repurchase
Counterparty’s obligations under the Underlying Repurchase Documents.

 

n. Security Interest. This Agreement shall for any reason cease to create a
valid, first priority security interest in any material portion of the Purchased
Assets or other Repurchase Assets purported to be covered hereby.

 

o. Financial Statements. Sellers’, Underlying Repurchase Counterparty, or
Guarantors’ audited annual financial statements or the notes thereto or other
opinions or conclusions stated therein shall be qualified or limited by
reference to the status of Sellers, Underlying Repurchase Counterparty, or
Guarantors as a “going concern” or a reference of similar import.

 

p. Underlying Repurchase Documents and Underlying Repurchase Counterparties. (A)
Any material provision of any Underlying Repurchase Document shall at any time
for any reason cease to be valid and binding or in full force and effect; or (B)
The Underlying Repurchase Counterparty shall deny that it has any or further
liability or obligation under any material provision of any Underlying
Repurchase Document; or (C) any Seller or the Underlying Repurchase Counterparty
shall fail to perform or observe any material covenant, term, obligation or
agreement contained in any Underlying Repurchase Document or defaults in the
performance or observance of any of its obligations under any Underlying
Repurchase Document and such default shall continue after the earlier of (x) the
expiration of the grace period applicable thereto under such Underlying
Repurchase Document and (y) two (2) Business Days; or (D) The validity or
enforceability of any material provision of any Underlying Repurchase Document
shall be contested by any party thereto; or (E) Any representation or warranty
set forth on Schedule 1, Part II shall be untrue in any material respect; unless
in each case of clauses (A) through (E), the related Mortgage Loans subject to
the Underlying Repurchase Document are repurchased by any Seller within two (2)
Business Days following notice or knowledge thereof.

 

q. Guarantor Breach. A breach by any Guarantor of any material representation,
warranty or covenant set forth in the Guaranty or any other Program Agreement,
any “event of default” by any Guarantor under the Guaranty, any repudiation of
the Guaranty by any Guarantor, or if the Guaranty is not enforceable against any
Guarantor.

 

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r. REIT Qualification. The failure of PennyMac Mortgage Investment Trust to
qualify as a REIT and Buyer has delivered notice of an Event of Default to the
Sellers with respect thereto.

 

s. Governmental Event. Buyer shall determine, in its sole discretion, that a
Governmental Event, individually or collectively, and whether unforeseen or
arising out of any Seller Party’s or Underlying Repurchase Counterparty’s
existing applications, communications and correspondence with any Governmental
Authority or Person, has had, or is likely to have, a Material Adverse Effect,
or an adverse effect upon its ability to perform its obligations under this
Agreement or any other material agreement to which it is a party or that may
otherwise materially impair, limit or restrict any Seller Party’s or Underlying
Repurchase Counterparty’s ability to conduct its business or its operations.

 

t. REO Subsidiary Breach. A breach by REO Subsidiary of any material
representation, warranty or covenant set forth in the Property Contribution
Agreement, Subsidiary Agreement or any other Program Agreement, any “event of
default” by REO Subsidiary under the Property Contribution Agreement, any
repudiation of the Property Contribution Agreement or Subsidiary Agreement by
REO Subsidiary, or if the Property Contribution Agreement or Subsidiary
Agreement is not enforceable against REO Subsidiary.

 

u. Property Manager Termination Event. The occurrence of a Property Manager
Termination Event and a Seller has not appointed a successor Property Manager
acceptable to Buyer within thirty (30) days of Buyer’s written request.

 

An Event of Default shall be deemed to be continuing unless expressly waived by
Buyer in writing.

 

16. Remedies Upon Default

 

In the event that an Event of Default shall have occurred:

 

a. Buyer may, at its option (which option shall be deemed to have been exercised
immediately upon the occurrence of an Act of Insolvency of any Seller Party or
any Affiliate), declare an Event of Default to have occurred hereunder and, upon
the exercise or deemed exercise of such option, the Repurchase Date for each
Transaction hereunder shall, if it has not already occurred, be deemed
immediately to occur (except that, in the event that the Purchase Date for any
Transaction or Purchase Price Increase Date for any Purchase Price Increase has
not yet occurred as of the date of such exercise or deemed exercise, such
Transaction or Purchase Price Increase shall be deemed immediately canceled).
Buyer shall (except upon the occurrence of an Act of Insolvency) give notice to
Seller Parties and Guarantors of the exercise of such option as promptly as
practicable.

 

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b. If Buyer exercises or is deemed to have exercised the option referred to in
subparagraph (a) of this Section, (i) any Seller’s obligations in such
Transactions to repurchase all Purchased Assets and Repurchase Assets, at the
Repurchase Price therefor on the Repurchase Date determined in accordance with
subparagraph (a) of this Section, shall thereupon become immediately due and
payable, (ii) all Income paid after such exercise or deemed exercise shall be
retained by Buyer and applied, in Buyer’s sole discretion, to the aggregate
unpaid Repurchase Prices for all outstanding Transactions and any other amounts
owing by Sellers hereunder, and (iii) a Seller Party shall immediately deliver
to Buyer the Asset Files relating to any Purchased Assets and Repurchase Assets
subject to such Transactions then in such Seller Party’s possession or control.

 

c. Buyer also shall have the right to obtain physical possession, and to
commence an action to obtain physical possession, of all Records and files of
each Seller Party relating to the Purchased Assets, Mortgage Loans and
Contributed Assets and all documents relating to the Purchased Assets and
Repurchase Assets (including, without limitation, any legal, credit or servicing
files with respect to the Purchased Assets and Repurchase Assets) which are then
or may thereafter come in to the possession of any Seller Party or any third
party acting for such Seller Party. To obtain physical possession of any
Purchased Assets or Repurchase Assets held by Custodian, Buyer shall present to
Custodian a Trust Receipt. Without limiting the rights of Buyer hereto to pursue
all other legal and equitable rights available to Buyer for Seller Party’s
failure to perform its obligations under this Agreement, each of the Seller
Parties acknowledges and agrees that the remedy at law for any failure to
perform obligations hereunder would be inadequate and Buyer shall be entitled to
specific performance, injunctive relief, or other equitable remedies in the
event of any such failure. The availability of these remedies shall not prohibit
Buyer from pursuing any other remedies for such breach, including the recovery
of monetary damages.

 

d. Buyer shall have the right to direct all servicers or the Property Manager
then servicing or managing any Purchased Mortgage Loans and Contributed Assets
to remit all collections thereon to Buyer, and if any such payments are received
by any Seller Party, such Seller Party shall not commingle the amounts received
with other funds of such Seller Party and shall promptly pay them over to Buyer.
Buyer shall also have the right to terminate any one or all of the servicers or
Property Manager then servicing or managing any Purchased Mortgage Loans and
Contributed Assets with or without cause. In addition, Buyer shall have the
right to immediately sell the Purchased Assets, cause REO Subsidiary to sell the
Contributed Assets and liquidate all Repurchase Assets. Such disposition of
Purchased Assets, Mortgage Loans, Contributed Assets or Repurchase Assets may
be, at Buyer’s option, on either a servicing-released or a servicing-retained
basis. Buyer shall not be required to give any warranties as to the Purchased
Assets, Mortgage Loans, Contributed Assets or Repurchase Assets with respect to
any such disposition thereof. Buyer may specifically disclaim or modify any
warranties of title or the like relating to the Purchased Assets, Mortgage
Loans, Contributed Assets or Repurchase Assets. The foregoing procedure for
disposition of the Purchased Assets, Mortgage Loans, Contributed Assets or
Repurchase Assets and liquidation of the Repurchase Assets shall not be
considered to adversely affect the commercial reasonableness of any sale
thereof. Each Seller Party agrees that it would not be commercially unreasonable
for Buyer to dispose of the Purchased Assets or to cause the disposition of
Contributed Assets or dispose of the Repurchase Assets or any portion thereof by
using Internet sites that provide for the auction of assets similar to the
Purchased Assets, Mortgage Loans, Contributed Assets or the Repurchase Assets,
or that have the reasonable capability of doing so, or that match buyers and
sellers of assets. Buyer shall be entitled to place the Purchased Assets or
cause the placement of the Contributed Assets in a pool for issuance of
securities at the then-prevailing price for such securities and to sell such
securities for such prevailing price in the open market. Buyer shall also be
entitled to sell any or all of such Purchased Assets and Repurchase Assets
individually for the prevailing price. Buyer shall also be entitled, in its sole
discretion to elect, in lieu of selling all or a portion of such Purchased
Assets and Repurchase Assets or causing the sale of all or a portion of such
Purchased Assets or Repurchase Assets, to give the Sellers credit for such
Purchased Assets and the Repurchase Assets in an amount equal to the Market
Value of the Purchased Assets and Repurchase Assets against the aggregate unpaid
Repurchase Price and any other amounts owing by the Sellers hereunder.

 

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e. Upon the happening of one or more Events of Default, Buyer may apply any
proceeds from the liquidation of the Purchased Assets and Repurchase Assets to
the Repurchase Prices hereunder and all other Obligations in the manner Buyer
deems appropriate in its sole discretion.

 

f. Each Seller Party shall be liable to Buyer for (i) the amount of all
reasonable legal or other expenses (including, without limitation, all costs and
expenses of Buyer in connection with the enforcement of this Agreement or any
other agreement evidencing a Transaction, whether in action, suit or litigation
or bankruptcy, insolvency or other similar proceeding affecting creditors’
rights generally, further including, without limitation, the reasonable fees and
expenses of counsel (including the costs of internal counsel of Buyer) incurred
in connection with or as a result of an Event of Default, (ii) damages in an
amount equal to the cost (including all fees, expenses and commissions) of
entering into replacement transactions and entering into or terminating hedge
transactions in connection with or as a result of an Event of Default, and
(iii) any other loss, damage, cost or expense directly arising or resulting from
the occurrence of an Event of Default in respect of a Transaction.

 

g. To the extent permitted by applicable law, Sellers shall be liable to Buyer
for interest on any amounts owing by Sellers hereunder, from the date Sellers
become liable for such amounts hereunder until such amounts are (i) paid in full
by Sellers or (ii) satisfied in full by the exercise of Buyer’s rights
hereunder. Interest on any sum payable by Sellers under this Section 16(g) shall
accrue at a rate equal to the Post-Default Rate.

 

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h. Each Seller Party recognizes that the market for the Purchased Assets or
Contributed Assets may not be liquid and as a result it may not be possible for
Buyer to sell all of the Purchased Assets on a particular Business Day, or in a
transaction with the same purchaser, or in the same manner. Each Seller Party
further recognizes that Buyer may be unable to effect a public sale of any or
all of the REO Subsidiary Interests, by reason of certain prohibitions contained
in the 1934 Act and applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not a view to the
distribution or resale thereof. In view of the nature of the REO Subsidiary
Interests, each Seller Party agrees that liquidation of any REO Subsidiary
Interests may be conducted in a private sale and at such price as Buyer may deem
commercially reasonable. Buyer shall be under no obligation to delay a sale of
any REO Subsidiary Interests for the period of time necessary to permit the
applicable Seller to register the REO Subsidiary Interests for public sale under
the 1934 Act, or under applicable state securities laws, even if such Seller
would agree to do so.

 

i. Each Seller Party agrees to use its reasonable efforts to do or cause to be
done all such other acts as may be reasonably necessary to make any sale or
sales of any portion of the REO Subsidiary Interests pursuant to this Agreement
valid and binding and in compliance with any and all other applicable laws other
than registration under applicable securities laws, provided that each Seller
shall have no obligation to register the REO Subsidiary Interests for public
sale under the 1934 Act. Each Seller Party further agrees that a breach of any
of the covenants contained in this Section will cause irreparable injury to
Buyer, that Buyer has no adequate remedy at law in respect of such breach and,
as a consequence, that each and every covenant contained in this Section shall
be specifically enforceable against the Seller Parties, and each Seller Party
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for defense that no Event of
Default has occurred hereunder.

 

j. Buyer shall have, in addition to its rights hereunder, any rights otherwise
available to it under any other agreement or applicable law.

 

k. Buyer may exercise one or more of the remedies available to Buyer immediately
upon the occurrence of an Event of Default and, except to the extent provided in
subsections (a) and (d) of this Section, at any time thereafter without notice
to Seller Parties or Guarantors. All rights and remedies arising under this
Agreement as amended from time to time hereunder are cumulative and not
exclusive of any other rights or remedies which Buyer may have.

 

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l. Buyer may enforce its rights and remedies hereunder without prior judicial
process or hearing, and each Seller Party and each Guarantor hereby expressly
waives any defenses such Seller Party and such Guarantor might otherwise have to
require Buyer to enforce its rights by judicial process. Each Seller Party and
each Guarantor also waives any defense (other than a defense of payment or
performance) such Seller Party and such Guarantor might otherwise have arising
from the use of nonjudicial process, enforcement and sale of all or any portion
of the Repurchase Assets, or from any other election of remedies. Each Seller
Party and each Guarantor 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.

 

m. Buyer shall have the right to perform reasonable due diligence with respect
to each Seller Party and the Purchased Assets and Repurchase Assets, which
review shall be at the expense of such Seller.

 

n. To the fullest extent permitted by law, the REO Subsidiary for itself and its
successors and assigns, waives all rights to a marshalling of the assets of the
REO Subsidiary, the REO Subsidiary’s partners or members and of the Rental
Properties, or to a sale in inverse order of alienation in the event of
foreclosure of all or any of the Mortgages, and agrees not to assert any right
under any laws pertaining to the marshalling of assets, the sale in inverse
order of alienation, homestead exemption, the administration of estates of
decedents, or any other matters whatsoever to defeat, reduce or affect the right
of Buyer under the Program Agreements to a sale of the Rental Properties for the
collection of the Repurchase Assets without any prior or different resort for
collection or of the right of Buyer to the payment of the Repurchase Assets out
of the net proceeds of the Rental Properties in preference to every other
claimant whatsoever. In addition, the REO Subsidiary, for itself and its
successors and assigns, waives in the event of foreclosure of any or all of the
Mortgages, any equitable right otherwise available to the REO Subsidiary which
would require the separate sale of the Rental Properties or require Buyer to
exhaust its remedies against any Rental Property or any combination of the
Rental Properties before proceeding against any other Rental Property or
combination of Rental Properties; and further in the event of such foreclosure
the REO Subsidiary does hereby expressly consent to and authorizes, at the
option of Buyer, the foreclosure and sale either separately or together of any
combination of the Rental Properties.

 

17. Reports

 

a. Default Notices. Seller Parties or Guarantors shall furnish to Buyer
(i) promptly, copies of any material and adverse notices (including, without
limitation, notices of defaults, breaches, potential defaults or potential
breaches) and any material financial information that is not otherwise required
to be provided by Seller Parties or Guarantors hereunder which is given to
Seller Parties’ or Guarantors’ lenders and (ii) immediately, notice of the
occurrence of any (A) Event of Default hereunder, (B) default or breach by
Seller Parties or Servicer or Guarantors of any obligation under any Program
Agreement or any material contract or agreement of Seller Parties, Servicer or
Guarantors or (C) event or circumstance that such party reasonably expects has
resulted in, or will, with the passage of time, result in, a Material Adverse
Effect or an Event of Default or such a default or breach by such party.

 

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b. Financial Notices. Sellers or PennyMac Mortgage Investment Trust shall
furnish to Buyer:

 

(1) as soon as available and in any event within forty (40) calendar days after
the end of each calendar month, the unaudited consolidated balance sheets of
Sellers and PennyMac Mortgage Investment Trust and their consolidated
Subsidiaries as at the end of such period and the related unaudited consolidated
statements of income and retained earnings for the Sellers and PennyMac Mortgage
Investment Trust and their consolidated Subsidiaries for such period and the
portion of the fiscal year through the end of such period, accompanied by a
certificate of a Responsible Officer of Sellers and PennyMac Mortgage Investment
Trust, which certificate shall state that said consolidated financial statements
fairly present in all material respects the consolidated financial condition and
results of operations of Sellers and PennyMac Mortgage Investment Trust and
their consolidated Subsidiaries in accordance with GAAP (other than solely with
respect to footnotes, year-end adjustments and cash flow statements)
consistently applied, as at the end of, and for, such period;

 

(2) to the extent not filed with the SEC on EDGAR, as soon as available and in
any event within ninety (90) days after the end of each fiscal year of Sellers
or PennyMac Mortgage Investment Trust, the consolidated balance sheets of
Sellers, PennyMac Mortgage Investment Trust and their consolidated Subsidiaries
as at the end of such fiscal year and the related consolidated statements of
income and retained earnings and of cash flows for the Sellers or PennyMac
Mortgage Investment Trust and their consolidated Subsidiaries for such year,
setting forth in each case in comparative form the figures for the previous
year, accompanied by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion and the scope of
audit shall be acceptable to Buyer in its sole discretion, shall have no “going
concern” qualification and shall state that said consolidated financial
statements fairly present the consolidated financial condition and results of
operations of Sellers or PennyMac Mortgage Investment Trust and their respective
consolidated Subsidiaries as at the end of, and for, such fiscal year in
accordance with GAAP

 

(3) at the time the Sellers and PennyMac Mortgage Investment Trust furnish each
set of financial statements pursuant to Section 17(b)(1) or (2) above, an
Officer’s Compliance Certificate or, with respect to 17(b)(2) above, (at the
time filed with the SEC on EDGAR), a certificate of a Responsible Officer of
Sellers and PennyMac Mortgage Investment Trust in the form attached as Exhibit A
to the Pricing Side Letter;

 

 - 87 - 

 

 

(4) if applicable, notice of any 10-K or 10-Q filings with the SEC on EDGAR by
Sellers or PennyMac Mortgage Investment Trust, within five (5) Business Days of
such filing with the SEC; and

 

(5) as soon as available and in any event within thirty (30) days of receipt
thereof:

 

(a) reserved;

 

(b) copies of relevant portions of all final written Agency, FHA, VA,
Governmental Authority and investor audits, examinations, evaluations,
monitoring reviews and reports of its operations (including those prepared on a
contract basis) which provide for or relate to (i) material corrective action
required, (ii) material sanctions proposed, imposed or required, 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, or (iii)
“report cards,” “grades” or other classifications of the quality of Sellers’
operations;

 

(c) such other information regarding the financial condition, operations, or
business of the Sellers or Guarantors as Buyer may reasonably request; and

 

(d) the particulars of any Event of Termination in reasonable detail.

 

c. Notices of Certain Events. As soon possible and in any event within five (5)
Business Days of knowledge thereof, Sellers shall furnish to Buyer notice of the
following events:

 

(1) a change in the insurance coverage required of any Seller Party, Servicer,
Property Manager or any other Person pursuant to any Program Agreement, with a
copy of evidence of same attached;

 

(2) any material dispute, litigation, investigation, proceeding or suspension
between a Seller or Servicer, on the one hand, and any Governmental Authority or
any Person;

 

(3) any material change in accounting policies or financial reporting practices
of a Seller or Servicer;

 

(4) that the underlying Mortgaged Property, with respect to any Purchased
Mortgage Loan or any Contributed Asset has been damaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty, or
otherwise damaged so as to affect adversely the value of such Mortgage Loan,
Rental Property or REO Property;

 

 - 88 - 

 

 

(5) any material issues raised upon examination of a Seller or such Seller’s
facilities by any Governmental Authority;

 

(6) any material change in the Indebtedness of a Seller, including, without
limitation, any default, renewal, non-renewal, termination, increase in
available amount or decrease in available amount related thereto;

 

(7) any default related to any Repurchase Asset, including without limitation
any default under any Underlying Repurchase Documents, or any lien or security
interest (other than security interests created hereby or by the other Program
Agreements) on, or claim asserted against, any of the Purchased Assets or any
Repurchase Asset;

 

(8) any Underlying Repurchase Counterparty for any reason ceases to possess all
applicable Agency approvals, or an event has occurred or Underlying Repurchase
Counterparty has a reason to believe or suspect that an event will occur prior
to the issuance of the Agency Security or the consummation of the Take-Out
Commitment, that will require notification to an Agency or HUD, FHA or VA;

 

(9) any other event, circumstance or condition that has resulted, or has a
possibility of resulting, in a Material Adverse Effect with respect to a Seller
or Servicer;

 

(10) the occurrence of any material employment dispute and a description of the
strategy for resolving it that has the possibility of resulting in a Material
Adverse Effect;

 

(11) without limiting any of the other reporting obligations of Sellers
hereunder, Sellers shall promptly notify Buyer of any Governmental Event or
update thereto, and shall include the particulars of each update with sufficient
detail as is satisfactory to Buyer;

 

(12) any notice a Seller receives from an Underlying Repurchase Counterparty in
accordance with the terms of the Underlying Repurchase Documents relating to a
material event, circumstance or condition affecting the Servicer; and

 

(13) with respect to the sample testing required pursuant to Section 14.bb
hereof, if any such tested Rental Property in any one Property Level Reporting
Period fails to meet the requirements set forth in Section 14bb.(i)-(iii), and
such failure is not cured within sixty (60) days.

 

d. Portfolio Performance Data. On the first Reporting Date of each calendar
month, Sellers will furnish to Buyer (i) in the event the Seasoned Mortgage
Loans are serviced on a “retained” basis, an electronic Purchased Mortgage Loan
and Contributed Asset performance data for Seasoned Mortgage Loans, including,
without limitation, delinquency reports and volume information, broken down by
product (i.e., delinquency, foreclosure and net charge-off reports) and (ii)
electronically, in a format mutually acceptable to Buyer and Sellers, servicing
information, including, without limitation, those fields reasonably requested by
Buyer from time to time, on a loan-by-loan basis and in the aggregate, with
respect to the Purchased Mortgage Loans serviced by any Seller or any Servicer
for the month (or any portion thereof) prior to the Reporting Date and, with
respect to Seasoned Mortgage Loans and Contributed Assets, the current BPO and
the current BPO date. In addition to the foregoing information on each Reporting
Date, Sellers will furnish to Buyer such information upon (i) the occurrence and
continuation of an Event of Default and (ii) upon any Purchased Mortgage Loan
becoming an Aged Loan or Aged New Origination Performing Loan.

 

 - 89 - 

 

 

e. Quality Control Reports. Within forty (40) days following the end of each
calendar month, monthly quality control reports or similar reports generated,
based on a sample of at least 10% of volume, with respect to the Mortgage Loan
product types owned or financed by Underlying Repurchase Counterparty; and

 

f. Pending/Completed Repurchase Requests. Within forty (40) days following the
end of each calendar month, a summary of the portfolio performance of New
Origination Mortgage Loans owned or financed by Underlying Repurchase
Counterparty including representation breaches, missing document breaches,
repurchases due to fraud, early payment default requests, and New Origination
Mortgage Loans owned or financed by Underlying Repurchase Counterparty subject
to other warehouse lines in excess of sixty (60) days summarized on the basis of
(a) pending repurchase demands (including weighted average duration of
outstanding request), (b) satisfied repurchase demands and (c) total repurchase
demands.

 

g. Other Reports. Sellers shall deliver to Buyer any other reports or
information reasonably requested by Buyer or as otherwise required pursuant to
this Agreement including without limitation any reports prepared by the
Diligence Agent, if any, in accordance with Section 14.bb hereof and any reports
or information received from any Underlying Repurchase Counterparty.

 

h. Loan Activity Report. Sellers hereby acknowledge that by the 10th Business
Day of each calendar month, Sellers will furnish to Buyer (i) an Asset Schedule
and (ii) a loan activity report comprised of the information set forth in
Exhibit K attached hereto.

 

i. Property Management Report. Within forty (40) days after the end of each
calendar month, a monthly property management report of Property Manager, in the
form attached hereto as Exhibit B, setting forth information regarding the
Rental Properties with respect to the immediately preceding calendar month,
together with a copy of each other report delivered by Property Manager to the
REO Subsidiary pursuant to the Property Management Agreement (to the extent not
delivered directly to Buyer by Property Manager).

 

 - 90 - 

 

 

18. Repurchase Transactions

 

Buyer may, in its sole election, engage in repurchase transactions with the
Purchased Assets or Repurchase Assets or its interests in Contributed Assets or
otherwise pledge, hypothecate, assign, transfer or otherwise convey the
Purchased Assets or Repurchase Assets to a counterparty of Buyer’s choice.
Unless an Event of Default shall have occurred, no such transaction shall
relieve Buyer of its obligations to transfer Purchased Assets or Repurchase
Assets to Sellers pursuant to Section 4 hereof, or of Buyer’s obligation to
credit or pay Income to, or apply Income to the obligations of, Sellers pursuant
to Section 7 hereof. In the event Buyer engages in a repurchase transaction with
any of the Purchased Assets or Repurchase Assets or its interests in Contributed
Assets or otherwise pledges or hypothecates any of the Purchased Assets or its
interests in Contributed Assets, Buyer shall have the right to assign to Buyer’s
counterparty any of the applicable representations or warranties herein and the
remedies for breach thereof, as they relate to the Purchased Assets or
Repurchase Assets or its interests in Contributed Assets that are subject to
such repurchase transaction.

 

19. Single Agreement

 

Buyer and each Seller Party acknowledge they have and will enter into each
Transaction hereunder, in consideration of and in reliance upon the fact that,
all Transactions hereunder constitute a single business and contractual
relationship and have been made in consideration of each other. Accordingly,
each of Buyer and each Seller Party agrees (i) to perform all of its obligations
in respect of each Transaction hereunder, and that a default in the performance
of any such obligations shall constitute a default by it in respect of all
Transactions hereunder, (ii) that each of them shall be entitled to set-off
claims and apply property held by them in respect of any Transaction against
obligations owing to them in respect of any other Transactions hereunder and
(iii)  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.

 

20. Notices and Other Communications

 

Any and all notices (with the exception of Transaction Requests or Purchase
Price Increase Requests, as applicable, which shall be delivered via electronic
mail or other electronic medium agreed to by the Buyer and Seller Parties),
statements, demands or other communications hereunder may be given by a party to
the other by mail, email, facsimile, messenger or otherwise to the address
specified below, or so sent to such party at any other place specified in a
notice of change of address hereafter received by the other. All notices,
demands and requests hereunder may be made orally, to be confirmed promptly in
writing, or by other communication as specified in the preceding sentence. In
all cases, to the extent that the related individual set forth in the respective
“Attention” line is no longer employed by the respective Person, such notice may
be given to the attention of a Responsible Officer of the respective Person or
to the attention of such individual or individuals as subsequently notified in
writing by a Responsible Officer of the respective Person.

 

 

 - 91 - 

 

 

If to Seller Parties:

 

PennyMac Corp.

PennyMac Holdings, LLC

PennyMac Operating Partnership, L.P.

PMC REO Financing Trust

3043 Townsgate Road

Westlake Village, California 91361

Attention: Pamela Marsh/Kevin Chamberlain

Phone Number: (805) 330-6059/(818) 746-2877

E-mail: pamela.marsh@pnmac.com;

             kevin.chamberlain@pnmac.com

 

 

with a copy to:

 

PennyMac Corp.
PennyMac Holdings, LLC

 

PennyMac Operating Partnership, L.P.

3043 Townsgate Road

Westlake Village, California 91361

Attention: Jeff Grogin
Phone Number: (818) 224-7050
E-mail: jeff.grogin@pnmac.com

 

If to Guarantors:

 

 

PennyMac Mortgage Investment Trust

3043 Townsgate Road

Westlake Village, California 91361

E-mail: anne.mccallion@pnmac.com

PennyMac Operating Partnership, L.P.

3043 Townsgate Road

Westlake Village, California 91361

Attention: Anne D. McCallion

Phone Number: (818) 224-7434

E-mail: anne.mccallion@pnmac.com

 

If to Buyer:

 

For Transaction Requests:

 

CSFBMC LLC

c/o Credit Suisse Securities (USA) LLC

One Madison Avenue, 2nd floor

New York, New York 10010

Attention: Christopher Bergs, Resi Mortgage Warehouse Ops

Phone: 212-538-5087

E-mail: christopher.bergs@credit-suisse.com

 

 

 - 92 - 

 

 

with a copy to:

 

 

Credit Suisse First Boston Mortgage Capital LLC

c/o Credit Suisse Securities (USA) LLC

Eleven Madison Avenue, 4th Floor

New York, New York 10010

Attention: Margaret Dellafera

Phone: 212-325-6471

Fax: 212-743-4810

E-mail: margaret.dellafera@credit-suisse.com

 

For all other Notices:

 

Credit Suisse First Boston Mortgage Capital LLC

c/o Credit Suisse Securities (USA) LLC

Eleven Madison Avenue, 4th Floor

New York, New York 10010

Attention: Margaret Dellafera

Phone: 212-325-6471

Fax: 212-743-4810

E-mail: margaret.dellafera@credit-suisse.com

 

with a copy to:

 

Credit Suisse First Boston Mortgage Capital LLC

c/o Credit Suisse Securities (USA) LLC

One Madison Avenue, 9th Floor

New York, NY 10010

Attention: Legal Department—RMBS Warehouse Lending

Fax: (212) 322-2376

 

21. Entire Agreement; Severability

 

This Agreement shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions. 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.

 

22. Non assignability

 

The Program Agreements are not assignable by any Seller Party or any Guarantor.
Buyer may from time to time assign all or a portion of its rights and
obligations under this Agreement and the Program Agreements; provided, however
that Buyer shall maintain as agent of Sellers, for review by Sellers upon
written request, a register of assignees and a copy of an executed assignment
and acceptance by Buyer and assignee (“Assignment and Acceptance”), specifying
the percentage or portion of such rights and obligations assigned. Upon such
assignment, (a) such assignee shall be a party hereto and to each Program
Agreement to the extent of the percentage or portion set forth in the Assignment
and Acceptance, and shall succeed to the applicable rights and obligations of
Buyer hereunder, and (b) Buyer shall, to the extent that such rights and
obligations have been so assigned by it to either (i) an Affiliate of Buyer
which assumes the obligations of Buyer or (ii)  another Person approved by
Sellers (such approval not to be unreasonably withheld) which assumes the
obligations of Buyer, be released from its obligations hereunder and under the
Program Agreements. Unless otherwise stated in the Assignment and Acceptance,
Seller Parties shall continue to take directions solely from Buyer unless
otherwise notified by Buyer in writing. Buyer may distribute to any prospective
assignee any document or other information delivered to Buyer by Seller Parties.

 

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23. Set-off

 

In addition to any rights and remedies of the Buyer hereunder and by law, the
Buyer shall have the right, without prior notice to the Seller Parties or
Guarantors, any such notice being expressly waived by the Seller Parties and
Guarantors to the extent permitted by applicable law to set-off and appropriate
and apply against any Obligation from any Seller Party, any Guarantor or any
Affiliate thereof to Buyer or any of its Affiliates any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other obligation (including to return excess margin), credits, indebtedness
or claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by or due from the
Buyer or any Affiliate thereof to or for the credit or the account of the Seller
Parties, any Guarantor or any Affiliate thereof. The Buyer agrees promptly to
notify the Seller Parties or Guarantors after any such set off and application
made by the Buyer; provided that the failure to give such notice shall not
affect the validity of such set off and application.

 

24. Binding Effect; Governing Law; Jurisdiction

 

a. This Agreement shall be binding and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Each Seller Party
acknowledges that the obligations of Buyer hereunder or otherwise are not the
subject of any guaranty by, or recourse to, any direct or indirect parent or
other Affiliate of Buyer. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH,
AND GOVERNED BY, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF (EXCEPT FOR SECTION 5-1401 AND 5-1402 OF THE
NEW YORK GENERAL OBLIGATIONS LAW).

 

b. EACH SELLER PARTY AND EACH GUARANTOR HEREBY WAIVE TRIAL BY JURY. EACH SELLER
PARTY AND EACH GUARANTOR HEREBY IRREVOCABLY CONSENT TO THE EXCLUSIVE
JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ARISING OUT OF OR RELATING
TO THE PROGRAM AGREEMENTS IN ANY ACTION OR PROCEEDING. EACH SELLER PARTY AND
EACH GUARANTOR HEREBY SUBMIT TO, AND WAIVE ANY OBJECTION THEY MAY HAVE TO,
EXCLUSIVE PERSONAL JURISDICTION AND VENUE IN THE COURTS OF THE STATE OF NEW YORK
AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH
RESPECT TO ANY DISPUTES ARISING OUT OF OR RELATING TO THE PROGRAM AGREEMENTS.

 

 - 94 - 

 

 

25. No Waivers, Etc.

 

No express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder by any party shall constitute a waiver of its right to exercise any
other remedy hereunder. No modification or waiver of any provision of this
Agreement and no consent by any party to a departure herefrom shall be effective
unless and until such shall be in writing and duly executed by both of the
parties hereto. Without limitation on any of the foregoing, the failure to give
a notice pursuant to Section 6(a), 16(a) or otherwise, will not constitute a
waiver of any right to do so at a later date.

 

26. Intent

 

a. The parties recognize that each Transaction is a “repurchase agreement” as
that term is defined in Section 101 of Title 11 of the United States Code, as
amended, a “securities contract” as that term is defined in Section 741 of
Title 11 of the United States Code, as amended, and a “master netting agreement”
as that term is defined in Section 101(38A)(A) of the Bankruptcy Code, that all
payments hereunder are deemed “margin payments” or “settlement payments” as
defined in Title 11 of the United States Code, and that the pledge of the
Repurchase Assets 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. Each Seller Party 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). For the avoidance of doubt, the pledge of the REO Subsidiary
Interests which constitutes “a security agreement or other arrangement or other
credit enhancement” that is “related to” this Agreement and Transactions
thereunder within the meaning of Sections 101(38A)(A), 101(47)(A)(v) and
741(7)(A)(xi) of the Bankruptcy Code.

 

b. Buyer’s right to liquidate the Purchased Assets, Repurchase Assets, Mortgage
Loans and Contributed Assets delivered to it in connection with the Transactions
hereunder or to accelerate or terminate this Agreement or otherwise exercise any
other remedies pursuant to Section 16 hereof 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 satisfy a Margin Deficit shall
be considered a “margin payment” as such term is defined in Bankruptcy Code
Section 741(5).

 

 - 95 - 

 

 

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

 

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

 

e. This Agreement is intended to be a “repurchase agreement” and a “securities
contract,” within the meaning of Section 101(47), Section 555, Section 559 and
Section 741 under the Bankruptcy Code.

 

f. Each party agrees that this Agreement is intended to create mutuality of
obligations among the parties, and as such, the Agreement constitutes a contract
which (i) is between all of the parties and (ii) places each party in the same
right and capacity.

 

g. For U.S. federal tax purposes, each of the Seller Parties, the Guarantor, the
Buyer, and each Buyer assignee by acquiring an interest in any Transaction agree
to treat and report each Transaction as indebtedness issued by PennyMac Mortgage
Investment Trust, PMC or PennyMac Holdings, LLC as the case may be, which
indebtedness, in the case of each obligor, shall have but a single maturity for
purposes of Code section 7701(i)(2)(A)(ii) and U.S. Treasury Regulation section
301.7701(i)-1(e).

 

27. Disclosure Relating to Certain Federal Protections

 

The parties acknowledge that they have been advised that:

 

a. in the case of Transactions in which one of the parties is a broker or dealer
registered with the SEC under Section 15 of the 1934 Act, the Securities
Investor Protection Corporation has taken the position that the provisions of
the SIPA do not protect the other party with respect to any Transaction
hereunder;

 

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

 

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

 

28. Power of Attorney

 

Each Seller Party hereby authorizes Buyer to file such financing statement or
statements relating to the Repurchase Assets without such Seller Party’s
signature thereon as Buyer, at its option, may deem appropriate. Each Seller
Party hereby appoints Buyer as such Seller Party’s agent and attorney-in-fact to
execute any such financing statement or statements in such Seller Party’s name
and to perform all other acts which Buyer deems appropriate to perfect and
continue its ownership interest in and/or the security interest granted hereby,
if applicable, and to protect, preserve and realize upon the Repurchase Assets,
including, but not limited to, the right to endorse notes, complete blanks in
documents, transfer servicing, and sign assignments on behalf of such Seller
Party as its agent and attorney-in-fact and exercise all rights and remedies of
such Seller Party thereunder and to act as attorney-in-fact for Underlying
Repurchase Counterparty. This agency and power of attorney is coupled with an
interest and is irrevocable without Buyer’s consent. Notwithstanding the
foregoing, the power of attorney hereby granted may be exercised only during the
occurrence and continuance of any Default hereunder. Sellers shall pay the
filing costs for any financing statement or statements prepared pursuant to this
Section 28. In addition the foregoing, each Seller agrees to execute a Power of
Attorney, the form of Exhibit D hereto, to be delivered on the date hereof.
Sellers shall cause PennyMac Loan Services, LLC and REO Subsidiary to execute a
Power of Attorney in the form of Exhibit E-1 and Exhibit E-2, respectively,
hereto.

 

29. Buyer May Act Through Affiliates and REO Subsidiary May Act Through Seller

 

Buyer may, from time to time, designate one or more Affiliates for the purpose
of performing any action hereunder. Pursuant to the Subsidiary Agreement, the
REO Subsidiary has appointed Sellers as its agent with respect to the execution,
delivery and/or performance of any Program Agreement, including, without
limitation, the Custodial Agreement, any Servicing Agreement and any Servicer
Notice.

 

30. Indemnification; Obligations

 

a. Each Seller and each Guarantor agrees to hold Buyer and each of its
respective Affiliates and their officers, directors, employees, agents and
advisors (each, an “Indemnified Party”) harmless from and indemnify each
Indemnified Party (and will reimburse each Indemnified Party as the same is
incurred) against all liabilities, losses, damages, judgments, costs and
expenses (including, without limitation, reasonable fees and expenses of
counsel) of any kind which may be imposed on, incurred by, or asserted against
any Indemnified Party relating to or arising out of this Agreement, any
Transaction Request or Purchase Price Increase Request, any Program Agreement,
any Underlying Repurchase Document, or any transaction contemplated hereby or
thereby resulting from anything other than the Indemnified Party’s gross
negligence or willful misconduct. Each Seller and each Guarantor also agrees to
reimburse each Indemnified Party for all reasonable expenses in connection with
the enforcement of this Agreement and the exercise of any right or remedy
provided for herein, any Transaction Request or Purchase Price Increase Request,
and any Program Agreement, including, without limitation, the reasonable fees
and disbursements of counsel. Each Seller’s and each Guarantor’s agreements in
this Section 30 shall survive the payment in full of the Repurchase Price and
the expiration or termination of this Agreement. Each Seller and each Guarantor
hereby acknowledges that its obligations hereunder are recourse obligations of
such Seller and such Guarantor and are not limited to recoveries each
Indemnified Party may have with respect to the Purchased Assets and Repurchase
Assets. Each Seller Party and each Guarantor also agrees not to assert any claim
against Buyer or any of its Affiliates, or any of their respective officers,
directors, employees, attorneys and agents, on any theory of liability, for
special, indirect, consequential or punitive damages arising out of or otherwise
relating to the facility established hereunder, the actual or proposed use of
the proceeds of the Transactions or Purchase Price Increases, this Agreement or
any of the transactions contemplated 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.

 

 - 97 - 

 

 

b. Without limitation to the provisions of Section 4, if any payment of the
Repurchase Price of any Transaction or Purchase Price Increase is made by
Sellers other than on the then scheduled Repurchase Date thereto as a result of
an acceleration of the Repurchase Date pursuant to Section 16 or for any other
reason, Sellers shall, upon demand by Buyer, pay to Buyer an amount sufficient
to compensate Buyer for any losses, costs or expenses that it may reasonably
incur as of a result of such payment.

 

c. Without limiting the provisions of Section 30(a) hereof, if Sellers fail to
pay when due any costs, expenses or other amounts payable by it under this
Agreement, including, without limitation, fees and expenses of counsel and
indemnities, such amount may be paid on behalf of Sellers by Buyer, in its sole
discretion.

 

31. 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. Delivery of an executed counterpart of a signature
page of this Agreement in a Portable Document Format (PDF) or by facsimile shall
be effective as delivery of a manually executed original counterpart of this
Agreement.

 

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32. Confidentiality

 

a. This Agreement and its terms, provisions, supplements and amendments, and
notices hereunder, are proprietary to Buyer and shall be held by each Seller
Party and each Guarantor in strict confidence and shall not be disclosed to any
third party without the written consent of Buyer except for (i) disclosure to
Seller Parties’ or Guarantors’ direct and indirect Affiliates and Subsidiaries,
attorneys or accountants, but only to the extent such disclosure is necessary
and such parties agree to hold all information in strict confidence, or (ii) 
disclosure required by law, rule, regulation or order of a court or other
regulatory body. Notwithstanding the foregoing or anything to the contrary
contained herein or in any other Program Agreement, the parties hereto may
disclose to any and all Persons, without limitation of any kind, the federal,
state and local tax treatment of the Transactions, any fact relevant to
understanding the federal, state and local tax treatment of the Transactions,
and all materials of any kind (including opinions or other tax analyses)
relating to such federal, state and local tax treatment and that may be relevant
to understanding such tax treatment; provided that no Seller Party may disclose
the name of or identifying information with respect to Buyer or any pricing
terms (including, without limitation, the Commitment Fee, Pricing Rate, Purchase
Price Percentage and Purchase Price) or other nonpublic business or financial
information (including any sublimits and financial covenants) that is unrelated
to the federal, state and local tax treatment of the Transactions and is not
relevant to understanding the federal, state and local tax treatment of the
Transactions, without the prior written consent of the Buyer.

 

b. Notwithstanding anything in this Agreement to the contrary, each Seller Party
shall comply with all applicable local, state and federal laws, including,
without limitation, all privacy and data protection law, rules and regulations
that are applicable to the Purchased Assets and Repurchase Assets and/or any
applicable terms of this Agreement (the “Confidential Information”). Each Seller
Party understands that the Confidential Information may contain “nonpublic
personal information”, as that term is defined in Section 509(4) of the
Gramm-Leach-Bliley Act (the “Act”), and each Seller Party agrees to maintain
such nonpublic personal information that it receives hereunder in accordance
with the Act and other applicable federal and state privacy laws. Each Seller
Party shall implement such physical and other security measures as shall be
necessary to (a) ensure the security and confidentiality of the “nonpublic
personal information” of the “customers” and “consumers” (as those terms are
defined in the Act) of Buyer or any Affiliate of Buyer which such Seller Party
holds, (b) protect against any threats or hazards to the security and integrity
of such nonpublic personal information, and (c) protect against any unauthorized
access to or use of such nonpublic personal information. Each Seller Party
represents and warrants that it has implemented appropriate measures to meet the
objectives of Section 501(b) of the Act and of the applicable standards adopted
pursuant thereto, as now or hereafter in effect. Upon request, each Seller Party
will provide evidence reasonably satisfactory to allow Buyer to confirm that the
providing party has satisfied its obligations as required under this Section.
Without limitation, this may include Buyer’s review of audits, summaries of test
results, and other equivalent evaluations of each Seller Party. The Seller
Parties shall notify Buyer immediately following discovery of any breach or
compromise of the security, confidentiality, or integrity of nonpublic personal
information of the customers and consumers of Buyer or any Affiliate of Buyer
provided directly to the Seller Parties by Buyer or such Affiliate. The Seller
Parties shall provide such notice to Buyer by personal delivery, by facsimile
with confirmation of receipt, or by overnight courier with confirmation of
receipt to the applicable requesting individual.

 

 - 99 - 

 

 

33. Recording of Communications

 

Buyer, Seller Parties and Guarantors shall have the right (but not the
obligation) from time to time to make or cause to be made tape recordings of
communications between its employees and those of the other party with respect
to Transactions. Buyer, Seller Parties and Guarantors consent to the
admissibility of such tape recordings in any court, arbitration, or other
proceedings. The parties agree that a duly authenticated transcript of such a
tape recording shall be deemed to be a writing conclusively evidencing the
parties’ agreement.

 

34. Agency and Allocation Agreement.

 

Buyer intends to assign the Transactions to one or more affiliates of Buyer and
to enter into an agency and allocation agreement allocating current and future
Transactions to such affiliates and setting forth certain agency related
provisions and amending this Agreement to conform thereto, as applicable. Each
Seller Party shall agree to and acknowledge such agency and allocation agreement
in writing (the “Allocation Agreement”). In the event that the Seller Parties
fail to execute the Allocation Agreement described herein for any reason within
sixty (60) days following receipt thereof from Buyer or its counsel, then the
obligations of the Buyer under the Repurchase Agreement will be deemed
uncommitted and Buyer shall have no obligations to enter into Transactions under
the Repurchase Agreement.

 

35. Condition Subsequent

 

Within ten (10) Business Days following the date hereof, Sellers shall deliver
to Buyer the opinions of Sellers’ and Guarantors’ counsel, in form and substance
acceptable to Buyer, as referred to in Section 10(a)(6) hereof. Buyer reserves
the right not to fund any Transactions if Sellers fail to deliver such items as
described in this Section. Sellers’ failure to deliver these items shall be a
breach of a material covenant under this Agreement.

 

36. Periodic Due Diligence Review

 

Each Seller Party and each Guarantor acknowledges that Buyer has the right to
perform continuing due diligence reviews with respect to each Seller Party, each
Guarantor, Underlying Repurchase Counterparty and the Purchased Assets, Mortgage
Loans and Contributed Assets, for purposes of verifying compliance with the
representations, warranties and specifications made hereunder, for the purpose
of performing quality control review of the Purchased Assets, Mortgage Loans and
Contributed Assets or otherwise, and upon reasonable (but no less than one (1)
Business Day’s) prior notice unless an Event of Default shall have occurred, in
which case no notice is required, to Sellers, each Seller agrees to permit or
shall cause Underlying Repurchase Counterparty to permit Buyer or its authorized
representatives will be permitted during normal business hours to examine,
inspect, and make copies and extracts of, the Asset Files and any and all
documents, data, records, agreements, instruments or information relating to
such Purchased Assets, Mortgage Loans and Contributed Assets (including, without
limitation, quality control review) in the possession or under the control of
Sellers, Guarantors, Underlying Repurchase Counterparty and/or the Custodian.
Sellers also shall make available or cause Underlying Repurchase Counterparty to
make available to Buyer a knowledgeable financial or accounting officer for the
purpose of answering questions respecting the Asset Files and the Purchased
Assets, Mortgage Loans and Contributed Assets.

 

 - 100 - 

 

 

Without limiting the generality of the foregoing, each Seller and each Guarantor
acknowledges that Buyer may purchase Purchased Assets or enter into Transactions
with respect to Contributed Assets from such Seller based solely upon the
information provided by such Seller to Buyer in the Asset Schedule and the
representations, warranties and covenants contained herein, and that Buyer, at
its option, has the right at any time to conduct a partial or complete due
diligence review on some or all of the Purchased Assets and Repurchase Assets
purchased in a Transaction, including, without limitation, ordering BPOs, new
credit reports and new appraisals on the related Mortgaged Properties and
otherwise re-generating the information used to originate such Purchased
Mortgage Loan or Contributed Asset. Buyer may underwrite such Purchased Asset,
Contributed Asset or Mortgage Loans itself or engage a mutually agreed upon
third party underwriter to perform such underwriting. Each Seller agrees to
cooperate or cause Underlying Repurchase Counterparty to cooperate with Buyer
and any third party underwriter in connection with such underwriting, including,
but not limited to, providing Buyer and any third party underwriter with access
to any and all documents, records, agreements, instruments or information
relating to such Purchased Assets, Contributed Assets or Mortgage Loans in the
possession, or under the control, of such Seller. Each Seller further agrees
that Sellers shall pay all out-of-pocket costs and expenses incurred by Buyer in
connection with Buyer’s activities pursuant to this Section 36 (“Due Diligence
Costs”).

 

37. Authorizations

 

Any of the persons whose signatures and titles appear on Schedule 2 are
authorized, acting singly, to act for Seller Parties or Buyer to the extent set
forth therein, as the case may be, under this Agreement. The Seller Parties may
amend Schedule 2 from time to time by delivering a revised Schedule 2 to Buyer
and expressly stating that such revised Schedule 2 shall replace the existing
Schedule 2.

 

38. Acknowledgement of Anti-Predatory Lending Policies

 

Buyer has in place internal policies and procedures that expressly prohibit its
purchase of any High Cost Mortgage Loan.

 

 

 - 101 - 

 

 

39. Documents Mutually Drafted

 

Each Seller Party, each Guarantor and the Buyer agree that this Agreement and
each other Program Agreement prepared in connection with the Transactions set
forth herein have been mutually drafted and negotiated by each party, and
consequently such documents shall not be construed against either party as the
drafter thereof.

 

40. General Interpretive Principles

 

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

 

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

 

b. accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with GAAP;

 

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

 

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

 

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

 

f. the term “include” or “including” shall mean without limitation by reason of
enumeration;

 

g. all times specified herein or in any other Program Agreement (unless
expressly specified otherwise) are local times in New York, New York unless
otherwise stated; and

 

h. all references herein or in any Program Agreement to "good faith" means good
faith as defined in Section 1-201(19) of the UCC as in effect in the State of
New York.

 

41. Joint and/or Several Liability of Sellers

 

a. Each Seller Party shall be jointly and severally liable for the rights,
covenants, obligations and warranties and representations of each other Seller
Party as contained herein and the actions of any Person (including another
Seller Party) or third party shall in no way affect such joint and several
liability.

 

 - 102 - 

 

 

b. Each Seller Party acknowledges and agrees that a Default or an Event of
Default is hereby considered a Default or an Event of Default by each Seller.

 

c. Each Seller Party acknowledges and agrees that the Buyer shall have no
obligation to proceed against one Seller before proceeding against another
Seller Party. Each Seller Party hereby waives any defense to its obligations
under this Agreement or any other Program Agreement based upon or arising out of
the disability or other defense or cessation of liability of one Seller Party
versus the other.

 

42. Amendment and Restatement

 

The terms and provisions of the Existing Master Repurchase Agreements shall be
consolidated, amended and restated in their entirety by the terms and provisions
of this Agreement and this Agreement shall supersede all provisions of the
Existing Master Repurchase Agreements as of the date hereof. From and after the
date hereof, all references made to the Existing Master Repurchase Agreements in
any Program Agreement or in any other instrument or document shall, without
more, be deemed to refer to this Agreement.

 

43. Reaffirmation of Guaranty

 

Each Guarantor hereby (i) agrees that the liability of such Guarantor or rights
of Buyer under the Guaranty shall not be affected as a result of amending and
restating this Agreement, (ii) ratifies and affirms all of the terms, covenants,
conditions and obligations of the Guaranty and (iii) acknowledges and agrees
that such Guaranty is and shall continue to be in full force and effect.

 

[Signature Page Follows]

 

 

 

 

 

 

 

 

 

 

 - 103 - 

 

 

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

 

Credit Suisse First Boston Mortgage Capital LLC, as Buyer

 

 

By: /s/ Elie Chau
       Name: Elie Chau
       Title: Vice President

 

 

PennyMac Corp., as a Seller

 

By: /s/ Pamela Marsh
       Name: Pamela Marsh
      Title: Managing Director, Treasurer

 

 

PennyMac Holdings, LLC, as a Seller

 

By: /s/ Pamela Marsh
       Name: Pamela Marsh
       Title: Managing Director, Treasurer

 

 

PMC REO Financing Trust, as REO Subsidiary

 

By: PennyMac Corp., as Administrator

 

By: /s/ Pamela Marsh
       Name: Pamela Marsh
       Title: Managing Director, Treasurer

 

PennyMac Mortgage Investment Trust, as a Guarantor

 

By: /s/ Pamela Marsh
Name: Pamela Marsh
Title: Managing Director, Treasurer

 

 

Signature Page to the Amended and Restated Master Repurchase Agreement

 

  

 

 

PennyMac Operating Partnership, L.P., as a Seller and as a Guarantor

 

By: PennyMac GP OP, Inc., its General Partner

 

 

By: /s/ Pamela Marsh
       Name: Pamela Marsh
       Title: Managing Director, Treasurer

 

 

 

 

 

 

 

Signature Page to the Amended and Restated Master Repurchase Agreement

 

  

 

 

SCHEDULE 1

 

PART I

 

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO NEW ORIGINATION MORTGAGE LOANS

 

The Sellers make the following representations and warranties to the Buyer, with
respect to the New Origination Mortgage Loans subject to a Transaction that as
of the Purchase Date for the purchase of New Origination Mortgage Loans subject
to a Transaction by the Buyer from a Seller, and as of the date of this
Agreement and any Transaction hereunder relating to the New Origination Mortgage
Loans is outstanding and at all times while the Program Agreements and any
Transaction hereunder is in full force and effect. For purposes of this Schedule
1 and the representations and warranties set forth herein, a breach of a
representation or warranty shall be deemed to have been cured with respect to
the New Origination Mortgage Loans if and when the Sellers have taken or caused
to be taken action such that the event, circumstance or condition that gave rise
to such breach no longer adversely affects such New Origination Mortgage Loans.

 

(a) Payments Current. All payments required to be made up to the Purchase Date
for the Mortgage Loan under the terms of the Mortgage Note have been made and
credited. No payment required under the Mortgage Loan is delinquent nor has any
payment under the Mortgage Loan been delinquent at any time since the
origination of the Mortgage Loan and, if the Mortgage Loan is a Co-op Loan, no
foreclosure action or private or public sale under the Uniform Commercial Code
has ever to the knowledge of Sellers, been threatened or commenced with respect
to the Co-op Loan. The first Monthly Payment shall be made, or shall have been
made, with respect to the Mortgage Loan on its Due Date or within the grace
period, all in accordance with the terms of the related Mortgage Note.

 

(b) 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. No
Seller nor the Qualified Originator from which the applicable 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/or interest thereunder.

 

(c) Original Terms Unmodified. The terms of the Mortgage Note (and the
Proprietary Lease, the Assignment of Proprietary Lease and Stock Power with
respect to each Co-op Loan) and Mortgage 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 the Custodian and the terms of which are
reflected in the Custodial Asset Schedule. The substance of any such waiver,
alteration or modification has been approved by the title insurer, to the extent
required, and its terms are reflected on the Custodial Asset Schedule. 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 Asset File delivered to the Custodian and the terms of which are
reflected in the Custodial Asset Schedule.

 

 Schedule 1 Part 1 - 1  

 

 

(d) No Defenses. The Mortgage Loan (and the Assignment of Proprietary Lease
related to each Co-op 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. No Seller has 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.

 

(e) Hazard Insurance. The Mortgaged Property is insured by a fire and extended
perils insurance policy, issued by a Qualified Insurer, and such other hazards
as are customary in the area where the Mortgaged Property is located, and to the
extent required by a Seller as of the date of origination consistent with the
Underwriting Guidelines, against earthquake and other risks insured against by
Persons operating like properties in the locality of the Mortgaged Property, 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, or (iii) the amount necessary to avoid the operation of
any co-insurance provisions with respect to the Mortgaged Property, and
consistent with the amount that would have been required as of the date of
origination in accordance with the Underwriting Guidelines. 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 the applicable
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 a 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. No Seller has 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 a Seller.

 

 Schedule 1 Part 1 - 2  

 

 

(f) 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 Mortgage Loan have been
complied with, the consummation of the transactions contemplated hereby will not
involve the violation of any such laws or regulations, and the applicable 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.

 

(g) No Satisfaction of Mortgage. The Mortgage has not been satisfied, canceled,
subordinated or rescinded, in whole or in part, and the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or in part, nor has
any instrument been executed that would effect any such release, cancellation,
subordination or rescission. No Seller has waived the performance by the
Mortgagor of any action, if the Mortgagor’s failure to perform such action would
cause the Mortgage Loan to be in default, nor has any Seller waived any default
resulting from any action or inaction by the Mortgagor.

 

(h) Location and Type of Mortgaged Property. The Mortgaged Property is located
in an Acceptable State as identified in the Custodial Asset Schedule and
consists of a single parcel of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
condominium unit in a low-rise Co-op Project, or an individual unit in a planned
unit development or a de minimis planned unit development; provided, however,
that any condominium unit, Co-op Unit or planned unit development shall conform
with the applicable Fannie Mae and Freddie Mac requirements regarding such
dwellings or shall conform to underwriting guidelines acceptable to Buyer in its
sole discretion and that no residence or dwelling is a mobile home. No portion
of the Mortgaged Property is used for commercial purposes; provided, that, the
Mortgaged Property may be a mixed use property if such Mortgaged Property
conforms to underwriting guidelines acceptable to Buyer in its sole discretion.

 

(i) Valid First Lien. The Mortgage is a valid, subsisting, enforceable and
perfected first priority lien and first priority security interest on the real
property included in the Mortgaged Property, including all buildings on the
Mortgaged Property and all installations and mechanical, electrical, plumbing,
heating and air conditioning systems located in or annexed to such buildings,
and all additions, alterations and replacements made at any time with respect to
the foregoing. The lien of the Mortgage is subject only to:

 

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

 

 Schedule 1 Part 1 - 3  

 

 

(ii) 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;

 

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

 

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 the applicable 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.

 

(j) Validity of Mortgage Documents. The Mortgage Note and the Mortgage and any
other agreement executed and delivered by a Mortgagor or guarantor, if
applicable, in connection with a Mortgage Loan are genuine, and each is the
legal, valid and binding obligation of the maker thereof enforceable in
accordance with its terms. All parties to the Mortgage Note, the Mortgage and
any other such related agreement had legal capacity to enter into the Mortgage
Loan and to execute and deliver the Mortgage Note, the Mortgage and any such
agreement, and the Mortgage Note, the Mortgage and any other such related
agreement have been duly and properly executed by such related parties. No
fraud, error, omission, misrepresentation, negligence or similar occurrence with
respect to a Mortgage Loan has taken place 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. The applicable
Seller has reviewed all of the documents constituting the Asset 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 Sellers’ 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.

 

(k) Full Disbursement of Proceeds. There is no further requirement for future
advances under the Mortgage Loan, and any and all requirements as to completion
of any on-site or off-site improvement and as to disbursements of any escrow
funds therefor have been complied with. All costs, fees and expenses incurred in
making or closing the Mortgage Loan and the recording of the Mortgage were paid,
and the Mortgagor is not entitled to any refund of any amounts paid or due under
the Mortgage Note or Mortgage.

 

(l) Ownership. The applicable Seller has full right to sell the Mortgage Loan 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 Mortgage Loan pursuant to this Agreement and following the sale of
each Mortgage Loan, Buyer will own such Mortgage Loan (and with respect to any
Co-op 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.

 

 Schedule 1 Part 1 - 4  

 

 

(m) 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.

 

(n) Title Insurance. The Mortgage Loan is covered by either (i) an attorney’s
opinion of title and abstract of title, the form and substance of which is
acceptable to prudent mortgage lending institutions making mortgage loans in the
area wherein the Mortgaged Property is located or (ii) an ALTA lender’s title
insurance policy or other generally acceptable form of policy or insurance
acceptable to Fannie Mae or Freddie Mac and each such title insurance policy is
issued by a title insurer acceptable to Fannie Mae or Freddie Mac and qualified
to do business in the jurisdiction where the Mortgaged Property is located,
insuring the applicable Seller, its successors and assigns, as to the first
priority lien of the Mortgage, as applicable, in the original principal amount
of the Mortgage Loan, with respect to a Mortgage Loan (or to the extent a
Mortgage Note provides for negative amortization, the maximum amount of negative
amortization in accordance with the Mortgage), subject only to the exceptions
contained in clauses (a), (b) and (c) of paragraph (i) of this Schedule 1. The
applicable Seller, its successors and assigns, are the sole insureds of such
lender’s title insurance policy, and such lender’s 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 lender’s title insurance policy, and no prior holder
or servicer of the related Mortgage, including any Seller, has done, by act or
omission, anything which would impair the coverage of such lender’s 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 a Seller.

 

(o) No Defaults. There is no default, breach, violation or event of acceleration
existing under the Mortgage or the Mortgage Note and no event has occurred
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach, violation or event of
acceleration, and no Seller nor its predecessors have waived any default,
breach, violation or event of acceleration; and with respect to each Co-op 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 the
applicable 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.

 

 Schedule 1 Part 1 - 5  

 

 

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

 

(q) 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.

 

(r) Origination; Payment Terms. 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. Principal and/or interest payments on
the Mortgage Loan commenced no more than 60 days after funds were disbursed in
connection with the Mortgage Loan. With respect to adjustable rate Mortgage
Loans, the Mortgage Interest Rate is adjusted on each Interest Rate Adjustment
Date to equal the Index plus the Gross Margin (rounded up or down to the nearest
.125%), subject to the Mortgage Interest Rate Cap. The Mortgage Note is payable
on the first day of each month in equal monthly installments of principal and/or
interest (subject to an “interest only” period in the case of Interest Only
Loans), which installments of interest (a) with respect to adjustable rate
Mortgage Loans are subject to change on the Interest Rate Adjustment Date due to
adjustments to the Mortgage Interest Rate on each Interest Rate Adjustment Date
and (b) with respect to Interest Only Loans are subject to change on the
Interest Only Adjustment Date due to adjustments to the Mortgage Interest Rate
on each Interest Only Adjustment Date, in both cases with interest calculated
and payable in arrears, sufficient to amortize the Mortgage Loan fully by the
stated maturity date, over an original term of not more than 30 years from
commencement of amortization.

 

(s) 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, including,
(i) in the case of a Mortgage designated as a deed of trust, by trustee’s sale,
and (ii) otherwise by judicial foreclosure. Upon default by a Mortgagor on a
Mortgage Loan and foreclosure on, or trustee’s sale of, the Mortgaged Property
pursuant to the proper procedures, the holder of the Mortgage Loan will be able
to deliver good and merchantable title to the Mortgaged Property. There is no
homestead or other exemption or other right available to the Mortgagor or any
other person, or restriction on any 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 any Seller, Buyer or any servicer or any successor
servicer to sell the related Mortgaged Property at a trustee's sale or
otherwise, or (z) the ability of any 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.

 

 Schedule 1 Part 1 - 6  

 

 

(t) 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. No Seller has 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. No
Seller has received notice of any violation or failure to conform with any such
law, ordinance, regulation, standard, license or certificate. With respect to
any Mortgage Loan originated with an “owner-occupied” Mortgaged Property, the
Mortgagor represented at the time of origination of the Mortgage Loan that the
Mortgagor would occupy the Mortgaged Property as the Mortgagor’s primary
residence.

 

(u) No Additional Collateral. The Mortgage Note is not and has not been secured
by any collateral except the lien of the corresponding Mortgage and the security
interest of any applicable security agreement or chattel mortgage referred to in
clause (i) above.

 

(v) Deeds of Trust. In the event the Mortgage constitutes a deed of trust, a
trustee, authorized and duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses are or will become payable by the Custodian or
Buyer to the trustee under the deed of trust, except in connection with a
trustee’s sale after default by the Mortgagor.

 

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

 

(x) Due-On-Sale. Except with respect to Mortgage Loans intended for purchase by
GNMA, 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.

 

(y) No Buydown Provisions; No Graduated Payments or Contingent Interests. Except
with respect to Agency 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 Sellers, the Mortgagor,
or anyone on behalf of the Mortgagor, or paid by any source other than 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.

 

 Schedule 1 Part 1 - 7  

 

 

(z) 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.

 

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

 

(bb) Collection Practices; Escrow Deposits; Interest Rate Adjustments. The
origination and collection practices used by the originator, each servicer of
the Mortgage Loan and each Seller with respect to the Mortgage Loan have been in
all respects in compliance with Accepted Servicing Practices, applicable laws
and regulations, and have been in all respects legal and proper. With respect to
escrow deposits and Escrow Payments, all such payments are in the possession of,
or under the control of, the applicable Seller and there exist no deficiencies
in connection therewith for which customary arrangements for repayment thereof
have not been made. All Escrow Payments have been collected in full compliance
with state and federal law. An escrow of funds is not prohibited by applicable
law and has been established in an amount sufficient to pay for every item that
remains unpaid and has been assessed but is not yet due and payable. No escrow
deposits or Escrow Payments or other charges or payments due the applicable
Seller have been capitalized under the Mortgage or the Mortgage Note. All
Mortgage Interest Rate adjustments have been made in strict compliance with
state and federal law and the terms of the related Mortgage Note. Any interest
required to be paid pursuant to state, federal and local law has been properly
paid and credited.

 

(cc) Conversion to Fixed Interest Rate. Except as allowed by Fannie Mae or
Freddie Mac or otherwise as expressly approved in writing by Buyer, with respect
to adjustable rate Mortgage Loans, the Mortgage Loan is not convertible to a
fixed interest rate Mortgage Loan.

 

(dd) Other Insurance Policies. No action, inaction or event has occurred and no
state of facts exists or has existed that has resulted or will result in the
exclusion from, denial of, or defense to coverage under any applicable special
hazard insurance policy, PMI Policy or bankruptcy bond, irrespective of the
cause of such failure of coverage. In connection with the placement of any such
insurance, no commission, fee, or other compensation has been or will be
received by any Seller or by any officer, director, or employee of any Seller or
any designee of any Seller or any corporation in which any Seller or any
officer, director, or employee had a financial interest at the time of placement
of such insurance.

 

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

 

 Schedule 1 Part 1 - 8  

 

 

(ff) Appraisal. The Asset File contains an appraisal of the related Mortgaged
Property signed prior to the funding of the Mortgage Loan by a qualified
appraiser, duly appointed by Sellers, 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 requirements of Fannie
Mae or Freddie Mac and Title XI of the Federal Institutions Reform, Recovery,
and Enforcement Act of 1989 as amended and the regulations promulgated
thereunder, all as in effect on the date the Mortgage Loan was originated.

 

(gg) 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 the
applicable Seller maintains such statement in the Asset File.

 

(hh) 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.

 

(ii) No Defense to Insurance Coverage. No action has been taken or failed to be
taken, no event has occurred and no state of facts exists or has existed on or
prior to the Purchase Date (whether or not known to Sellers on or prior to such
date) which has resulted or will result in an exclusion from, denial of, or
defense to coverage under any private mortgage insurance (including, without
limitation, any exclusions, denials or defenses which would limit or reduce the
availability of the timely payment of the full amount of the loss otherwise due
thereunder to the insured) whether arising out of actions, representations,
errors, omissions, negligence, or fraud of any Seller, the related Mortgagor or
any party involved in the application for such coverage, including the
appraisal, plans and specifications and other exhibits or documents submitted
therewith to the insurer under such insurance policy, or for any other reason
under such coverage, but not including the failure of such insurer to pay by
reason of such insurer’s breach of such insurance policy or such insurer’s
financial inability to pay.

 

(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 no Seller has financed nor does it own directly or indirectly, any
equity of any form in the Mortgaged Property or the Mortgagor.

 

(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 any Seller or any Affiliate or correspondent of any Seller,
except in connection with a refinanced Mortgage Loan.

 

 Schedule 1 Part 1 - 9  

 

 

(mm) Origination Date. The Purchase Date for a Mortgage Loan, other than a
correspondent Mortgage Loan or New Origination Performing Mortgage Loan, is no
more than ninety (90) days following the origination date. The Purchase Date for
a correspondent Mortgage Loan is no more than one hundred and eighty (180) days
following the origination date. The Purchase Date for a New Origination
Performing Mortgage Loan is no more than three hundred sixty-four (364) days
following the origination date.

 

(nn) No Exception. The Custodian has not noted any material exceptions on a
Custodial Asset Schedule with respect to the Mortgage Loan which would
materially adversely affect the Mortgage Loan or Buyer’s interest in the
Mortgage Loan.

 

(oo) 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.

 

(pp) Documents Genuine. Such Purchased Mortgage Loan and all accompanying
collateral documents are complete and authentic and all signatures thereon are
genuine. Such Purchased Mortgage Loan is a “closed” loan fully funded by a
Seller and held in such Seller’s name.

 

(qq) Bona Fide Loan. Such Purchased Mortgage Loan arose from a bona fide loan,
complying with all applicable state and federal laws and regulations, to persons
having legal capacity to contract and is not subject to any defense, set-off or
counterclaim.

 

(rr) Other Encumbrances. To the best of Sellers’ knowledge, any property subject
to any security interest given in connection with such Purchased Mortgage Loan
is not subject to any other encumbrances other than a stated first mortgage, if
applicable, and encumbrances which may be allowed under the Underwriting
Guidelines.

 

(ss) Description. Each Purchased Mortgage Loan conforms to the description
thereof as set forth on the related Custodial Asset Schedule delivered to the
Custodian and Buyer.

 

(tt) Located in U.S. No collateral (including, without limitation, the related
real property and the dwellings thereon and otherwise) relating to a Purchased
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.

 

(uu) Underwriting Guidelines. Each Purchased Mortgage Loan has been originated
in accordance with the Underwriting Guidelines (including all supplements or
amendments thereto) previously provided to Buyer.

 

(vv) Aging. Such Purchased Mortgage Loan has not been subject to a Transaction
hereunder for more than the applicable Aging Limit.

 

(ww) Committed Mortgage Loans. Each Committed Mortgage Loan is covered by a
Take-out Commitment, does not exceed the availability under such Take-out
Commitment (taking into consideration mortgage loans which have been purchased
by the respective Take-out Investor under the Take-out Commitment and mortgage
loan which the applicable Seller has identified to Buyer as covered by such
Take-out Commitment) and conforms to the requirements and the specifications set
forth in such Take-out Commitment and the related regulations, rules,
requirements and/or handbooks of the applicable Take-out Investor and is
eligible for sale to and insurance or guaranty by, respectively the applicable
Take-out Investor and applicable insurer. Each Take-out Commitment is a legal,
valid and binding obligation of the applicable 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).

 

 Schedule 1 Part 1 - 10  

 

 

(xx) Primary Mortgage Guaranty Insurance. Each Conforming Mortgage Loan with a
Loan to Value Ratio of 80% or higher is insured as to payment defaults by
primary mortgage guaranty insurance. Each other Mortgage Loan is insured as to
payment defaults by a policy of primary mortgage guaranty insurance where
applicable. Each Purchased Mortgage Loan is insured in the amount required, and
by an insurer approved, by the applicable Take-out Investor, if applicable, and
all provisions of such primary mortgage guaranty insurance have been and are
being complied with, such policy is in full force and effect, and all premiums
due thereunder have been paid. Each Mortgage Loan which is represented to Buyer
to have, or to be eligible for, FHA insurance is insured, or eligible to be
insured, pursuant to the National Housing Act. Each Mortgage Loan which is
represented by a Seller to be guaranteed, or to be eligible for guaranty, by the
VA is guaranteed, or eligible to be guaranteed, under the provisions of Chapter
37 of Title 38 of the United States Code. As to each FHA insurance certificate
or each VA guaranty certificate, the applicable 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 each Mortgage Loan. There are no defenses, counterclaims, or rights of setoff
affecting the Mortgage Loans or affecting the validity or enforceability of any
private mortgage insurance or FHA insurance applicable to the Mortgage Loans or
any VA guaranty with respect to the Mortgage Loans.

 

(yy) Predatory Lending Regulations; High Cost Loans. None of the Mortgage Loans
are classified as High Cost Mortgage Loans.

 

(zz) High LTV Loans. None of the Mortgage Loans are High LTV Loans.

 

(aaa) Wet-Ink Mortgage Loans. With respect to each Mortgage Loan that is a
Wet-Ink Mortgage Loan, the Settlement Agent has been instructed in writing by a
Seller to hold the related Asset Documents as agent and bailee for Buyer or
Buyer agent and to promptly forward such Asset Documents in accordance with the
provisions of the Custodial Agreement and the Escrow Instruction Letter.

 

(bbb) FHA Mortgage Insurance; VA Loan Guaranty. With respect to the FHA Loans,
the FHA Mortgage Insurance Contract is in full force and effect and there exists
no impairment to full recovery without indemnity to HUD or the FHA under FHA
Mortgage Insurance. With respect to the VA Loans, the VA Loan Guaranty Agreement
is in full force and effect to the maximum extent stated therein. 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. Each FHA Loan and VA Loan was originated in accordance with
the criteria of an Agency for purchase of such Mortgage Loans.

 

 Schedule 1 Part 1 - 11  

 

 

(ccc) Second Lien. None of the Mortgage Loans are second lien Mortgage Loans.

 

(ddd) Co-op Loan: Valid First Lien. With respect to each Co-op 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 Co-op 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 Co-op Loan), which have priority equal to or over a
Seller’s security interest in such Co-op Shares.

 

(eee) Co-op Loan: Compliance with Law. With respect to each Co-op 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 Internal Revenue 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.

 

(fff) Co-op Loan: No Pledge. With respect to each Co-op Loan, there is no
prohibition against pledging the shares of the cooperative corporation or
assigning the Proprietary Lease. With respect to each Co-op Loan, (i) the term
of the related Proprietary Lease is longer than the term of the Co-op Loan, (ii)
there is no provision in any Proprietary Lease which requires the Mortgagor to
offer for sale the Co-op Shares owned by such Mortgagor first to the Co-op
Corporation, (iii) there is no prohibition in any Proprietary Lease against
pledging the Co-op 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.

 

(ggg) Co-op Loan: Acceleration of Payment. With respect to each Co-op 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 Co-op Unit is transferred or sold without the consent of the
holder thereof.

 

 

 Schedule 1 Part 1 - 12  

 

 

(hhh) Qualified Mortgage. Notwithstanding anything to the contrary set forth in
this Agreement, on and after January 10, 2014 (or such later date as set forth
in the relevant regulations), (i) prior to the origination of each Mortgage
Loan, the originator made a reasonable and good faith determination that the
Mortgagor had a reasonable ability to repay the loan according to its terms, in
accordance with, at a minimum, the eight underwriting factors set forth in 12
CFR 1026.43(c) and (ii) each Mortgage Loan, other than a New Origination
Performing Mortgage Loan, is a “Qualified Mortgage” as defined in 12 CFR
1026.43(e).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Schedule 1 Part 1 - 13  

 

SCHEDULE 1

 

PART II

 

 

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO

 

UNDERLYING REPURCHASE TRANSACTIONS

 

 

The Sellers make the following representations and warranties to the Buyer, with
respect to the Underlying Repurchase Transactions, that as of the Underlying
Repurchase Transaction, and as of the date of this Agreement and any Underlying
Repurchase Transaction is outstanding and at all times while the Program
Agreements and any Underlying Repurchase Transaction is in full force and
effect. For purposes of this Schedule 1 and the representations and warranties
set forth herein, a breach of a representation or warranty shall be deemed to
have been cured with respect to the Underlying Repurchase Transaction if and
when the Sellers have taken or caused to be taken action such that the event,
circumstance or condition that gave rise to such breach no longer adversely
affects such Underlying Repurchase Transaction.

 

(a) Validity of Underlying Repurchase Documents. The Underlying Repurchase
Documents and any other agreement executed and delivered by the Underlying
Repurchase Counterparty or guarantor thereto, as applicable, in connection with
an Underlying Repurchase Transaction are genuine, and each is the legal, valid
and binding obligation of the maker thereof enforceable in accordance with its
terms, except as such enforcement may be affected by bankruptcy, by other
insolvency laws or by general principles of equity. Sellers and the Underlying
Repurchase Counterparty had legal capacity to enter into the Underlying
Repurchase Transaction and the Underlying Repurchase Counterparty had the legal
capacity to execute and deliver the Underlying Repurchase Documents and any such
agreement, and the Underlying Repurchase Documents and any such other related
agreement to which Sellers or the Underlying Repurchase Counterparty are parties
have been duly and properly executed by Sellers and the Underlying Repurchase
Counterparty, as applicable. The Underlying Repurchase Documents to which the
Underlying Repurchase Counterparty is a party constitute legal, valid, binding
and enforceable obligations of the Underlying Repurchase Counterparty. The
Underlying Repurchase Transaction and the Underlying Repurchase Documents are in
full force and effect, and the enforceability of the Underlying Repurchase
Documents has not been contested by the Underlying Repurchase Counterparty.

 

(b) Original Terms Unmodified. Except to the extent approved in writing by
Buyer, the terms of the Underlying Repurchase Documents have not been impaired,
altered or modified in any respect.

 

(c) No Defenses. The Underlying Repurchase Transaction is not subject to any
right of rescission, set-off, counterclaim or defense nor will the operation of
any of the terms of any Underlying Repurchase Documents, or the exercise of any
right thereunder, render any Underlying Repurchase Document unenforceable in
whole or in part and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto.

 

 Schedule 1 Part 2 - 1  

 

 

(d) No Bankruptcy. The Underlying Repurchase Counterparty is not a debtor in any
state or federal bankruptcy or insolvency proceeding. The Underlying Repurchase
Counterparty has not threatened and, to Sellers’ knowledge, is not contemplating
either the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidation of all or a major portion of the Underlying
Repurchase Counterparty’s assets or any of the Mortgage Loans.

 

(e) Compliance with Applicable Laws; Consents. Any and all requirements of any
federal, state or local law including, without limitation, usury, consumer
credit protection, or disclosure laws applicable to the Underlying Repurchase
Transaction have been complied with in all material respects, the consummation
of the transactions contemplated hereby will not involve the violation of any
such laws or regulations, and the applicable Seller shall maintain in its
possession, available for the inspection by Buyer, and shall deliver to Buyer,
upon demand, evidence of compliance with all such requirements. All consents of
and all filings with any federal or state Governmental Authority necessary in
connection with the execution, delivery or performance of the Underlying
Repurchase Transaction have been obtained or made and are in full force and
effect.

 

(f) No Waiver. Except to the extent approved in writing by Buyer, no Seller has
waived the performance by the Underlying Repurchase Counterparty of any action,
if the Underlying Repurchase Counterparty’s failure to perform such action would
cause the Underlying Repurchase Transaction to be in default in any material
respect nor, except to the extent approved in writing by Buyer, has any Seller
waived any such default resulting from any action or inaction by the Underlying
Repurchase Counterparty.

 

(g) No Defaults. Except to the extent approved in writing by Buyer, there is no
default, breach, violation or event of acceleration existing under the
Underlying Repurchase Documents and no event has occurred which, with the
passage of time or giving of notice or both and the expiration of any grace or
cure period, would constitute a default, breach, violation or event of
acceleration thereunder, and no Seller nor its predecessors in interest have
waived any such default, breach, violation or event of acceleration.

 

(h) Delivery of Underlying Repurchase Documents. True and correct copies of the
Underlying Repurchase Documents have been delivered to Buyer.

 

(i) Organization. The Underlying Repurchase Counterparty has been duly organized
and is validly existing and in good standing under the laws of the jurisdiction
of its formation. The Underlying Repurchase Counterparty has requisite power and
authority to (i) own its properties, (ii) transact the business in which it is
now engaged, (iii) execute and deliver the Underlying Repurchase Documents and
(iv) consummate the transactions contemplated thereby. The Underlying Repurchase
Counterparty is duly qualified to do business and is in good standing in the
jurisdictions where it is required to be so qualified in connection with the
ownership, maintenance, management and operation of its business. The Underlying
Repurchase Counterparty possesses all material rights, licenses, permits and
authorizations, governmental or otherwise, necessary to entitle it to own its
properties and to transact the businesses in which it is now engaged.

 

 Schedule 1 Part 2 - 2  

 

 

(j) No Conflicts. The execution, delivery and performance of the Underlying
Repurchase Documents by the Underlying Repurchase Counterparty do not conflict
with or constitute a default under, or result in the creation or imposition of
any lien (other than pursuant to the Underlying Repurchase Documents) under, any
material mortgage, deed of trust, Agreement, partnership agreement, or other
agreement or instrument to which the Underlying Repurchase Counterparty is a
party or to which any of its property is subject, nor will such action result in
any violation of the provisions of any statute of any Governmental Authority
having jurisdiction over the Underlying Repurchase Counterparty, and any
qualification of or with any governmental authority required for the execution,
delivery, and performance by the Underlying Repurchase Counterparty of the
Underlying Repurchase Documents has been obtained and is in full force and
effect.

 

(k) Compliance. The Underlying Repurchase Counterparty is in compliance in all
material respects with all applicable legal requirements. The Underlying
Repurchase Counterparty is not in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority, the violation of
which might adversely affect the condition (financial or otherwise) or business
of the Underlying Repurchase Counterparty.

 

(l) Underlying Repurchase Transaction Not Assigned. No Underlying Repurchase
Transaction Document is assigned to any third party. The Underlying Repurchase
Documents permit Sellers to sell, assign, pledge, transfer or rehypothecate the
Mortgage Loans and all other collateral purchased by Sellers pursuant to the
Underlying Repurchase Documents.

 

(m) Solvency. The transfer of the Mortgage Loans subject to the Underlying
Repurchase Documents is not undertaken with the intent to hinder, delay or
defraud any of the Underlying Repurchase Counterparty’s creditors. The
Underlying Repurchase Counterparty is not insolvent within the meaning of 11
U.S.C. Section 101(32) and the transfer and pledge of the Mortgage Loans
pursuant to the Underlying Repurchase Documents (i) will not cause the
Underlying Repurchase Counterparty to become insolvent, (ii) will not result in
any property remaining with the Underlying Repurchase Counterparty to be
unreasonably small capital, and (iii) will not result in debts that would be
beyond the Underlying Repurchase Counterparty’s ability to pay as same mature.
The Underlying Repurchase Counterparty receives reasonably equivalent value in
exchange for the transfer and pledge of the Mortgage Loans in accordance with
the Underlying Repurchase Documents.

 

(n) Ownership. The applicable Seller is the sole owner and holder of the
underlying Mortgage Loan or REO Subsidiary Interest, as applicable. Neither the
Mortgage Loans nor the REO Subsidiary Interests have not been assigned or
pledged by the applicable Seller other than pursuant to this Agreement. The
applicable Seller has good, indefeasible and marketable title to the Mortgage
Loans and the REO Subsidiary Interests, and has full right to transfer, pledge
and assign the Mortgage Loans and the REO Subsidiary Interests 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 assign,
transfer and pledge the Mortgage Loans and the REO Subsidiary Interests pursuant
to this Agreement, and following the transfer and pledge of the Mortgage Loans
and the REO Subsidiary Interests, Buyer will hold such Mortgage Loans and REO
Subsidiary Interests 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 the Agreement.

 

 Schedule 1 Part 2 - 3  

 

 

(o) Agency Approvals. With respect to each Agency Security and to the extent
necessary, the applicable Underlying Repurchase Counterparty is an FHA Approved
Mortgagee, a VA Approved Lender and a GNMA Approved Lender. The applicable
Underlying Repurchase Counterparty is also approved by Fannie Mae as an approved
lender and Freddie Mac as an approved seller/servicer, and, to the extent
necessary, approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act. In each such case, the
applicable Underlying Repurchase Counterparty is in good standing, with no event
having occurred or such Underlying Repurchase Counterparty having any reason
whatsoever to believe or suspect will occur prior to the issuance of the Agency
Security or the consummation of the Take-out Commitment, as the case may be,
including, without limitation, a change in insurance coverage which would either
make such Underlying Repurchase Counterparty 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. Should such
Underlying Repurchase Counterparty for any reason cease to possess all such
applicable approvals, or should notification to the relevant Agency or to HUD,
FHA or VA be required, Sellers shall so notify Buyer immediately in writing.

 

(p) No Plan Assets. The related Underlying Repurchase Counterparty is not an
“employee benefit plan,” as defined in Section 3(3) of ERISA, subject to Title I
of ERISA, and none of the assets of the Mortgagor constitutes or will constitute
“plan assets” of one or more such plans within the meaning of 29 C.F.R. Section
2510.3-101.

 

(q) No Prohibited Persons. Neither the related Underlying Repurchase
Counterparty nor any of its Affiliates, officers, directors, partners or
members, is an entity or person (or to Sellers’ knowledge after due inquiry,
owned or controlled by an entity or person): (i) that is listed in the Annex to,
or is otherwise subject to the provisions of Executive Order 13224 issued on
September 24, 2001 (“EO13224”); (ii) whose name appears on the United States
Treasury Department’s Office of Foreign Assets Control (“OFAC”) most current
list of “Specifically Designated National and Blocked Persons” (which list may
be published from time to time in various mediums including, but not limited to,
the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf); (iii) who commits,
threatens to commit or supports “terrorism”, as that term is defined in EO13224;
or (iv) who is otherwise affiliated with any entity or person listed above.

 

(r) Financial Information. Based upon the related Underlying Repurchase
Counterparty’s representations and warranties, all financial data, including,
without limitation the statements of cash flow and income and operating expense,
that have been delivered to Sellers (i) are true, complete, and correct in all
material respects, and (ii) accurately represent the financial condition of such
Underlying Repurchase Counterparty as of the date of such reports.

 

(s) Mortgage Loans Assignable; Buyer’s Security Interest. The underlying Asset
Documents and Underlying Repurchase Documents have been delivered to Buyer and
(i) the UCC-1 Financing Statement naming the Underlying Repurchase Counterparty
as debtor and each Seller as secured party and identifying the Mortgage Loans
and the REO Subsidiary Interests as collateral has been filed in the applicable
filing office.

 

 Schedule 1 Part 2 - 4  

 

 

(t) No Custodial Arrangement. There is no agreement or arrangement with any
third party to hold the Asset Documents pursuant to the Underlying Repurchase
Transaction.

 

(u) Underlying Repurchase Counterparty Diligence. The applicable Seller has
delivered to Buyer all information regarding the applicable Underlying
Repurchase Counterparty as Buyer has requested and such information is
satisfactory to Buyer in all material respects.

 

(v) Underlying Repurchase Documents. The Underlying Repurchase Documents are
“repurchase agreements” within the meaning of Section 559 of the Bankruptcy
Code.

 

 

 

 

 

 

 

 

 

 

 

 Schedule 1 Part 2 - 5  

 

SCHEDULE 1

 

PART III

 

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO SEASONED MORTGAGE LOANS

 

The Sellers make the following representations and warranties to the Buyer, with
respect to the Seasoned Mortgage Loans subject to a Transaction, that as of the
Purchase Date for the purchase of Seasoned Mortgage Loans subject to a
Transaction by the Buyer from a Seller, , and as of the date of this Agreement
and any Transaction hereunder relating to the Seasoned Mortgage Loans is
outstanding and at all times while the Program Agreements and any Transaction
hereunder is in full force and effect. For purposes of this Schedule 1 and the
representations and warranties set forth herein, a breach of a representation or
warranty shall be deemed to have been cured with respect to the Seasoned
Mortgage Loans if and when the Sellers have taken or caused to be taken action
such that the event, circumstance or condition that gave rise to such breach no
longer adversely affects such Seasoned Mortgage Loans.

 

(a) Data. The information on the Asset Schedule correctly and accurately
reflects the information contained in the Sellers’ records (including, without
limitation, the Asset File, as applicable) in all material respects. The
information contained under each of the headings in the Asset Schedule is true,
complete and correct in all material respects.

 

(b) No Error, Omission, Fraud etc. No fraud, misrepresentation, material error
or omission or gross negligence, has taken place on the part of the Sellers or,
to the best of Sellers’ knowledge any other party in connection with the
origination of the Mortgage Loan, the determination of the value of the
Mortgaged Property, or the sale or servicing of the Mortgage Loan.

 

(c) Regulatory Compliance. At the time of origination, or if modified, the date
of modification, each Mortgage Loan complied in all material respects with all
then-applicable federal, state, and local laws, including (without limitation)
usury, truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity, predatory and abusive lending laws,
disclosure or unfair and deceptive practice laws or such noncompliance was cured
subsequent to origination, as permitted by applicable law. The servicing and
collection practices used by the related Servicer with respect to each Mortgage
Loan have at all times complied in all material respects with all applicable
federal, state, and local laws. While the Mortgage Loan has been serviced by the
related Servicer, it has been serviced in accordance with the terms of the
Mortgage Note or any applicable forbearance plan or bankruptcy plan.

 

(d) Ownership. Immediately prior to the transfer and assignment of the Mortgage
Loan pursuant to this Agreement, the applicable Seller was the sole owner and
holder of the Mortgage Loan free and clear of any and all liens, pledges,
charges, or security interests of any nature and had full right and authority to
sell and assign the same. Upon consummation of a Transaction with respect to the
Mortgage Loan, the Buyer shall acquire good and marketable title to the
Purchased Mortgage Loan.

 

 Schedule 1 Part 3 - 1  

 

 

(e) Enforceability and Priority of Lien. (A) The Mortgage is a valid,
subsisting, and enforceable first lien on the property therein described, the
Mortgaged Property is free and clear of all encumbrances and liens having
priority over the lien of the Mortgage except for, (i) the lien of current real
property taxes and assessments not yet due and payable, (ii) covenants,
conditions, and restrictions, rights of way, easements, and other matters of
public record as of the date of recording of such mortgage acceptable to
mortgage lending institutions in the area in which the Mortgaged Property is
located, (iii) liens created pursuant to any federal, state, or local law,
regulation, or ordinance affording liens for the costs of clean-up of hazardous
substances or hazardous wastes or for other environmental protection purposes,
and (iv) such other matters to which like properties are commonly subject that
do not individually or in aggregate materially interfere with the benefits of
the security intended to be provided by the Mortgage; and (B) any security
agreement, chattel mortgage, or equivalent document related to and delivered to
the Custodian with any Mortgage establishes a valid and subsisting first lien on
the property described therein.

 

(f) Mortgage Loan Legal and Binding. (A) The Mortgage Note, the related
Mortgage, and other agreements executed in connection therewith are genuine, and
each is the legal, valid, and binding obligation of the maker thereof,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors’ rights generally and by general equity
principles (regardless of whether such enforcement is considered in a proceeding
in equity or at law); and (B) to the best of Sellers’ knowledge, all parties to
the Mortgage Note and the Mortgage had legal capacity to execute the Mortgage
Note and the Mortgage, and each Mortgage Note and Mortgage has been duly and
properly executed by the Mortgagor and delivered by the parties.

 

(g) Customary Provisions. The Mortgage and related Mortgage Note contain
customary and enforceable provisions such as to render the rights and remedies
of the holder thereof adequate for the realization against the Mortgaged
Property of the benefits of the security provided thereby, including (i) in the
case of a Mortgage designated as a deed of trust by trustee’s sale, and
(ii) otherwise by judicial foreclosure. There is no homestead or other exemption
available to the Mortgagor that would interfere with such right of foreclosure.

 

(h) No Prior Modifications. If a Mortgage Loan has been modified after
acquisition by the applicable Seller, the current and applicable modified terms
are reflected on the Asset Schedule and the signed modification documents are in
the related loan file.

 

(i) Taxes Paid. Except as disclosed to Buyer, all taxes, and insurance premiums,
and, to the best of the applicable Seller’s knowledge, homeowner or similar
association fees, charges and assessments, governmental assessments, and water,
sewer and municipal charges, which previously became due and owing have been
paid, or an escrow of funds has been established, to the extent permitted by
law, in an amount sufficient to pay for every such item which remains unpaid.

 

(j) No Damage/Condemnation. To the best of Sellers’ knowledge, the Mortgaged
Property is undamaged by water, fire, earthquake, earth movement other than
earthquake, windstorm, flood, tornado, defective construction materials or work,
or similar casualty (excluding casualty from the presence of hazardous wastes or
hazardous substances) to affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan as reflected in the value of the Mortgage Loan;
and to the best of Sellers’ knowledge, there is no proceeding (pending or
threatened) for the total or partial condemnation of the Mortgaged Property.

 

 Schedule 1 Part 3 - 2  

 

 

(k) Predatory Lending Regulations; High Cost Loans. No Mortgage Loan (a) is
subject to Section 226.32 of Regulation Z or any similar state law (relating to
high interest rate credit/lending transactions), (b) is a High Cost Mortgage
Loan or (c) contains any term or condition, or involves any loan origination
practice, that has been defined as “predatory” under any applicable federal,
state, county or municipal law, or that has been expressly categorized as an
“unfair” or “deceptive” term, condition or practice in any such applicable
federal, state, county or municipal law. No predatory or deceptive lending
practices, including, without limitation, the extension of credit without regard
to the ability of the Mortgagor to repay and the extension of credit which has
no apparent benefit to the Mortgagor, were employed in the origination of the
Mortgage Loan.

 

(l) Existence of Title Insurance. The Mortgage Loan (except any Mortgage Loan
secured by a Mortgaged Property located in any jurisdiction for which an opinion
of counsel of the type customarily rendered in such jurisdiction in lieu of
title insurance is instead received) is covered by an American Land Title
Association mortgagee title insurance policy or other generally acceptable form
of policy or insurance issued by a title insurer acceptable to Fannie Mae or
Freddie Mac, issued by a title insurer acceptable to Fannie Mae or Freddie Mac
insuring the originator and its successors, and assigns, as to the first
priority lien of the Mortgage in the original or current principal amount of the
Mortgage Loan and subject only to (a) the lien of current real property taxes
and assessments not yet due and payable, (b) covenants, conditions, and
restrictions, rights of way, easements, and other matters of public record as of
the date of recording of such mortgage acceptable to mortgage lending
institutions in the area in which the Mortgaged Property is located or
specifically referred to in the appraisal performed in connection with the
origination of the related Mortgage Loan, (c) liens created pursuant to any
federal, state, or local law, regulation, or ordinance affording liens for the
costs of clean-up of hazardous substances or hazardous wastes or for other
environmental protection purposes, and (d) such other matters to which like
properties are commonly subject which do not individually, or in the aggregate,
materially interfere with the benefits of the security intended to be provided
by the Mortgage. The Sellers or any other person on behalf of the Sellers are
the sole insured of such mortgagee title insurance policy. The assignment of
such mortgagee title insurance policy does not require any consent of or
notification to the insurer which has not been obtained or made. No claims have
been made under such mortgagee title insurance policy.

 

(m) Hazard Insurance; Flood Insurance. The Mortgaged Property securing each
Mortgage Loan is insured by an insurer acceptable to Fannie Mae or Freddie Mac
against loss by fire and such hazards as are covered under a standard extended
coverage endorsement in an amount that is not less than the value. If the
Mortgaged Property is a condominium unit, it is included under the coverage
afforded by a blanket policy for the project. If upon origination of the
Mortgage Loan, the improvements on the Mortgaged Property were in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, a flood insurance policy meeting the requirements
of the current guidelines of the Federal Insurance Administration is in effect
with a generally acceptable insurance carrier in an amount representing
commercially reasonable coverage. Each Mortgage obligates the Mortgagor
thereunder to maintain all such insurance at the Mortgagor’s cost and expense.

 

 Schedule 1 Part 3 - 3  

 

 

(n) Mortgage Recorded. With respect to any Mortgage that has not been recorded
in the name of MERS, as agent for the holder from time to time of the Mortgage
Note, each original Mortgage was recorded or submitted for recordation in the
jurisdiction in which the Mortgaged Property is located and all subsequent
assignments of the original Mortgage have been delivered in the appropriate form
for recording in all jurisdictions in which such recordation is appropriate.

 

(o) Litigation. Other than any customary claim or counterclaim arising out of
any foreclosure or collection proceeding relating to any Mortgage Loan, there is
no litigation, proceeding or governmental investigation pending, or any order,
injunction or decree outstanding, existing or relating to the Mortgage Loan or
the related Mortgaged Property.

 

(p) Property Value. Seller has delivered to Buyer a BPO valuation and valuation
date given by a licensed real estate agent or broker in conformity with
customary and usual business practices, which includes comparable sales and
comparable listings and complies with the criteria set forth in FIRREA for an
“appraisal” or an “evaluation”, as applicable, and such other information in
further compliance with this Agreement. The person performing any BPO received
no benefit from, and such person’s compensation or flow of business from the
Sellers were not affected by, the acquisition of the Mortgage Loan by the
Sellers or any other applicable transferee.

 

(q) Location and Type of Mortgaged Property. Each Mortgaged Property is located
in an Acceptable State as identified in the Custodial Asset Schedule and
consists of a one- to four-unit residential property, which may include, but is
not limited to, a single-family dwelling, townhouse, condominium unit, or unit
in a planned unit development. No Mortgaged Property is a cooperative or a
manufactured home.

 

(r) Insurance Coverage Not Impaired. With respect to any Mortgage Loan that is
not covered under an umbrella insurance policy of the related Servicer, with
respect to any insurance policy including, but not limited to, hazard, title, or
mortgage insurance covering a Mortgage Loan and the related Mortgaged Property,
neither (i) the originator nor (ii) any prior holder has engaged in, and the
Sellers have no knowledge of the Mortgagor’s having engaged in, any act or
omission that would impair the coverage of any such policy, the benefits of the
endorsement, 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 as has been or will be received, retained, or
realized by any attorney, firm, or other person or entity, and no such unlawful
items have been received, retained, or realized by the originator.

 

(s) Environmental Laws. To the best of Sellers’ knowledge, the Mortgaged
Property is currently in material compliance with all applicable environmental
laws pertaining to environmental hazards including, without limitation,
asbestos.

 

 Schedule 1 Part 3 - 4  

 

 

(t) Deeds of Trust. In the event that the Mortgage constitutes a deed of trust,
a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in the Mortgage, and no
fees or expenses are or will become payable by the Buyer or any other applicable
transferee to the trustee under the deed of trust, except in connection with a
trustee’s sale after default by the Mortgage.

 

(u) Due-On-Sale. The Mortgage contains an enforceable provision, to the extent
not prohibited by applicable law as of the date of such Mortgage, 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.

 

(v) Leases. The Mortgaged Property is either a fee simple estate or a long-term
residential lease. If the Mortgage Loan is secured by a long-term residential
lease, to the best of Sellers’ knowledge: (A) the terms of such lease expressly
permit the mortgaging of the leasehold estate, the assignment of the lease
without the lessor’s consent (or the lessor’s consent has been obtained and such
consent is in the Asset File), and the acquisition by the holder of the Mortgage
of the rights of the lessee upon foreclosure or assignment in lieu of
foreclosure or provide the holder of the Mortgage with substantially similar
protection; (B) the terms of such lease do not allow the termination thereof
upon the lessee’s default without the holder of the Mortgage being entitled to
receive written notice of, and opportunity to cure, such default or prohibit the
holder of the Mortgage from being insured under the hazard insurance policy
related to the Mortgaged Property; (C) the original term of such lease is not
less than 15 years; (D) the term of such lease does not terminate earlier than
five years after the maturity date of the Mortgage Note; and (E) the Mortgaged
Property is located in a jurisdiction in which the use of leasehold estates for
residential properties is an accepted practice.

 

(w) Complete Asset Files. For each Mortgage Loan, all of the required Mortgage
Loan documents have been delivered to the Custodian in accordance with the
Custodial Agreement and all Mortgage Loan documents necessary to foreclose on
the Mortgaged Property are included in the Asset File delivered to the
Custodian. No material documentation is missing from the Asset File in
possession of Custodian, unless such documentation is subject to a Servicer
request for release of documents and a foreclosure attorney acknowledgment in
form and substance acceptable to Buyer. Each of the documents and instruments
specified to be included in the Asset File is executed and in due and proper
form, and each such document or instrument is in form acceptable to the
applicable federal or state regulatory agency.

 

(x) No Construction Loans; Reverse Mortgage Loans; Home Equity Lines of Credit.
No Mortgage Loan (i) was made in connection with the construction or
rehabilitation of a Mortgaged Property where construction loan proceeds are
still being disbursed, (ii) is a reverse mortgage loan or (iii) is a home equity
line of credit.

 

(y) No Rescission. (A) No Mortgage Note or Mortgage is subject to any right of
rescission, set-off, counterclaim, or defense, including the defense of usury,
nor will the operation of any of the terms of the Mortgage Note or Mortgage, or
the exercise of any right thereunder, render the Mortgage Note or Mortgage
unenforceable, in whole or in part, or subject it to any right of rescission,
set-off, counterclaim, or defense, including the defense of usury; and (B) to
the best of the applicable Seller’s knowledge, no such right of rescission,
set-off, counterclaim, or defense has been asserted with respect thereto.

 

 Schedule 1 Part 3 - 5  

 

 

(z) TRID Compliance. With respect to each Mortgage Loan where the Mortgagor’s
loan application for the Mortgage Loan was taken on or after October 3, 2015,
such Mortgage Loan was originated in compliance with the TILA-RESPA Integrated
Disclosure Rule

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Schedule 1 Part 3 - 6  

 

 

 

 

 

SCHEDULE 1

 

PART IV

 

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO REO PROPERTY

 

 

 

The Sellers make the following representations and warranties to the Buyer, with
respect to the REO Property owned or deemed owned by the REO Subsidiary and any
Unrecorded REO Property owned or deemed owned by REO Subsidiary, that as of the
Purchase Price Increase Date for the acquisition of REO Property by REO
Subsidiary and as of the date of this Agreement and any Transaction hereunder
relating to the REO Subsidiary Interests is outstanding and at all times while
the Program Agreements and any Transaction hereunder is in full force and
effect, provided that to the extent that any Seller has declared in writing a
REO Property to be ineligible to satisfy the representations and warranties set
forth below, then Sellers shall not make such representations and warranties
with respect to such REO Property. For purposes of this Schedule 1 and the
representations and warranties set forth herein, a breach of a representation or
warranty shall be deemed to have been cured with respect to the REO Property if
and when the Sellers have taken or caused to be taken action such that the
event, circumstance or condition that gave rise to such breach no longer
adversely affects such REO Property.

 

(a) Asset File. All documents required to be delivered as part of the Asset
File, have been delivered to the Custodian or held by an attorney in connection
with a foreclosure pursuant to an Attorney Bailee Letter and all information
contained in the related Asset File (or as otherwise provided to Buyer) in
respect of such REO Property is accurate and complete in all material respects.

 

(b) Ownership. The REO Subsidiary is the sole owner and holder of the REO
Property; provided that with respect to Unrecorded REO Property, the holder of
record title in the REO Property may be a Seller, the applicable Servicer, or
any prior owner or prior servicer for whom a Servicer is contractually permitted
to act.

 

(c) REO Property as Described. The information set forth in the Asset Schedule
accurately reflects information contained in the applicable Seller’s records in
all material respects.

 

(d) Taxes, Assessments and Other Charges. All taxes, homeowner or similar
association fees, charges, and assessments, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid.

 

(e) No Litigation. Other than any customary claim or counterclaim arising out of
any foreclosure or collection proceeding relating to any REO Property, there is
no litigation, proceeding or governmental investigation pending, or any order,
injunction or decree outstanding, existing or relating to Sellers, the REO
Subsidiary or any of their Subsidiaries with respect to the REO Property that
would materially and adversely affect the value of the REO Property.

 

 Schedule 1 Part 4 - 1  

 

 

(f) Hazard Insurance. All buildings or other customarily insured improvements
upon the REO Property are insured by an insurer against loss by fire, hazards of
extended coverage and such other hazards in an amount not less than the BPO
value.

 

(g) Flood Insurance. If the improvements on the REO Property were in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards at the time of origination of the Mortgage Loan
that resulted in the REO Property, a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
is in effect with a generally acceptable insurance carrier in an amount
representing commercially reasonable coverage.

 

(h) Title Insurance. The REO Property (and the Unrecorded REO Property Deed upon
its submission) is covered by an owner’s mortgage title insurance policy or an
attorney’s opinion of title, or such other generally acceptable form of policy
or insurance issued by a title insurer qualified to do business in the
jurisdiction where the REO Property is located, insuring the owner of the REO
Property, its successors and assigns as to the first priority lien of the
Mortgage in the original principal amount of the Mortgage Loan. The REO
Subsidiary is the insured under such mortgage title insurance policy. No claim
has been made under such owner’s title insurance policy, and the Sellers, have
not done, by act or omission, anything which would impair the coverage of such
lender’s title insurance policy.

 

(i) No Mechanics’ Liens. To the best of the applicable Seller’s knowledge, there
are no mechanics’ or similar liens or claims which have been filed for work,
labor or material affecting the related REO Property.

 

(j) No Damage. To the best of the applicable Seller’s knowledge, the REO
Property is undamaged by water, fire, earthquake, earth movement other than
earthquake, windstorm, flood, tornado, defective construction materials or work,
or similar casualty (excluding casualty from the presence of hazardous wastes or
hazardous substances) to affect adversely the value of the REO Property.

 

(k) No Condemnation. To the best of the applicable Seller’s knowledge, there is
no proceeding pending, or threatened, for the total or partial condemnation of
the REO Property.

 

(l) Environmental Matters. To the best of the applicable Seller’s knowledge,
there is no pending action or proceeding directly involving the REO Property in
which compliance with any environmental law, rule or regulation is an issue or
is secured by a secured lender’s environmental insurance policy.

 

(m) Location and Type of REO Property. Each REO Property is located in the U.S.
or a territory of the U.S. and consists of a one- to four-unit residential
property, which may include, but is not limited to, a single-family dwelling,
townhouse, condominium unit, or unit in a planned unit development. No REO
Property is a cooperative or a manufactured home.

 

(n) Delivery of Broker’s Price Opinion. With respect to each REO Property, the
REO Subsidiary has delivered to Buyer a true and complete copy of an internal
BPO for such REO Property dated no more than ninety (90) days prior to the
requested Purchase Date.

 

 Schedule 1 Part 4 - 2  

 

SCHEDULE 1

 

PART V

 

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO
REO SUBSIDIARY INTERESTS

 

The Sellers make the following representations and warranties to the Buyer, with
respect to the REO Subsidiary Interests subject to a Transaction, that as of the
Purchase Date for the purchase of REO Subsidiary Interests subject to a
Transaction by the Buyer from a Seller and as of the date of this Agreement and
any Transaction hereunder relating to the REO Subsidiary Interests is
outstanding and at all times while the Program Agreements and any Transaction
hereunder is in full force and effect. For purposes of this Schedule 1 and the
representations and warranties set forth herein, a breach of a representation or
warranty shall be deemed to have been cured with respect to the REO Subsidiary
Interests if and when the Sellers have taken or caused to be taken action such
that the event, circumstance or condition that gave rise to such breach no
longer adversely affects such REO Subsidiary Interests.

 

(a) REO Subsidiary Interests. The REO Subsidiary Interests constitute all the
issued and outstanding REO Subsidiary Interests of all classes of REO Subsidiary
and are certificated. Neither Seller shall issue certificates representing the
REO Subsidiary Interests or issue additional REO Subsidiary Interests other than
the REO Subsidiary Interests.

 

(b) Duly and Validly Issued. All of the shares of the REO Subsidiary Interests
have been duly and validly issued and, if capital stock of a corporation, are
fully paid and nonassessable.

 

(c) REO Subsidiary Interests as Securities. The REO Subsidiary Interests
(a) constitute “securities” as defined in Section 8-102 of the Uniform
Commercial Code (b) are not dealt in or traded on securities exchanges or in
securities markets, (c) do not constitute investment company securities (within
the meaning of Section 8-103(c) of the Uniform Commercial Code) and (d) are not
held in a securities account (within the meaning of Section 8-103(c) of the
Uniform Commercial Code).

 

(d) Beneficial Owner. A Seller is the sole record and beneficial owner of, and
has title to, the REO Subsidiary Interests, free of any and all Liens or options
in favor of, or claims of, any other Person, except the Lien created herein.

 

(e) Consents. All consents of majority in interest of the members of REO
Subsidiary to the grant of the security interests provided herein to Buyer and
to the Transactions provided for herein have been obtained and are in full force
and effect.

 

(f) Conveyance; First Priority Lien. Upon delivery to the Buyer of the
certificates evidencing the REO Subsidiary Interests (and assuming the
continuing possession by the Buyer of such certificate in accordance with the
requirements of applicable law) and the filing of a financing statement covering
the REO Subsidiary Interests in the State of Delaware and naming the applicable
Seller as debtor and the Buyer as secured party, such Seller has conveyed and
transferred to Buyer all of its right, title and interest to the REO Subsidiary
Interests, including taking all steps as may be necessary in connection with the
indorsement, transfer of power, delivery and pledge of all REO Subsidiary
Interests as “securities” (as defined in Section 8-102 of the Uniform Commercial
Code) to Buyer. The Lien granted hereunder is a first priority Lien on the REO
Subsidiary Interests.

 

 Schedule 1 Part 5 - 1  

 

 

(g) No Waiver. The applicable Seller has not waived or agreed to any waiver
under, or agreed to any amendment or other modification of, the Subsidiary
Agreements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Schedule 1 Part 5 - 2  

 

SCHEDULE 1

 

PART VI

 

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO
RENTAL PROPERTY

 

The Sellers make the following representations and warranties to the Buyer, with
respect to the Rental Property subject to a Transaction, that as of the Purchase
Date for the purchase of Rental Property subject to a Transaction by the Buyer
from a Seller and as of the date of this Agreement and any Transaction hereunder
relating to the Rental Property is outstanding and at all times while the
Program Agreements and any Transaction hereunder is in full force and effect.
For purposes of this Schedule 1 and the representations and warranties set forth
herein, a breach of a representation or warranty shall be deemed to have been
cured with respect to the Rental Property if and when the Sellers have taken or
caused to be taken action such that the event, circumstance or condition that
gave rise to such breach no longer adversely affects such Rental Property.

 

(a) Title. The REO Subsidiary has good and marketable fee simple title to the
Rental Property with full right to transfer and sell the Rental Property, free
and clear of all liens.

 

(b) Asset File. All documents required to be delivered as part of the Asset File
in accordance with the Custodial Agreement, have been delivered to the Custodian
and all information contained in the related Asset File (or as otherwise
provided to Buyer) in respect of such Rental Property is accurate and complete
in all material respects.

 

(c) Ownership. The REO Subsidiary is the sole owner and holder of the Rental
Property related thereto. The REO Subsidiary has not assigned or pledged the
Rental Property.

 

(d) Rental Property as Described. All information or data furnished with respect
to such Rental Property, including, without limitation, the information set
forth in the Transaction Request and the Program Agreements with respect to each
Rental Property is complete, true and correct in all material respects. There is
no fact known to any Seller Party or their Affiliates which has not been
disclosed to the Buyer with respect to such Rental Property or the local housing
market containing such Rental Property that could reasonably be expected to have
a material adverse effect on the value of such Rental Property or the interest
of the Buyer in such Rental Property.

 

(e) Owner’s Title Insurance Policy. The related Asset Files contain, for such
Rental Property, an owner’s title insurance policy insuring the good and
marketable fee ownership by the REO Subsidiary of such Rental Property or a
title commitment for such a policy issued by a nationally recognized title
insurer, and the REO Subsidiary has not been notified in writing of any fact
that would lead a reasonable person to believe that Buyer cannot obtain similar
insurance from a nationally recognized title insurer (without additional
exceptions to coverage) upon payment of the applicable premium. The REO
Subsidiary is the sole insured of such owner’s title insurance policy, and such
owner’s title insurance policy is in full force and effect and will be in full
force and effect upon the pledge of the Rental Property to Buyer and all
premiums thereon have been paid and no material claims have been made thereunder
and no claims have been paid thereunder. Neither the REO Subsidiary nor Property
Manager has, by act or omission, done anything that would materially impair the
coverage under such policy. No claims have been made under such owner’s title
insurance policy, and the REO Subsidiary has not done, by act or omission,
anything which would impair the coverage of such owner’s title insurance policy.

 

 Schedule 1 Part 6 - 1  

 

 

(f) Deed. The Asset File for such Rental Property includes a Deed for such
Rental Property conveying the Rental Property to the REO Subsidiary, with
vesting in the actual name of the REO Subsidiary and (i) evidence that such Deed
has been duly recorded, (ii) certification from a Responsible Officer of the REO
Subsidiary that such Deed has been submitted for recordation to the applicable
recording office, or (iii) a stamped certification from the related title
insurance company that such Deed has been submitted for recordation to the
applicable recording office.

 

(g) Compliance with Requirements of Law. Such Rental Property (including the
leasing and intended use thereof) complies with all applicable Requirements of
Law, including all applicable anti-discrimination laws and landlord-tenant laws,
building and zoning ordinances and codes and all certifications, permits,
licenses and approvals, including without limitation, certificates of completion
and occupancy permits, required for the legal leasing, use, occupancy,
habitability and operation of the Rental Property, have been obtained and are in
full force and effect. There is no consent, approval, order or authorization of,
and no filing with or notice to, any court or Governmental Authority related to
the operation, use or leasing of the Rental Property that has not been obtained.
There has not been committed by REO Subsidiary or by any other Person in
occupancy of or involved with the operation, use or leasing of the Rental
Property any act or omission affording any Governmental Authority the right of
forfeiture as against the Rental Property or any part thereof.

 

(h) Taxes, Assessments and Other Charges. All taxes, homeowner or similar
association fees, charges, and assessments, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
with respect to such Rental Property which previously became due and owing have
been paid. All transfer taxes, deed stamps, intangible taxes or other amounts in
the nature of transfer taxes required to be paid under applicable Requirements
of Law in connection with the transfer of such Rental Property to the REO
Subsidiary have been paid or are being paid simultaneously with the making of
the relevant Advance.

 

(i) No Litigation. There is no litigation, proceeding or governmental
investigation pending, or any order, injunction or decree outstanding, existing
or relating to the REO Subsidiary or any of its Affiliates with respect to the
Rental Property that could reasonably be expected to materially and adversely
affect the value of the Rental Property or the REO Subsidiary. Neither the REO
Subsidiary nor Property Manager has received notice from any Person (including
without limitation any Governmental Authority) that the Rental Property owned by
the REO Subsidiary is subject to any consumer litigation which could have a
material and adverse effect on the value of the Rental Property.

 

 Schedule 1 Part 6 - 2  

 

 

(j) Hazard Insurance. All buildings or other customarily insured improvements
upon the Rental Property (including loss of Rental Proceeds with respect to the
Rental Property) are insured by an insurer against loss by fire, hazards of
extended coverage and such other hazards in an amount not less than the lesser
of the related BPO value and the replacement value of such Rental Property.

 

(k) Flood Insurance. If the improvements on the Rental Property were in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards at the time the REO Subsidiary acquired such Rental
Property, a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration is in effect with a generally
acceptable insurance carrier in an amount representing commercially reasonable
coverage.

 

(l) No Mechanics’ Liens. There are no valid and enforceable mechanics’ or
similar liens or claims which have been filed for work, labor or material
affecting the related Rental Property.

 

(m) No Damage. The Rental Property is undamaged by water, fire, earthquake,
earth movement other than earthquake, windstorm, flood, tornado, defective
construction materials or work, or similar casualty (excluding casualty from the
presence of hazardous wastes or hazardous substances) which would cause such
Rental Property to become uninhabitable.

 

(n) No Condemnation. There is no proceeding pending, or threatened, for the
total or partial condemnation of the Rental Property.

 

(o) Environmental Matters. The Rental Property is in material compliance with
all environmental laws. No Seller Party has caused, or has knowledge of, any
release on to the Rental Property or any adjoining property and to each Seller
Party’s knowledge, no tenant of such Rental Property is involved in any activity
that would reasonably be expected to give rise to any environmental liability
for any Seller Party. Additionally, (1) there is no condition affecting the
Rental Property (x) relating to lead paint, radon, asbestos or other hazardous
materials, (y) requiring remediation of any condition or (z) relating to a claim
which could impose liability upon, diminish rights of or otherwise adversely
affect Buyer and (2) the REO Subsidiary prior to the related Purchase Date has
delivered or caused to be delivered to Buyer a Disclosure of Information on
Lead-Based Paint and Lead-Based Paint Hazards for the Rental Property in a form
acceptable to Buyer to the extent required by applicable law.

 

(p) Location and Type of Rental Property. Each Rental Property is located in the
U.S. or a territory of the U.S. and consists of a one- to four-unit residential
property, which may include, but is not limited to, a single-family dwelling,
townhouse, condominium unit, or unit in a planned unit development. No Rental
Property is a manufactured home.

 

(q) Recordation. The related Deed is in recordable form and is acceptable in all
respects for recording under the laws of the jurisdiction in which the Property
is located and has been delivered for recordation to the appropriate recording
office. The related Deed has been initially recorded or sent for recordation in
the name of the REO Subsidiary.

 

 Schedule 1 Part 6 - 3  

 

 

(r) No Consents. Other than consents and approvals obtained as of the related
Advance Date or those already granted in the documents governing such Rental
Property, no consent or approval by any Person is required in connection with
the REO Subsidiary’s acquisition of such Rental Property, for Buyer’s exercise
of any rights or remedies in respect of such Rental Property or for Buyer’s
sale, pledge or other disposition of such Rental Property. No third party holds
any “right of first refusal”, “right of first negotiation”, “right of first
offer”, purchase option, or other similar rights of any kind, and no other
impediment exists to any such transfer or exercise of rights or remedies with
respect to such Rental Property. No consent, approval, authorization or order
of, or registration or filing with, or notice to, any court or governmental
agency or body having jurisdiction or regulatory authority over the REO
Subsidiary is required for any transfer or assignment by the holder of such
Rental Property.

 

(s) No Fraudulent Acts. No fraudulent acts were committed by the REO Subsidiary
in connection with the acquisition of such Rental Property nor were any
fraudulent acts committed by any Person in connection with the acquisition of
such Rental Property.

 

(t) Acquisition of Rental Property. With respect to each such Rental Property,
(i) such Rental Property was (x) acquired by the REO Subsidiary under a Property
Contribution Agreement or (y) has been approved as a Rental Property by Buyer in
its sole and absolute discretion, and (ii) with respect to each such Rental
Property, prior to the related Purchase Date, Custodian shall have received the
complete, related Asset File in accordance with the Custodial Agreement and such
Asset File shall not have been released from the possession of the Custodian for
longer than the time periods permitted under the Custodial Agreement.

 

(u) Tenant and Leasing Matters. The REO Subsidiary is the owner and lessor of
landlord’s interest in the related Lease Agreement. No Person has any possessory
interest in the Rental Property or right to occupy the same except under and
pursuant to the provisions of the related Lease Agreement. The related Lease
Agreement is in full force and effect (other than any Lease Agreement that
expires in accordance with its terms). There are no defaults by the REO
Subsidiary or any Tenant under such Lease Agreement, and there are no conditions
that, with the passage of time or the giving of notice, or both, would
constitute defaults under such Lease Agreement. Except as the REO Subsidiary (or
Property Manager acting on behalf of the REO Subsidiary) acting in its
reasonable business judgment may otherwise determine, the REO Subsidiary has not
waived any material default, breach, violation or event of acceleration by the
related Tenant existing under such Lease Agreement related to such Rental
Property. All work to be performed by the REO Subsidiary under such Lease
Agreement has been performed as required, and the REO Subsidiary has not been
notified in writing that the applicable Tenant under such Lease Agreement has
not accepted or has contested the completion of such work, and any payments,
free rent, partial rent, rebate of rent or other payments, credits, allowances
or abatements required to be given by the REO Subsidiary to the related Tenant
have already been received by such Tenant. The related Tenant under such Lease
Agreement does not have a right or option pursuant to such Lease Agreement or
otherwise to purchase all or any part of the leased premises or the building of
which the leased premises are a part. The Lease Agreement is terminable upon the
occurrence of a material default by the related Tenant after the expiration of
any notice period required by applicable Requirements of Law. The rent amount
and Tenant name indicated on the related Lease Agreement match the rent amount
and Tenant name on the rent roll report provided to Buyer with respect to such
Rental Property.

 

 

 Schedule 1 Part 6 - 4  

 

 

(v) Utilities and Public Access. The Rental Property has rights of access to
public ways and is served by public water, sewer, sanitary sewer and storm drain
facilities adequate to manage the Rental Property for its intended uses. All
public utilities necessary or convenient to the full use and enjoyment of the
Rental Property are located either in the public right-of-way abutting the
Rental Property or in recorded easements serving the Rental Property and such
easements are set forth in and insured by the ALTA owner’s title insurance
policy. All roads necessary for the use of the Rental Property for its current
purpose have been completed, are physically open and are dedicated to public
use.

 

(w) Separate Lots. The Rental Property is comprised of one (1) or more parcels
which constitute a separate tax lot or lots and does not constitute a portion of
any other tax lot not a part of the Rental Property.

 

(x) Certificate of Occupancy; Licenses. All certifications, permits, licenses
and approvals, including without limitation, certificates of completion and
occupancy permits required for the legal use, occupancy and operation of the
Rental Property by the REO Subsidiary as a residential rental property, have
been obtained and are in full force and effect and are not subject to
revocation, suspension or forfeiture. The use being made of the Rental Property
is in conformity with the certificate of occupancy issued for the Rental
Property, if a certificate of occupancy is required by law.

 

(y) Boundaries. All of the improvements which were included in determining the
appraised value of the Rental Property lie wholly within the boundaries and
building restriction lines of the Rental Property and comply in all material
respects with all applicable zoning laws and ordinances (except to the extent
that they may constitute legal non-conforming uses), and no improvements on
adjoining properties encroach upon the Rental Property, and no easements or
other encumbrances upon the Rental Property encroach upon any of the
Improvements except those that do not materially or adversely affect the value
or current use of the Rental Property.

 

(z) Illegal Activity. No portion of the Rental Property has been or will be
purchased with proceeds of any illegal activity and there are no illegal
activities or activities relating to any controlled substances at the Rental
Property.

 

(aa) No Ground Leases. No Rental Property is subject to a ground lease.

 

(bb) No Defenses or Counterclaims. Each eviction proceeding, if any, relating to
the Rental Property has been properly commenced and there is no valid defense or
counterclaim by anyone with respect thereto.

 

(cc) Management. The Rental Property has been and is currently being managed and
maintained by the Property Manager in compliance in all material respects with
all applicable laws and regulations and Accepted Property Management Practices.

 

(dd) Management and Other Contracts. There are no management, service, supply,
security, maintenance or other similar contracts or agreements with respect to
the Rental Property which are not terminable at will or on notice of no greater
than thirty (30) calendar days.

 

 Schedule 1 Part 6 - 5  

 

(ee) No Set-off; No Pledge. No Rental Property is or has been the subject of any
compromise, adjustment, extension, satisfaction, subordination, rescission,
setoff, counterclaim, defense, abatement, suspension, deferment, deduction,
reduction, termination or modification, whether arising out of transactions
concerning such Rental Property or otherwise, by the REO Subsidiary, any
transferor thereof or other Person, except, in each case, as set forth in the
SFR Property Documents delivered to Buyer. None of the SFR Property Documents in
respect of any Rental Property has any marks or notations indicating that it has
been sold, assigned, pledged, encumbered or otherwise conveyed to any Person
other than the REO Subsidiary or Buyer.

 

(ff) Delivery of BPO. With respect to each Rental Property, the REO Subsidiary
has delivered to Buyer a true and complete copy of an internal BPO for such
Rental Property dated no more than sixty (60) days prior to the requested
Purchase Date.

 

(gg) Leasing Criteria. Each Lease Agreement exceeds or meets the Leasing
Criteria (including all supplements or amendments thereto) previously provided
to and approved by Buyer.]

 

(hh) Tenant Underwriting Criteria. Each Tenant exceeds or meets the Tenant
Underwriting Criteria (including all supplements or amendments thereto)
previously provided to and approved by Buyer.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Schedule 1 Part 6 - 6  

 

SCHEDULE 2

 

AUTHORIZED REPRESENTATIVES

 

 

 

SELLER PARTIES AUTHORIZATIONS

 

Any of the persons whose signatures and titles appear below are authorized,
acting singly, to act for Seller Parties under this Agreement:

 

Authorized Representatives for execution of Program Agreements and amendments

 

Name   Title   Signature

 

 

 

 

 

 

 

 

 

 

Authorized Representatives for execution of Transaction Requests and day-to-day
operational functions

 

Name   Title   Signature

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Schedule 2 - 1  

 

BUYER AUTHORIZATIONS

 

Any of the persons whose signatures and titles appear below, including any other
authorized officers, are authorized, acting singly, to act for Buyer under this
Agreement:

 

 

 

Name

 

Title

 

Signature

 

Adam Loskove Vice President   Margaret Dellafera Vice President   Elie Chau Vice
President   Patrick Gallagher Vice President   Deirdre Harrington Vice President
  Robert Durden Vice President   Ron Tarantino Vice President   Michael Marra
Vice President  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Schedule 2 - 2  

 

EXHIBIT A

 

FORM OF TENANT INSTRUCTION NOTICE

 

 

 

[insert DATE]

 

VIA CERTIFIED OR REGISTERED MAIL,

RETURN RECEIPT REQUESTED

 

 

[TENANT NAME

ADDRESS]

 

 

Re: [insert ADDRESS] (“Property”)

 

 

Dear ______________:

 

 

This is to notify you that [______________], the manager and landlord on your
lease has transferred its rights to manage the Property described above and in
connection therewith has assigned its interest as landlord under your lease
agreement to [NAME OF NEW MANAGER, ADDRESS, PHONE NUMBER AND CONTACT NAME].

 

You are further notified that any refundable security deposits or any prepaid
rents under your lease have been transferred to [NAME OF NEW MANAGER].

 

Commencing as of the date of this notice, all rental payments under your lease
should be paid to [NAME OF NEW MANAGER] in accordance with the delivery
instructions below or as [NAME OF NEW MANAGER] may otherwise direct. We
appreciate your prompt cooperation with these new instructions.

 

If you pay your rent by mailing a check, the address to which your rent checks
should be sent is as follows:

 

[P.O. BOX ADDRESS]

[                      ]

[                     ]

 

 

If you pay your rent by hand-delivering a check, the address to which your rent
checks should be delivered is as follows:

 

 

 Exhibit A- 1  

 

 

[STREET ADDRESS]

 

 

If you pay your rent by wire transfer, ACH withdrawal, direct debit or over the
internet, no changes to where your rental payments are made to or drawn from are
required.

 

 

Any written notices you desire or are required to make to the landlord under
your lease should hereafter be sent to _________________________ at the address
listed in the first paragraph above.

 

 

[Signature Page Follows]

 

 

 

 

 

 

 

 Exhibit A- 2  

 

 

 

   

Sincerely,

 

 

[___________________],

 

 

By: _______________________

Name:

Title:

 

 

 

 

 

 

 

 

 

 

 Exhibit A- 3  

 

EXHIBIT B

 

FORM OF PROPERTY MANAGER REPORT

 

[SELLERS TO PROVIDE]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Exhibit B- 1  

 

EXHIBIT C

 

 

 

FORM OF PROPERTY MANAGEMENT AGREEMENT SIDE LETTER

 

[Date]

 

[________________], as Property Manager
[ADDRESS]
Attention: ___________

 

Re:Amended and Restated Master Repurchase Agreement, dated as of March 31, 2016
(the “Repurchase Agreement”), by and among PennyMac Corp., PennyMac Holdings,
LLC and PennyMac Operating Partnership, L.P. (the “Sellers”), PMC REO Financing
Trust (the “REO Subsidiary” and, together with Sellers, the “Seller Parties”),
PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (the
“Guarantors”) and Credit Suisse First Boston Mortgage Capital LLC (the “Buyer”).

 

Ladies and Gentlemen:

 

[___________________] (the “Property Manager”) is managing certain real estate
owned properties for REO Subsidiary pursuant to that certain Property Management
Agreement between the Property Manager and REO Subsidiary. Pursuant to the
Repurchase Agreement among Buyer, Seller Parties, and Guarantors, the Property
Manager is hereby notified that REO Subsidiary and any subsequent REO Subsidiary
that executes a joinder agreement to the Repurchase Agreement, has pledged to
Buyer certain real estate owned properties which are managed by Property Manager
which are subject to a security interest in favor of Buyer.

 

Upon receipt of a Notice of Event of Default from Buyer (“Notice of Event of
Default”) in which Buyer shall identify the real estate owned properties which
are then pledged to Buyer under the Repurchase Agreement (the “REO Properties”),
the Property Manager shall segregate all amounts collected on account of such
REO Properties, hold them in trust for the sole and exclusive benefit of Buyer,
and remit such collections in accordance with Buyer’s written instructions.
Following such Notice of Event of Default, Property Manager shall follow the
instructions of Buyer with respect to the REO Properties, and shall deliver to
Buyer any information with respect to the REO Properties reasonably requested by
Buyer.

 

Notwithstanding any contrary information which may be delivered to the REO
Properties by REO Subsidiary, the Property Manager may conclusively rely on any
information or Notice of Event of Default delivered by Buyer, and REO Subsidiary
shall indemnify and hold the Property Manager harmless for any and all claims
asserted against it for any actions taken in good faith by the Property Manager
in connection with the delivery of such information or Notice of Event of
Default.

 

 Exhibit C- 1  

 

 

Please acknowledge receipt of this instruction letter by signing in the
signature block below and forwarding an executed copy to Buyer promptly upon
receipt. Any notices to Buyer should be delivered to the following addresses:
Eleven Madison Avenue, New York, New York 10010; Attention: Margaret Dellafera;
Telephone: 212-325-6471.

 

Very truly yours,

[__________________]

 

By:____________________
Name:
Title:

 

[___________________]

 

By:____________________
Name:
Title:

 

ACKNOWLEDGED:

 

[____________________]
as Property Manager

 

By:____________________
Name:
Title:

 

 

 

Credit Suisse First Boston Mortgage Capital LLC

 

By:____________________
Name:
Title:

 

 

 

 

 

 Exhibit C- 2  

 

EXHIBIT D

 

POWER OF ATTORNEY

 

Credit Suisse First Boston Mortgage Capital LLC
c/o Credit Suisse Securities (USA) LLC
Eleven Madison Avenue, 4th Floor
Attention: Margaret Dellafera
Fax Number: 212-743-4810

 

 

Re: Amended and Restated Master Repurchase Agreement, dated as of ____________
__, 2016 (as amended, restated, supplemented or otherwise modified from time to
time, the “Agreement”) among PennyMac Corp., PennyMac Holdings, LLC, PennyMac
Operating Partnership, L.P., PMC REO Financing Trust, PennyMac Mortgage
Investment Trust, and Credit Suisse First Boston Mortgage Capital LLC

 

Ladies and Gentlemen:

 

KNOW ALL MEN BY THESE PRESENTS, that [PennyMac Corp.][PennyMac Holdings,
LLC][PennyMac Operating Partnership, L.P.] [PMC REO Financing Trust] (“Seller
Party”) hereby irrevocably constitutes and appoints Credit Suisse First Boston
Mortgage Capital LLC (“Buyer”) and any officer or agent thereof, with full power
of substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of Seller and in the name of Seller
or in its own name, from time to time in Buyer’s discretion:

 

a.in the name of Seller Party, or in its own name, or otherwise, to take
possession of and endorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due with respect to any assets
purchased by Buyer (the “Assets”) from Seller Party and to file any claim or to
take any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by Buyer for the purpose of collecting any and all such
moneys due with respect to the Obligations;

 

b.to pay or discharge taxes and liens levied or placed on or threatened against
the Assets;

 

c.(i) to direct any party liable for any payment under any Assets, including
without limitation, any Underlying Repurchase Counterparty under any Underlying
Repurchase Document, to make payment of any and all moneys due or to become due
thereunder directly to Buyer or as Buyer shall direct; (ii) to ask or demand
for, collect, receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising out of
any Assets including without limitation, from any Underlying Repurchase
Counterparty under any Underlying Repurchase Document; (iii) to sign and endorse
any invoices, assignments, verifications, notices and other documents in
connection with any Assets including without limitation, with respect to any
Underlying Repurchase Counterparty under any Underlying Repurchase Document;
(iv) to commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the Assets or any
proceeds thereof and to enforce any other right in respect of any Assets
including without limitation, any Underlying Repurchase Document; (v) to defend
any suit, action or proceeding brought against Seller Party with respect to any
Assets, (vi) to settle, compromise or adjust any suit, action or proceeding
described in clause (vii) above and, in connection therewith, to give such
discharges or releases as Buyer may deem appropriate; and (viii) generally, to
sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any Assets as fully and completely as though Buyer were the absolute owner
thereof for all purposes, and to do, at Buyer’s option and Seller Party’s
expense, at any time, and from time to time, all acts and things which Buyer
deems necessary to protect, preserve or realize upon the Assets and Buyer’s
Liens thereon and to effect the intent of this Agreement, all as fully and
effectively as Seller Party might do, including without limitation, in each
case, with respect to any Underlying Repurchase Counterparty and any Underlying
Repurchase Document;

 

 Exhibit D- 1  

 

 

d.for the purpose of carrying out the transfer of servicing with respect to the
Assets including without limitation, directing any Underlying Repurchase
Counterparty under any Underlying Repurchase Document, from Seller Party or any
third party to a successor servicer appointed by Buyer in its sole discretion
and to take any and all appropriate action and to execute any and all documents
and instruments which may be necessary or desirable to accomplish such transfer
of servicing, and, without limiting the generality of the foregoing, Seller
Party hereby gives Buyer the power and right, on behalf of Seller Party, without
assent by Seller Party, to, in the name of Seller Party or its own name, or
otherwise, prepare and send or cause to be sent “good-bye” letters to all
mortgagors under the Assets, transferring the servicing of the Assets to a
successor servicer appointed by Buyer in its sole discretion;

 

e.for the purpose of delivering any notices of sale including without
limitation, on behalf of any Underlying Repurchase Counterparty under any
Underlying Repurchase Document, to mortgagors or other third parties, including
without limitation, those required by law.

 

f.For the purpose of acting as attorney-in-fact for any Underlying Repurchase
Counterparty pursuant to any power of attorney granted to Seller Party by such
Underlying Repurchase Counterparty.

 

Seller Party hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.

 

Any capitalized term used but not defined herein shall have the meaning assigned
to such term in the Agreement.

 

Seller Party also authorizes Buyer, from time to time, to execute, in connection
with any sale, any endorsements, assignments or other instruments of conveyance
or transfer with respect to the Assets.

 

 Exhibit D- 2  

 

 

The powers conferred on Buyer hereunder are solely to protect Buyer’s interests
in the Assets and shall not impose any duty upon it to exercise any such powers.
Buyer shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers, and neither it nor any of its officers,
directors, employees or agents shall be responsible to Seller for any act or
failure to act hereunder, except for its or their own gross negligence or
willful misconduct.

 

TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, SELLER PARTY HEREBY AGREES THAT ANY
THIRD PARTY RECEIVING A DULY EXECUTED COPY OR FACSIMILE OF THIS INSTRUMENT MAY
ACT HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF SHALL BE INEFFECTIVE AS
TO SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL NOTICE OR KNOWLEDGE OF SUCH
REVOCATION OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD PARTY, AND
BUYER ON ITS OWN BEHALF AND ON BEHALF OF BUYER’S ASSIGNS, HEREBY AGREES TO
INDEMNIFY AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY AND ALL
CLAIMS THAT MAY ARISE AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD PARTY
HAVING RELIED ON THE PROVISIONS OF THIS INSTRUMENT.

 

 

 

[REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURES FOLLOW.]

 

 

 

 

 

 Exhibit D- 3  

 

IN WITNESS WHEREOF Seller Party has caused this Power of Attorney to be executed
and Seller Party’s seal to be affixed this ___ day of _________, 2016.

 

 

 

   

[PennyMac Corp.][PennyMac Holdings, LLC][PennyMac Operating Partnership, L.P.]
[PMC REO Financing Trust]

 

By:   _______________________________
         Name:
         Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Exhibit D- 4  

 

 

A notary public or other officer completing this certificate verifies only the
identity of the individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity of that document.

 

 

 

STATE OF CALIFORNIA

COUNTY OF ______________

 

 

On ______________________, 20__, before me, ____________________________, a
Notary Public, personally appeared ______________________________________, who
proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

 

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

 

WITNESS my hand and official seal.

 

Signature ________________________________

 

(Seal)

 

 

 

 

 

 Exhibit D- 5  

 

EXHIBIT E-1

 

FORM OF SERVICER POWER OF ATTORNEY

 

KNOW ALL MEN BY THESE PRESENTS, that PennyMac Loan Services, LLC (the
“Servicer”) hereby irrevocably constitutes and appoints Credit Suisse First
Boston Mortgage Capital LLC (“Buyer”) and any officer or agent thereof, with
full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Servicer and in the
name of Servicer or in its own name, from time to time in Buyer’s discretion:

 

(a) in the name of Servicer, or in its own name, or otherwise, to take
possession of and endorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due with respect to any assets
purchased by Buyer under the Amended and Restated Master Repurchase Agreement
(as amended, restated or modified, “the Agreement”) dated March 31, 2016 among
Buyer, PennyMac Corp. (“PennyMac Corp.”), PennyMac Operating Partnership, L.P.
(“POP”), PennyMac Holdings, LLC (a “Seller,” together with PennyMac Corp. and
POP, the “Sellers”), PMC REO Financing Trust, and PennyMac Mortgage Investment
Trust or owned by the subsidiary of any Seller subject to the Agreement (the
“Assets”) and to file any claim or to take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by Buyer for the purpose
of collecting any and all such moneys due with respect to any other assets
whenever payable;

 

(b) to pay or discharge taxes and liens levied or placed on or threatened
against the Assets;

 

(c) (i) to direct any party liable for any payment under any Assets to make
payment of any and all moneys due or to become due thereunder directly to Buyer
or as Buyer shall direct; (ii) to ask or demand for, collect, receive payment of
and receipt for, any and all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any Assets; (iii) to sign and
endorse any invoices, assignments, verifications, notices and other documents in
connection with any Assets; (iv) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Assets or any proceeds thereof and to enforce any other right in
respect of any Assets; (v) to defend any suit, action or proceeding brought
against Servicer with respect to any Assets; (vi) to settle, compromise or
adjust any suit, action or proceeding described in clause (vii) above and, in
connection therewith, to give such discharges or releases as Buyer may deem
appropriate; and (viii) generally, to sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any Assets as fully and
completely as though Buyer were the absolute owner thereof for all purposes, and
to do, at Buyer’s option and Servicer’s expense, at any time, and from time to
time, all acts and things which Buyer deems necessary to protect, preserve or
realize upon the Assets and to effect the intent of this Agreement, all as fully
and effectively as Servicer might do;

 

(d) for the purpose of carrying out the transfer of servicing with respect to
the Assets from the Servicer to a successor servicer appointed by Buyer in its
sole discretion and to take any and all appropriate action and to execute any
and all documents and instruments which may be necessary or desirable to
accomplish such transfer of servicing, and, without limiting the generality of
the foregoing, Servicer hereby gives Buyer the power and right, on behalf of
such Servicer, without assent by Servicer, to, in the name of Servicer or its
own name, or otherwise, prepare and send or cause to be sent “good-bye” letters
to all mortgagors under the Assets, transferring the servicing of the Assets to
a successor servicer appointed by Buyer in its sole discretion;

 

 Exhibit E-1- 1  

 

 

(e) for the purpose of delivering any notices of sale to mortgagors or other
third parties, including without limitation, those required by law.

 

(f) for the purpose of transferring real estate owned property from a Seller’s
Subsidiary by execution and delivery of a deed.

 

Servicer hereby ratifies all that said attorneys shall lawfully do or cause to
be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.

 

Servicer also authorizes Buyer, from time to time, to execute, in connection
with any sale, any endorsements, assignments or other instruments of conveyance
or transfer with respect to the Assets.

 

The powers conferred on Buyer hereunder are solely to protect Buyer’s interests
in the Assets and shall not impose any duty upon it to exercise any such powers.
Buyer shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers, and neither it nor any of its officers,
directors, employees or agents shall be responsible to Servicer for any act or
failure to act hereunder, except for its or their own gross negligence or
willful misconduct.

 

TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, Servicer HEREBY AGREES THAT ANY
THIRD PARTY RECEIVING A DULY EXECUTED COPY OR FACSIMILE OF THIS INSTRUMENT MAY
ACT HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF SHALL BE INEFFECTIVE AS
TO SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL NOTICE OR KNOWLEDGE OF SUCH
REVOCATION OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD PARTY, AND
BUYER ON ITS OWN BEHALF AND ON BEHALF OF BUYER’S ASSIGNS, HEREBY AGREES TO
INDEMNIFY AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY AND ALL
CLAIMS THAT MAY ARISE AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD PARTY
HAVING RELIED ON THE PROVISIONS OF THIS INSTRUMENT.

 

[REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURES FOLLOW.]

 

 

 

 Exhibit E-1- 2  

 

IN WITNESS WHEREOF Servicer has caused this Power of Attorney to be executed and
Servicer’s seal to be affixed this ____ day of _________, 2016.

 

 

 

   

PennyMac Loan Services, LLC

 

 

 

By:   _______________________________
         Name:
         Title:

 

 

 

 

A notary public or other officer completing this certificate verifies only the
identity of the individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity of that document.

 

 

STATE OF CALIFORNIA

COUNTY OF ______________

 

On ______________________, 20__, before me, ____________________________, a
Notary Public, personally appeared ______________________________________, who
proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

 

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

 

 

WITNESS my hand and official seal.

 

Signature ________________________________

 

(Seal)

 

 

 

 

 

 Exhibit E-1- 3  

 

EXHIBIT E-2

 

 

 

FORM OF REO SUBSIDIARY POWER OF ATTORNEY

 

KNOW ALL MEN BY THESE PRESENTS, that PMC REO Financing Trust (the “REO
Subsidiary”) hereby irrevocably constitutes and appoints Credit Suisse First
Boston Mortgage Capital LLC (“Buyer”) and any officer or agent thereof, with
full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of REO Subsidiary and in
the name of REO Subsidiary or in its own name, from time to time in Buyer’s
discretion:

 

(a) in the name of REO Subsidiary, or in its own name, or otherwise, to take
possession of and endorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due with respect to any assets
purchased by Buyer under the Amended and Restated Master Repurchase Agreement
(as amended, restated or modified, “the Agreement”) among Buyer, PennyMac Corp.
(“PennyMac Corp.”), PennyMac Operating Partnership, L.P. (“POP”), PennyMac
Holdings, LLC (a “Seller,” together with PennyMac Corp. and POP, the “Sellers”),
PMC REO Financing Trust (the “REO Subsidiary”) and PennyMac Mortgage Investment
Trust dated March 31, 2016 or owned by the subsidiary of REO Subsidiary subject
to the Agreement (the “Assets”) and to file any claim or to take any other
action or proceeding in any court of law or equity or otherwise deemed
appropriate by Buyer for the purpose of collecting any and all such moneys due
with respect to any other assets whenever payable;

 

(b) to pay or discharge taxes and liens levied or placed on or threatened
against the Assets;

 

(c) (i) to direct any party liable for any payment under any Assets to make
payment of any and all moneys due or to become due thereunder directly to Buyer
or as Buyer shall direct; (ii) to ask or demand for, collect, receive payment of
and receipt for, any and all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any Assets; (iii) to sign and
endorse any invoices, assignments, verifications, notices and other documents in
connection with any Assets; (iv) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Assets or any proceeds thereof and to enforce any other right in
respect of any Assets; (v) to defend any suit, action or proceeding brought
against REO Subsidiary with respect to any Assets; (vi) to settle, compromise or
adjust any suit, action or proceeding described in clause (vii) above and, in
connection therewith, to give such discharges or releases as Buyer may deem
appropriate; and (viii) generally, to sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any Assets as fully and
completely as though Buyer were the absolute owner thereof for all purposes, and
to do, at Buyer’s option and REO Subsidiary’s expense, at any time, and from
time to time, all acts and things which Buyer deems necessary to protect,
preserve or realize upon the Assets and to effect the intent of this Agreement,
all as fully and effectively as REO Subsidiary might do;

 

(d) for the purpose of carrying out the transfer of servicing with respect to
the Assets from the REO Subsidiary to a successor servicer appointed by Buyer in
its sole discretion and to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish such transfer of servicing, and, without limiting the generality of
the foregoing, REO Subsidiary hereby gives Buyer the power and right, on behalf
of REO Subsidiary, without assent by REO Subsidiary, to, in the name of REO
Subsidiary or its own name, or otherwise, prepare and send or cause to be sent
“good-bye” letters to all mortgagors under the Assets, transferring the
servicing of the Assets to a successor servicer appointed by Buyer in its sole
discretion;

 

 Exhibit E-2- 1  

 

 

(e) for the purpose of delivering any notices of sale to mortgagors or other
third parties, including without limitation, those required by law;

 

(f) for the purpose of transferring real estate owned property from REO
Subsidiary by execution and delivery of a deed;

 

(g) for the purpose of entering into insurance policies with respect to any
Rental Property;

 

(h) for the purpose of completing and/or filing any assignment of leases and
rents; and

 

(i) for the purpose of eviction or for termination in accordance with the
applicable Lease Agreement and renewal of Lease Agreements.

 

REO Subsidiary hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable.

 

REO Subsidiary also authorizes Buyer, from time to time, to execute, in
connection with any sale, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Assets.

 

The powers conferred on Buyer hereunder are solely to protect Buyer’s interests
in the Assets and shall not impose any duty upon it to exercise any such powers.
Buyer shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers, and neither it nor any of its officers,
directors, employees or agents shall be responsible to REO Subsidiary for any
act or failure to act hereunder, except for its or their own gross negligence or
willful misconduct.

 

TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, REO Subsidiary HEREBY AGREES THAT
ANY THIRD PARTY RECEIVING A DULY EXECUTED COPY OR FACSIMILE OF THIS INSTRUMENT
MAY ACT HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF SHALL BE
INEFFECTIVE AS TO SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL NOTICE OR KNOWLEDGE
OF SUCH REVOCATION OR TERMINATION SHALL HAVE BEEN RECEIVED BY SUCH THIRD PARTY,
AND BUYER ON ITS OWN BEHALF AND ON BEHALF OF BUYER’S ASSIGNS, HEREBY AGREES TO
INDEMNIFY AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY AND ALL
CLAIMS THAT MAY ARISE AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD PARTY
HAVING RELIED ON THE PROVISIONS OF THIS INSTRUMENT.

 

[REMAINDER OF PAGE INTENTIONALLY BLANK. SIGNATURES FOLLOW.]

 

 Exhibit E-2- 2  

 

IN WITNESS WHEREOF REO Subsidiary has caused this Power of Attorney to be
executed and REO Subsidiary’s seal to be affixed this ____ day of _________,
2016.

 

 

 

 

   

PMC REO Financing Trust

 

By: PennyMac Corp., as Administrator

 

 

 

By:   _______________________________
         Name:
         Title:

 

 

 

 

A notary public or other officer completing this certificate verifies only the
identity of the individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity of that document.

 

 

 

STATE OF CALIFORNIA

COUNTY OF ______________

 

 

 

On ______________________, 20__, before me, ____________________________, a
Notary Public, personally appeared ______________________________________, who
proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

 

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

 

 

WITNESS my hand and official seal.

 

Signature ________________________________

 

(Seal)

 

 Exhibit E-2- 3  

 

EXHIBIT F

 

Reserved.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Exhibit F- 1  

 

 

 

EXHIBIT G

 

SELLER PARTIES’ AND GUARANTORS’ TAX IDENTIFICATION NUMBERS

 

 

 

PennyMac Holdings, LLC 27-2199755 PennyMac Operating Partnership, L.P.
27-0214441 PennyMac Corp. 80-0463416 PennyMac Mortgage Investment Trust
27-0186273 PMC REO FINANCING TRUST 45-6362117

 

 

 

 

 

 

 

 

 

 

 

 

 

 Exhibit G- 1  

 

EXHIBIT H

 

EXISTING INDEBTEDNESS

 

INDEBTEDNESS AS OF March 28, 2016

 

See Attached.

 

 

 

 

 

 

 

 

 

 

 

 

 Exhibit H- 1  

 

EXHIBIT I

 

 

 

form of ESCROW INSTRUCTION letter TO BE PROVIDED BY SELLERS bEFORE CLOSING

 

 

 

The escrow instruction letter (the “Escrow Instruction Letter”) shall also
include the following instruction to the Settlement Agent (the “Escrow Agent”):

 

 

 

Credit Suisse First Boston Mortgage Capital LLC (the “Buyer”), has agreed to
provide funds (“Escrow Funds”) on behalf of [PennyMac Holdings, LLC][ PennyMac
Operating Partnership, L.P.,] to PennyMac Corp. to finance certain mortgage
loans [, REO properties and Rental Properties] (the “[Mortgage Loans][Assets]”)]
for which you are acting as Escrow Agent.

 

 

 

You hereby agree that (a) you shall receive such Escrow Funds from Buyer to be
disbursed in connection with this Escrow Instruction Letter, (b) you will hold
such Escrow Funds in trust, without deduction, set-off or counterclaim for the
sole and exclusive benefit of Buyer until such Escrow Funds are fully disbursed
on behalf of Buyer in accordance with the instructions set forth herein, and (c)
you will disburse such Escrow Funds on the date specified for closing (the
“Closing Date”) only after you have followed the Escrow Instruction Letter’s
requirements with respect to the Mortgage Loans. In the event that the Escrow
Funds cannot be disbursed on the Closing Date in accordance with the Escrow
Instruction Letter, you agree to promptly remit the Escrow Funds to the
Custodian by re-routing via wire transfer the Escrow Funds in immediately
available funds, without deduction, set-off or counterclaim, back to the account
specified in Buyer’s incoming wire transfer.

 

You further agree that, upon disbursement of the Escrow Funds, you will hold all
Asset Documents specified in the Escrow Instruction Letter in escrow as agent
and bailee for Buyer, and will forward the Asset Documents and original Escrow
Instruction Letter in connection with such Mortgage Loans by overnight courier
(y) to the Custodian within five (5) Business Days following the date of
origination.

 

You agree that all fees, charges and expenses regarding your services to be
performed pursuant to the Escrow Instruction Letter are to be paid by a Seller
or its borrowers, and Buyer shall have no liability with respect thereto.

 

You represent, warrant and covenant that you are not an affiliate of or
otherwise controlled by Pennymac Corp. or any affiliate thereof, and that you
are acting as an independent contractor and not as an agent of Pennymac Corp. or
any affiliate thereof.

 

The provisions of this Escrow Instruction Letter may not be modified, amended or
altered, except by written instrument, executed by the parties hereto and Buyer.
You understand that Buyer shall act in reliance upon the provisions set forth in
this Escrow Instruction Letter, and that Buyer is an intended third party
beneficiary hereof.

 

Whether or not an Escrow Instruction Letter executed by you is received by the
Custodian, your acceptance of the Escrow Funds shall be deemed to constitute
your acceptance of the Escrow Instruction Letter.

 

 Exhibit I- 2  

 

EXHIBIT J

 

FORM OF SERVICER NOTICE AND PLEDGE

 

[Date]

 

PennyMac Loan Services, LLC, as Servicer
[ADDRESS]
Attention: ___________

 

Re:Amended and Restated Master Repurchase Agreement, dated as of March 31, 2016
(the “Repurchase Agreement”), by and among PennyMac Corp., PennyMac Holdings,
LLC and PennyMac Operating Partnership, L.P. (the “Sellers”), PMC REO Financing
Trust (the “REO Subsidiary” and, together with Sellers, the “Seller Parties”),
PennyMac Mortgage Investment Trust and PennyMac Operating Partnership, L.P. (the
“Guarantors”) and Credit Suisse First Boston Mortgage Capital LLC (the “Buyer”).

 

Ladies and Gentlemen:

 

PennyMac Loan Services, LLC (the “Servicer”) is servicing certain mortgage loans
originated by PennyMac Corp. and purchased by Sellers, which mortgage loans are
serviced pursuant to that certain Second Amended and Restated Flow Servicing
Agreement, dated as of March 1, 2013, between the Servicer and PennyMac
Operating Partnership, L.P., as amended from time to time. Pursuant to the
Repurchase Agreement among Buyer, Seller Parties and Guarantors, the Servicer is
hereby notified that Seller Parties have pledged to Buyer certain mortgage loans
which are serviced by Servicer which are subject to a security interest in favor
of Buyer. Capitalized Terms used but not defined herein shall have the meaning
assigned to such term in the Repurchase Agreement.

 

 

 

Section 1. Servicing Rights and Grant of Security Interest. (a) Buyer and
Servicer hereby agree that in order to further secure the Obligations under the
Repurchase Agreement, Servicer hereby grants, assigns and pledges to Buyer a
fully perfected first priority security interest in all of its Servicing Rights
related to the Purchased Mortgage Loans and REO Properties and all proceeds
related thereto and in all instances, whether now owned or hereafter acquired,
now existing or hereafter created.

 

(b) The foregoing provision is intended to constitute a security agreement or
other arrangement or other credit enhancement related to the Repurchase
Agreement and Transactions thereunder as defined under Sections 101(47)(A)(v)
and 741(7)(A)(xi) of the Bankruptcy Code.

 

 Exhibit J- 1  

 

 

(c) Buyer shall have all rights and remedies hereunder as are set forth in the
Repurchase Agreement.

 

(d) In addition, Servicer hereby acknowledges that Buyer has purchased the
Purchased Mortgage Loans and REO Subsidiary has acquired the REO Properties on a
servicing released basis and Buyer shall have the same rights and remedies with
respect to the Servicing Rights as it has with respect to the Repurchase Assets
under the Repurchase Agreement.

 

(e) Servicer further acknowledges that notwithstanding any prior owner of the
Repurchase Assets, or any other agreement between such prior owner and the
Servicer, Buyer’s rights are superior to any other claim by any party and
Servicer shall follow the directions of Buyer and no other party.

 

(f) Servicer agrees to execute, deliver and/or file such documents and perform
such acts as may be reasonably necessary to fully perfect Buyer’s security
interest created hereby. Furthermore, the Servicer hereby authorizes Buyer to
file financing statements relating to the security interest set forth herein, as
Buyer, at its option, may deem appropriate.

 

(g) Servicer agrees to the extent a deed for an REO Property is registered in
the name of (a) a Seller, (b) the Servicer or (c) any prior owner or prior
servicer for whom the Servicer is contractually permitted to act, in each case,
it shall or shall cause to deliver for recordation (with a copy to Custodian) a
deed in recordable form into the name of REO Subsidiary within the period of
time generally necessary in the applicable jurisdiction for the Servicer, acting
in accordance with the Servicing Guidelines.

 

(h) Servicer waives any and all notice of the creation, renewal, extension or
accrual of any of the Obligations under the Repurchase Agreement or security
interest hereunder and notice or proof of reliance by Buyer upon this Servicer
Notice and Pledge. Servicer hereby waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon Sellers or
Servicer with respect the Obligations.

 

Section 2. Act as Servicer. (a) Pursuant to the Servicing Agreement and this
Servicer Notice, Servicer will remit (i) all collections on the Mortgage Loans
to the following account:

 

PennyMac Corp. for the benefit of Credit Suisse First

Boston Mortgage Capital LLC

Depository: City National Bank

ABA#: 122016066

Account Name: PMC Sellers Account

Account #: 555-062508

 

PennyMac Corp. for the benefit of Credit Suisse First

Boston Mortgage Capital LLC

Depository: City National Securities, Inc.

ABA#: 122016066

Account Name: PMC Sellers Account

Account #: TPS000299

 

 Exhibit J- 2  

 

 

PennyMac Holdings, LLC for the benefit of Credit Suisse First Boston Mortgage
Capital LLC

Depository: City National Bank

ABA#: 122016066

Account Name: PennyMac Holdings Sellers Account

Account #: 555-062516

 

PennyMac Holdings, LLC for the benefit of Credit Suisse First Boston Mortgage
Capital LLC

Depository: City National Securities, Inc.

ABA#: 122016066

Account Name: PennyMac Holdings Sellers Account

Account #: TPS000280

 

(ii) all collections on the assets owned by REO Subsidiary to the following
account:

 

PMC REO Financing Trust for the benefit of Credit Suisse

First Boston Mortgage Capital LLC

Depository: City National Bank

ABA#: 122016066

Account Name: REO Account

Account #:555-063024

 

PMC REO Financing Trust for the benefit of Credit Suisse

First Boston Mortgage Capital LLC

Depository: City National Securities, Inc.

ABA#: 122016066

Account Name: REO Account

Account #: TPS000264

 

 

Servicer’s obligation hereunder to remit such collections to such account may
not be altered, modified, revoked, amended or otherwise changed without the
prior written consent of Buyer or as otherwise provided in this notice.

 

Following receipt of notice of Event of Default (“Notice of Event of Default”)
from Buyer, Servicer shall follow the instructions of Buyer with respect to the
Purchased Mortgage Loans and REO Properties, and shall deliver to Buyer any
information with respect to the Purchased Mortgage Loans and REO Properties
reasonably requested by Buyer.

 

(b) To the extent that Servicer obtains possession of any documents related to
the Purchased Mortgage Loans or REO Properties, it will hold such documents in
trust for the benefit of the Buyer.

 

(c) Notwithstanding any contrary information which may be delivered to the
Servicer by Sellers, the Servicer may conclusively rely on any information or
Notice of Event of Default delivered by Buyer, and Seller Parties 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 or Notice of Event of Default.

 

 

 Exhibit J- 3  

 

 

 

Section 3. 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 4. Entire Agreement; Severability. This Agreement shall supersede any
existing agreements between the parties containing general terms and conditions
for repurchase transactions. 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 5. Governing Law; Jurisdiction; Waiver of Trial by Jury. (a) THIS
SERVICER NOTICE AND PLEDGE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED
BY, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS PRINCIPLES THEREOF.

 

(b) EACH SELLER PARTY AND SERVICER HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ARISING OUT OF OR RELATING
TO THE PROGRAM AGREEMENTS IN ANY ACTION OR PROCEEDING. SERVICER HEREBY SUBMITS
TO, AND WAIVES ANY OBJECTION THEY MAY HAVE TO, EXCLUSIVE PERSONAL JURISDICTION
AND VENUE IN THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT TO ANY DISPUTES
ARISING OUT OF OR RELATING TO THE PROGRAM AGREEMENTS.

 

(c) EACH SELLER PARTY AND SERVICER HEREBY WAIVES TRIAL BY JURY.

 

 

 

[remainder of page intentionally left blank]

 

 

 

 Exhibit J- 4  

 

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.

 

 

Credit Suisse First Boston Mortgage Capital LLC, as Buyer

 

By:____________________________________
       Name:

       Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Exhibit J- 5  

 

PennyMac Loan Services, LLC, as Servicer

 

 

By:____________________________________
       Name:

       Title:

 

 

PennyMac Corp., as a Seller

 

By:____________________________________
       Name:

       Title:

 

PennyMac Holdings, LLC, as a Seller

 

By:____________________________________
       Name:

      Title:

 

 

PennyMac Operating Partnership, L.P., as a Seller

 

By: PennyMac GP OP, Inc., its General Partner

 

By:____________________________________
       Name:

       Title:

 

PMC REO Financing Trust, as REO Subsidiary

 

By: PennyMac Corp., as Administrator

 

By:____________________________________
       Name:
       Title:

 

 

 

 Exhibit J- 6  

 

EXHIBIT K

 

 

 

LOAN ACTIVITY REPORT

 

 

 

loanid

servicernm

srvloanid

loanidprevious

lien

armorfix

loantype

fname

lname

staddress

city

state

zip

proptype

units

ownocc

doctype

originator

origdate

fpdate

mtdate

origterm

amortterm

origbal

origrate

origpandi

schedrterm

ramortterm

curbal

rate

pandi

piti

firstmtgbal

secmtgbal

secmtgcd

modified

modtype

moddate

lossmittype

bkflag

bkfiledate

bkchapter

fcflag

fcstart

fclstatus

fcjudgedt

fcnotsdate

fcsaledate

fcjudicial

balloon

paid2date

escflag

escadvbal

escrowbal

corpadvbal

suspense

fpadate

fradate

npadate

nradate

indexcd

margin

pfreq

rfreq

perfloor

percap

initfloor

initcap

lifefloor

lifecap

teaser

pmipct

mitype

pmico

appval

ltv

cltv

appform

curfico

curficodt

curficometh

frontendratio

backendratio

delqstring

paystatmba

nextpmtduedt

cash1

reoflag

dpbal

uncollectedextendedbalanceflag

pppflag

pppterm

pppdesc

inttype

negamflag

negampct

pmtadjcap

pmtrecast

recastdt

dualam

ioflag

ioterm

nxtduedate

pifflag

datadate

BPO-QSV

BPO-FMV

BPO-Date

HAMP Rewards

SERVICE_FEE

DIL Charge

Loan Sales Charge

Liquidation Charge

Loan Boarding Charge

Modification Charge

ModificationProgram

FirstNewPaymentDate

NewMaturityDate

NewAmortizationTerm

NewInterestRate

NewUPB

NewPILoanAmount

ForbearedAmount

NewPI

CapitalizationAmount

 

 Exhibit K- 1  

 

 

 

EXHIBIT L

 

FORM OF TRADE ASSIGNMENT

 

 

[NAME] (“Takeout Investor”)
[Address]

[Address]

Attention: [__]

[DATE]

Ladies and Gentlemen:

 

Attached hereto is a correct and complete copy of your confirmation of
commitment (the “Commitment”) for the following security (the “Security”):

 

Trade Date:   [__] Settlement Date:   [__] Security Description: [__] Coupon:
[__] Price: [__] Par Amount: [__] Pool Number: [__]

 

The undersigned customer (the “Customer”) has assigned the Security to Credit
Suisse First Boston Mortgage Capital LLC (“Credit Suisse”) as security for
certain obligations under the Amended and Restated Master Repurchase Agreement
dated as of March 31, 2016 as amended (the “Agreement”), by and among Customer
or its affiliate, PennyMac Corp., PennyMac Holdings, LLC (“PennyMac Holdings”)
or PennyMac Operating Partnership, L.P., (“POP”), PMC REO Financing Trust and
Credit Suisse.

 

This is to confirm that (i) Takeout Investor’s obligation to purchase the
Security on the above terms in accordance with the Commitment is in full force
and effect, (ii) Takeout Investor will accept delivery of the Security directly
from Credit Suisse, (iii) Takeout Investor will pay Credit Suisse for the
Security, (iv) Customer and PennyMac Holdings and POP unconditionally guarantees
payment to Credit Suisse of all sums due under the Commitment, (v) Credit Suisse
shall deliver the Security to Takeout Investor on the above terms and in
accordance with the Commitment. Payment will be made “delivery versus payment”
to Takeout Investor in immediately available funds. Capitalized terms used, but
not otherwise defined herein, shall have the respective meanings assigned to
such terms in the Agreement.

 

Very truly yours,

 

PennyMac Corp.

 

By:__________
Name:__________
Title: __________

 

Agreed to, confirmed and accepted:

 

[TAKEOUT INVESTOR]

 

By:__________
Name:__________
Title:__________

 

 

PennyMac Holdings, LLC

 

By:__________
Name:__________
Title: __________

 

 

 

 

 

PennyMac Operating Partnership, L.P.

 

By:__________
Name:__________
Title:__________

 

 

 

 Exhibit L- 1  

 

EXHIBIT M

 

STATE SPECIFIC FORECLOSURE AGING TIMELINE

 

  State Specific Foreclosure Aging Timeline State   NY 689 VT 677 ME 649 NJ 859
IL 483 PA 465 FL 653 NM 369 MA 370 CA 313 AK 192 MD 318 CT 447 WI 388 IN 451 NV
270 SC 354 KY 305 LA 423 UT 209 OK 329 CO 226 NC 194 NE 291 IA 384 AZ 212 SD 438
OH 432 DE 431 AL 135 WY 147 MT 263 VA 136 KS 260 WA 277 MO 153 ID 307 TN 192 HI
387 OR 290 TX 169 AR 186 MI 224 GA 182 WV 221 RI 281 NH 259 MN 259 MS 304 DC 360
ND 419

 

 Exhibit M- 1  

 

EXHIBIT N

STATE SPECIFIC REO DISPOSITION TIMELINE

 

  State Specific REO Disposition Timeline State   NY 403 VT 285 ME 306 NJ 409 IL
379 PA 325 FL 263 NM 353 MA 407 CA 325 AK 263 MD 421 CT 342 WI 306 IN 254 NV 282
SC 288 KY 305 LA 288 UT 185 OK 188 CO 217 NC 311 NE 223 IA 236 AZ 218 SD 400 OH
265 DE 275 AL 301 WY 470 MT 339 VA 289 KS 323 WA 240 MO 209 ID 229 TN 258 HI 301
OR 253 TX 236 AR 230 MI 380 GA 320 WV 319 RI 378 NH 371 MN 379 MS 315 DC 762 ND
382

 

 Exhibit N- 1  

 

 

EXHIBIT O

STATE SPECIFIC REO RECORDING TIMELINE

 

 

  State Specific REO Recording Timeline - REO Deed Out For Recording   State
Specific REO Recording Timeline - REO Deed Back From Recording State       NY 92
  162 VT 82   142 ME 117   212 NJ 77   132 IL 112   202 PA 77   132 FL 57   92
NM 57   92 MA 60   90 CA 42   62 AK 42   62 MD 237   452 CT 87   152 WI 62   102
IN 57   92 NV 42   62 SC 72   122 KY 132   242 LA 67   112 UT 37   52 OK 62  
102 CO 67   112 NC 60   90 NE 127   232 IA 47   72 AZ 37   52 SD 222   422 OH
142   262 DE 107   192 AL 67   112 WY 177   332 MT 37   52 VA 82   142 KS 147  
272 WA 42   62 MO 37   52 ID 37   52 TN 37   52 HI 117   212 OR 37   52 TX 37  
52 AR 60   90 MI 37   52 GA 60   90 WV 52   82 RI 67   112 NH 82   142 MN 37  
52 MS 37   52 DC 122   222 ND 132   242

 

 

 

 Exhibit O- 1