Exhibit 10.4

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June 30, 2010

 

Home Loan Center, Inc.

163 Technology Drive

Irvine, CA 92618

Attn: Rian Furey, Senior Vice President

Email: Rian.Furey@lendingtree.com

 

Re:           Transactions Terms Letter for Master Repurchase Agreement

 

Ladies and Gentlemen:

 

This Transactions Terms Letter is made and entered into, as of the date set
forth above, by and between Bank of America, N.A. (“Buyer”) and Home Loan
Center, Inc. (“Seller”). This Transactions Terms Letter supplements the Master
Repurchase Agreement (the “Agreement”) by and between Buyer and Seller.  In the
event there exists any inconsistency between the Agreement and this Transactions
Terms Letter, the latter shall be controlling notwithstanding anything contained
in the Agreement to the contrary.  All capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Agreement. This Transactions Terms Letter supercedes all previous Transactions
Terms Letters and amendments as of the Effective Date.

 

Effective Date:

June 30, 2010

 

 

Expiration Date:

Expiring on June 29, 2011

 

 

Aggregate Transaction Limit:

Fifty Million Dollars ($50,000,000)

 

 

Financial Covenants:

Seller shall maintain the following financial covenants:

 

 

 

(a)

Minimum Tangible Net Worth (calculated per HUD guidelines): $25,000,000.

 

(b)

Minimum Liquidity: Seller to maintain unrestricted cash or unrestricted Cash
Equivalents in a minimum amount equal to 25% of Seller’s Tangible Net Worth,
inclusive of the Over/Under Account Balance and available draws from Warehouse
and Repurchase facilities. By way of example but not limitation, cash in escrow
and/or impound accounts shall not be included in this calculation.

 

(c)

Maximum ratio of Total Liabilities and Warehouse Credit (Warehouse Credit is
inclusive of outstandings on warehouse lines, repurchase facilities or other off
balance sheet financing) to Tangible Net Worth: 8:1. (excluding the Early
Purchase Program with Buyer)

 

(d)

Net Income: Seller shall show positive pre-tax net income, on a rolling two
quarter basis.

 

(e)

Seller shall not add additional mortgage financing facilities (including
warehouse, repurchase, purchase or off-balance sheet facilities) without prior
written notification to Buyer.

 

(f)

Payment of Dividends: Seller may, without the prior written consent of Buyer,
(a) declare or pay dividends upon its shares of stock now or hereafter
outstanding, including dividends payable in the capital stock of Seller, or make
any distribution of assets to its shareholders, whether in cash,

 

Acknowledged:             

Home Loan Center, Inc.: RF

Bank of America, N.A.: BK

 

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property or secutities, or (b) acquire, purchase, redeem or retire shares of its
capital stock now or hereafter outstanding for value; provided that a Potential
Default or an Event of Default is not existing and will not occur as a result
thereof, or such distribution payments will not otherwise cause Seller to be in
breach of its obligations hereunder.

 

 

Other Covenants:

Seller shall maintain the following other covenants:

 

 

 

(a)

To help ensure that Seller has adequate approved investors for mortgage loans
originated by Seller, Seller shall become and remain an approved client of Bank
of America’s Correspondent Lending group (“Correspondent Lending”).

 

(b)

If the financial or other material covenants of Seller under any current, future
or modified third party warehouse, repurchase, financing or similar agreement
are, or become, more favorable to Buyer than the equivalent covenants under the
Agreement, or if one or more personal and/or corporate guaranties are currently
required or later become required in connection with any such third party
agreements, Seller shall promptly notify Buyer and Buyer shall have the right,
in its sole discretion, to modify the Agreement to include such covenants and/or
to require such personal and/or corporate guaranties of the Agreement. Further,
at the request of Buyer, Seller shall promptly provide Buyer with its financial
covenants and any other covenants that Buyer deems material under any such
current, future or modified third party agreement and/or copies of any personal
and/or corporate guaranties required in connection with such third party
agreement.

 

(c)

Delinquency Covenant. If, in any two consecutive fiscal quarters of Seller, the
delinquency rate for first-lien residential mortgage loans originated by Seller
and sold to Correspondent Lending is greater than one hundred and fifty percent
(150%) of the average delinquency rate for first-lien residential mortgages sold
by all clients of Correspondent Lending, Buyer may immediately terminate the
Agreement.

 

(d)

Loss Mitigation Covenant. If the sum total of all Total Adjusted Estimated Loss
(the “Billable Amount”), (including for example, outstanding repurchase
obligations), as disclosed in the Seller Repurchase Obligations Report, owed by
Seller to Correspondent Lending at the end of a calendar quarter is equal to or
greater than thirty five percent (35%) of Seller’s Tangible Net Worth, then
Buyer may immediately suspend Transactions under the Agreement and Correspondent
Lending may immediately cease purchasing mortgage loans from Seller.

 

(e)

Seller shall not have any undisputed accounts receivables owed to Correspondent
Lending that are aged over sixty (60) days exceeding in the aggregate $5,000.

 

Acknowledged:             

Home Loan Center, Inc.: RF

Bank of America, N.A.: BK

 

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Facility Fee:

Due annually, 25 basis points, payable in quarterly installments, with the first
installment due prior to the Effective Date. Upon early termination of the
Agreement by Seller, the entire Facility Fee will be due and owing. The fee is
payable based on Aggregate Transactions Limit only and will be prorated in the
event of increases.

 

 

Unused Facility Fees:

For any given calendar quarter, Seller’s average outstanding Transactions must
be greater than or equal to 50% of the Aggregate Transaction Limit, otherwise
Seller shall pay Buyer 25 basis points (0.25%) times the unused portion of the
Aggregate Transaction Limit, annualized. For the purposes of this calculation,
outstanding Transactions shall include EPP Loans under Seller’s EPP Addendum
with Buyer.

 

 

Transaction Request Deadline:

2:00 p.m. (Pacific time).

 

 

Deadline for Daily Receipt
Of Purchase Advices by Buyer:

2:00 p.m. (Pacific time).

 

 

Minimum Over/Under
Account Balance:

$1,125,000 (minimum of 150 basis points of the combined Repurchase and EPP
facility limits).

 

 

 

Seller to be entitled to interest on a monthly basis thereon at an annual rate
of LIBOR plus the Type A Margin over 30 day LIBOR spread on the positive monthly
average Over/Under Balance for the portion that is equal to or less than 20% of
the average monthly outstanding Transactions for such month and; Seller to be
entitled to interest on a monthly basis at an annual rate of LIBOR minus twenty
five (25) basis points (0.25%) on the remaining portion of the positive monthly
average Over/Under Balance that is greater than 20% but less than or equal to
75% of the average monthly outstanding Transactions for such month.  For the
purpose of this calculation, average outstanding Transactions shall include EPP
Loans under Seller’s EPP Addendum with Buyer.  “LIBOR” shall mean the greater of
(i) the daily rate per annum for one-month U.S. dollar denominated deposits as
offered to prime banks in the London interbank market or (ii) 2%, as applicable.

 

 

Eligible Loans:

Prior to being eligible for a Transaction, each mortgage loan shall comply with
Buyer’s and Correspondent Lending’s then-current underwriting requirements and
eligibility guidelines and no mortgage loan shall be more than 30 days past its
original funding date or contractually delinquent 30 days or more. Underwriting
requirements and eligibility guidelines are subject to change at Buyer’s sole
discretion.

 

 

Securitization:

Unless otherwise agreed to by Buyer, mortgage loans which Seller intends to
securitize shall not be eligible for Transactions.

 

 

Loans to Officers, Directors,
Owners and Guarantors:

Transactions for a loan to be made to an officer, director, senior manager or
owner of Seller or any guarantor (if applicable) shall

 

Acknowledged:             

Home Loan Center, Inc.: RF

Bank of America, N.A.: BK

 

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be subject to the prior approval of Buyer and such Transaction requirements as
determined in Buyer’s sole discretion.

 

 

Reporting requirements:

Financial Reports & Officer’s Certificate: Seller shall deliver to Buyer, within
thirty (30) days after the end of each month, financial statements of Seller,
including statements of income and changes in shareholders’ equity (or its
equivalent) for such month and the related balance sheet as at the end of such
month, all in reasonable detail acceptable to Buyer and certified by the chief
financial officer of Seller, subject, however, to year-end audit adjustments.
Together with such financial statements, Seller shall deliver an officer’s
certificate substantially in a form to be provided by Buyer, which shall include
funding and production volume reports for the previous month.

 

 

 

Annual Reports: Seller shall deliver to Buyer, within ninety (90) days after the
end of each fiscal year of Seller, audited financial statements of Seller,
including statements of income and changes in shareholders’ equity for such
fiscal year and the related balance sheet as at the end of such fiscal year, all
in reasonable detail acceptable to Buyer and certified by the chief financial
officer of Seller stating, at a minimum, that the financial statements fairly
present the financial condition and results of operations of Seller as of the
end of, and for, such year.

 

 

 

Government Insuring Reports: Seller shall provide Buyer within thirty (30) days
after the end of each quarter, or as requested by Buyer, the following
government insuring reports (including 15 month history):

 

(a)

Loans Originated - Current Defaults and Claims Reported — United States (from
FHA Connection):

 

 

·

Output option: all loans

 

 

·

Performance period: current period

 

 

·

All insured single family loans with a beginning amortization within the last
two years

 

(b)

HUD Pipeline/Uninsured Query:

 

 

·

Date range: use default

 

 

·

Sort by: originating ID in ascending order

 

(c)

Indemnification Query:

 

 

·

Date range: last five years

 

 

·

Sort by: case # in descending order

 

(d)

Late Endorsement Query:

 

 

·

Loan status: Active, claimed

 

 

·

Date range: last two year period

 

 

·

Sort by: # days closing to Endr pkg Rcvd in descending order

 

 

 

 

Hedging Report: Seller shall deliver to Buyer each Monday a loan and rate lock
position report and hedge report containing product level pricing and interest
rate sensitivity analysis (shocks) or as requested by Buyer (data elements to be
agreed upon).

 

 

 

If requested by Buyer, Seller shall provide to Buyer within five (5) days of
such request, in a form reasonably acceptable to Buyer, a detailed aging report
of all outstanding loans on warehouse/ purchase/ repurchase facilities, and
detail of all uninsured government loans.

 

Acknowledged:             

Home Loan Center, Inc.: RF

Bank of America, N.A.: BK

 

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Reimbursement of Expenses:

Seller shall reimburse Buyer for certain costs and expenses including, without
limitation, the following:

 

 

 

 

(a)

Amendments:  Seller shall pay Buyer $2,500 for any future amendments to
Transactions Documents or covenant violation notices.  The amendment fee shall
be waived for any future amendments or modifications requested by Seller
regarding increases to the Aggregate Transaction Limit.

 

 

 

 

Fees:

Wire Transfer Fee:

 

$10.00 per Transaction

 

File Fee:

 

$30.00 per Transaction

 

Shipping Fee:

 

$15.00 per Transaction for all investors other than Bank of America, N.A.; and

 

 

 

$0.00 for all Bank of America loans

 

Non compliant Fee:

 

$25.00

 

Wet Deficiency Fee:

 

$10.00 per day

 

Other Fees:

 

As set forth within Schedule 1 hereto

 

 

 

 

Buyer’s Guidelines, Policies and Procedures: 

The terms and conditions of this Transactions Terms Letter and the Agreement
shall be subject to Buyer’s guidelines, policies and procedures, as may be
changed from time to time. Buyer may communicate changes to its guidelines,
policies and procedures to Seller via Buyer’s website, email or in writing. 

 

 

Guarantors:

Lending Tree, LLC, Tree.com, Inc., and LendingTree Holdings, Inc

 

Please acknowledge your agreement to the terms and conditions of this
Transactions Terms Letter by signing in the appropriate space below and
returning a copy of the same to the undersigned. Facsimile signatures shall be
deemed valid and binding to the same extent as the original.  Buyer shall have
no obligation to honor the terms and conditions of this Transactions Terms
Letter if Seller fails to fully execute and return this document to Buyer within
thirty (30) days after the date of issuance.

 

Sincerely,

 

Agreed to and Accepted by:

 

 

 

Bank of America, N.A.

 

Home Loan Center, Inc.

 

 

 

 

 

 

By:

/s/ Blair Kenny

 

By:

/s/ Rian Furey

 

 

 

 

 

Name:

Blair Kenny

 

Name:

Rian Furey

 

 

 

 

 

Title:

Senior Vice President

 

Title:

Senior Vice President

 

 

 

 

 

Dated:

July 15, 2010

 

Dated:

July 15, 2010

 

Acknowledged:             

Home Loan Center, Inc.: RF

Bank of America, N.A.: BK

 

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SCHEDULE 1

(Eligible Mortgage Loans)

 

 

 

Type
Sublimit

 

Margin over 30
day LIBOR (B)

 

Type Purchase Price
Percentage (A)

 

Maximum
Dwell Time

 

Transaction
Requirements

 

 

 

 

 

 

 

 

 

 

 

Type A:

Conventional Conforming Mortgage Loans (Agency eligible 1st mortgages with
Full/Alt doc types only)

 

100%

 

2.25

 

97.00

 

30 days

 

None

 

 

 

 

 

 

 

 

 

 

 

Type B:

Government Mortgage Loans
(1st mortgages only)

 

100%

 

2.25

 

97.00

 

30 days

 

None

 

 

 

 

 

 

 

 

 

 

 

Type B-1:

Bond Loans
(1st mortgages only)

 

20%

 

2.25

 

97.00

 

45 days

 

None

 

 

 

 

 

 

 

 

 

 

 

Type C:

Jumbo Mortgage Loans
(1st mortgages only, maximum loan amounts to $1,000,000)

 

10%

 

2.25

 

95.00

 

30 days

 

Rate Lock and CLUES or Prior Approval

 

 

 

 

 

 

 

 

 

 

 

Noncompliant Mortgage Loans

 

7%

 

2.00 over the initial margin

 

See schedule 2

 

Additional 45 days

 

 

 

 

 

 

 

 

 

 

 

 

 

Wet Mortgage Loans

 

40%,
increasing to 60% for the first and last five (5) business days of each month

 

Noncompliant or default spreads, if applicable, over the initial Type Margin
over 30 day LIBOR

 

The initial Type Purchase Price Percentage. If Transaction exceeds the Wet
Mortgage Loans Maximum Dwell Time, see Schedule 3

 

5 business days

 

 

 

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(A)

The Purchase Price shall be calculated and equal to multiplying the unpaid
principal balance times the lesser of (i) the Type Purchase Price Percentage
times the lesser of par, takeout price or current market price or; (ii) 98% of
the takeout price or current market price or fair market value. Seller will have
the ability to reduce the Type Purchase Price Percentage to no less than 10%
once per month, not to be applied retroactively

 

 

(B)

For the purpose of calculating the Margin over 30 day LIBOR, “LIBOR” shall mean
the greater of (i) the daily rate per annum for one-month U.S. dollar
denominated deposits as offered to prime banks in the London interbank market or
(ii) 2%, as applicable.

 

·                  All Transactions are to the closing table.

 

·                  Delegated underwriting status does not satisfy the
Transaction Requirements contained herein.

 

·                  Transaction Requirement Definitions and Doc Type Definitions
are set forth on Buyer’s website.

 

·                  All loan amounts, FICO scores, LTV/CLTV, and document types
shall meet Correspondent Lending guidelines.

 

SCHEDULE 2

Noncompliant Mortgage Loans (Applicable to dry Transactions only)

 

Days over Maximum Dwell
Time

 

Reduction in Value of
Purchased Asset

1 to 15 Days

 

10

16 to 30 Days

 

20

31 to 45 Days

 

30

Investor Rejects

 

25

 

SCHEDULE 3

Wet Noncompliant Mortgage Loans (Applicable to wet Transactions only)

 

Days over Maximum Dwell Time
(for Wet Mortgage Loans)

 

Reduction in Value of
Purchased Asset

1 to 5 Business Days

 

10

 

Acknowledged:             

Home Loan Center, Inc.: RF

Bank of America, N.A.: BK

 

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