Exhibit 10.8

 

EXECUTION VERSION

 

 

SUBORDINATION, ACKNOWLEDGMENT AND PLEDGE AGREEMENT

 

between

 

PNMAC GMSR ISSUER TRUST, as Buyer (“Buyer”)

 

and

 

PENNYMAC HOLDINGS, LLC, as Pledgor (“Pledgor”)

 

Dated as of December 19, 2016

 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

 

 

Page

ARTICLE I

DEFINITIONS

2

 

 

Section 1.01

Certain Defined Terms

2

Section 1.02

Other Defined Terms

5

 

 

ARTICLE II

Collateral Security

6

 

 

Section 2.01

Collateral; Security Interest

6

Section 2.02

Further Documentation

7

Section 2.03

Participation Certificate

7

Section 2.04

Limited Pledge of Ginnie Mae Servicing

7

Section 2.05

Changes in Locations, Name, etc.

8

Section 2.06

Buyer’s Appointment as Attorney-in-Fact

8

Section 2.07

Proceeds

10

Section 2.08

Remedies

11

Section 2.09

Limitation on Duties Regarding Preservation of Collateral

13

Section 2.10

Powers Coupled with an Interest

13

Section 2.11

Release of Security Interest

13

Section 2.12

Reinstatement

13

Section 2.13

Use of Collateral

13

Section 2.14

Intent

13

 

 

ARTICLE III

RECOURSE; SUBORDINATION

14

 

 

Section 3.01

Recourse

14

Section 3.02

Subordination in Connection with Financing

14

Section 3.03

Rights under PMH Repurchase Agreement

15

 

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

15

 

 

Section 4.01

Pledgor Existence

15

Section 4.02

Licenses

16

Section 4.03

Power

16

Section 4.04

Due Authorization

16

Section 4.05

Financial Statements

16

Section 4.06

Solvency

16

Section 4.07

No Conflicts

17

Section 4.08

True and Complete Disclosure

17

Section 4.09

Approvals

17

Section 4.10

No Trigger Event

17

Section 4.11

[Reserved]

17

Section 4.12

Ownership

17

Section 4.13

[Reserved]

18

Section 4.14

Investment Company

18

Section 4.15

Chief Executive Office; Jurisdiction of Organization

18

 

i

--------------------------------------------------------------------------------

 

Section 4.16

Location of Books and Records

18

Section 4.17

Adjusted Tangible Net Worth

18

Section 4.18

ERISA

18

Section 4.19

[Reserved]

18

Section 4.20

No Reliance

19

Section 4.21

Plan Assets

19

Section 4.22

No Prohibited Persons

19

 

 

ARTICLE V

COVENANTS

19

 

 

Section 5.01

Insurance

19

Section 5.02

No Adverse Claims

19

Section 5.03

Assignment

19

Section 5.04

Security Interest

20

Section 5.05

Records

20

Section 5.06

Books

20

Section 5.07

Approvals

20

Section 5.08

Applicable Law

20

Section 5.09

Existence

20

Section 5.10

Chief Executive Office; Jurisdiction of Organization

20

Section 5.11

Taxes

21

Section 5.12

True and Correct Information

21

Section 5.13

Purchased MSR Excess Spread Not To Be Evidenced by Promissory Notes

21

Section 5.14

No Pledge; Other Liens; Creditors

21

Section 5.15

Plan Assets

21

Section 5.16

Sharing of Information

21

Section 5.17

No Modification of the Master Spread Acquisition Agreement; Intended Third Party
Beneficiary

21

 

 

ARTICLE VI

TRIGGER EVENTS / RIGHTS AND REMEDIES OF BUYER UPON TRIGGER EVENT OR EVENT OF
DEFAULT

22

 

 

Section 6.01

Trigger Events

22

Section 6.02

No Waiver

23

Section 6.03

Liquidation of Collateral

23

 

 

ARTICLE VII

ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS; SEPARATE ACTIONS BY BUYER

23

 

 

Section 7.01

Entire Agreement

23

Section 7.02

Waivers, Separate Actions by Buyer

23

Section 7.03

Amendment

24

 

 

ARTICLE VIII

SUCCESSORS AND ASSIGNS

24

 

 

Section 8.01

Successors and Assigns

24

 

ii

--------------------------------------------------------------------------------

 

ARTICLE IX

MISCELLANEOUS

24

 

 

Section 9.01

Survival

24

Section 9.02

Indemnification

24

Section 9.03

Nonliability of Buyer

24

Section 9.04

Governing Law; Jurisdiction, Waiver of Jury Trial: Waiver of Damages

25

Section 9.05

Notices

26

Section 9.06

Severability

27

Section 9.07

Section Headings

27

Section 9.08

Counterparts

27

Section 9.09

Hypothecation or Pledge of Collateral

27

Section 9.10

Non-Confidentiality of Tax Treatment

27

Section 9.11

Set-off

28

Section 9.12

Actions and Discretion of Buyer

29

Section 9.13

No Recourse

29

Section 9.14

Limitation of Liability of Owner Trustee

29

Section 9.15

Third-Party Beneficiaries

30

 

SCHEDULES

 

Schedule 1 — Responsible Officers of Pledgor

 

EXHIBITS

 

Exhibit A — Form of Power of Attorney (Buyer)

 

iii

--------------------------------------------------------------------------------

 

SUBORDINATION, ACKNOWLEDGMENT AND PLEDGE AGREEMENT

 

This Subordination, Acknowledgment and Pledge Agreement (as the same may be
amended, modified, restated or supplemented from time to time, this “Agreement”)
is made as of December 19, 2016, between PNMAC GMSR ISSUER TRUST (the “Buyer”),
and PENNYMAC HOLDINGS, LLC, as Pledgor (the “Pledgor”).

 

W I T N E S S E T H:

 

WHEREAS, PennyMac Loan Services, LLC (“PLS”) is the servicer under the Servicing
Contracts (as defined in the PC Repurchase Agreement (as defined below)) related
to certain MSRs (as defined in the PC Repurchase Agreement) and has sold and
desires, subject to the consent of the Buyer, to sell from time to time to
Pledgor all of PLS’s right, title and interest in and to the Purchased MSR
Excess Spread, as evidenced by a participation certificate (the “Purchased MSR
Excess Spread PC”) created pursuant to the Master Spread Acquisition Agreement
(as defined below);

 

WHEREAS, pursuant to that certain master repurchase agreement, dated as of
December 19, 2016, among the Pledgor, as seller, PLS, as buyer, and PennyMac
Mortgage Investment Trust, as guarantor (the “PMT Guarantor”) (as amended,
restated, supplemented or otherwise modified from time to time, the “PMH
Repurchase Agreement”), the Pledgor sold the Purchased MSR Excess Spread PC to
PLS, subject to its right to repurchase such Purchased MSR Excess Spread PC;

 

WHEREAS, PLS has entered into that certain master repurchase agreement, dated as
of December 19, 2016, among PLS, as seller, Private National Mortgage Acceptance
Company, LLC, as guarantor (the “Guarantor”), and the Buyer, as buyer (as
amended, restated, supplemented or otherwise modified from time to time, the “PC
Repurchase Agreement”);

 

WHEREAS, pursuant to the PC Repurchase Agreement, PLS has sold to the Buyer all
of its right, title and interest in, to and under Purchased MSR Excess Spread
PC;

 

WHEREAS, in part, to finance its purchase of the Purchased MSR Excess Spread PC
pursuant to the PMH Repurchase Agreement, PLS has entered into that certain
Indenture, dated as of December 19, 2016, among Buyer, as issuer, Citibank, N.A.
(“Citibank”), as indenture trustee, calculation agent, paying agent and
securities intermediary (in all such capacities, the “Indenture Trustee”), PLS,
as servicer and as administrator, Credit Suisse First Boston Mortgage Capital
LLC, as administrative agent (the “Administrative Agent”), and Pentalpha
Surveillance LLC, as credit manager (the “Credit Manager”) (as amended,
restated, supplemented or otherwise modified from time to time, the
“Indenture”);

 

WHEREAS, pursuant to the terms of the Indenture, subject to the interests of
Ginnie Mae (as defined below) as set forth in the Acknowledgment Agreement (as
defined in the PC Repurchase Agreement), the Buyer has granted to the Indenture
Trustee for the benefit and security of the Noteholders (as defined in the
Indenture) and the Indenture Trustee, in its individual capacity (each, a
“Secured Party” and collectively, the “Secured Parties”), a security interest in
all its right, title and interest in certain MSRs (as defined in the PC
Repurchase Agreement), including the Purchased MSR Excess Spread, evidenced by
the Purchased MSR Excess Spread PC;

 

1

--------------------------------------------------------------------------------

 

WHEREAS, the sale of any Purchased MSR Excess Spread is subject to and
subordinate to the Issuer’s rights under the PC Repurchase Agreement and the
Issuer’s security interest in the Purchased MSR Excess Spread and the Purchased
MSR Excess Spread PC; and

 

WHEREAS, Buyer has agreed to consent to the sale of the Purchased MSR Excess
Spread by PLS to the Pledgor and the creation of the Purchased MSR Excess Spread
PC in consideration of such sale being made subject and subordinate to the
Buyer’s Lien on the MSRs including the Purchased MSR Excess Spread and its
ownership of the Purchased MSR Excess Spread PC.

 

NOW, THEREFORE, in consideration of the mutual agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Buyer and Pledgor hereby agree as follows.

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01                             Certain Defined Terms.  Capitalized
terms used herein shall have the indicated meanings set forth in this
Section 1.01.  Any capitalized terms used and not defined herein shall have the
meaning set forth in the PC Repurchase Agreement.

 

“Act” has the meaning set forth in Section 9.10(b) hereof.

 

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly Controlling or Controlled by or under direct or indirect common
Control with such specified Person; provided, however, that in respect of PLS or
PNMAC, the term “Affiliate” shall include only PNMAC and its wholly owned
subsidiaries, and in respect of PMH or PMIT, the term “Affiliate” shall include
only PMIT and its wholly owned subsidiaries

 

“Agreement” means this Subordination, Acknowledgment and Pledge Agreement, as it
may be amended, restated, supplemented or otherwise modified from time to time.

 

“Asset” means the Purchased MSR Excess Spread PC and any Purchased MSR Excess
Spread related thereto.

 

“Bank” has the meaning set forth in Section 9.14 hereof.

 

“Buyer” means PNMAC GMSR ISSUER TRUST, together with its successors, and any
assignee of and Participant or Transferee under the PC Repurchase Agreement.

 

“Collateral” has the meaning assigned to such term in Section 2.01 hereof.

 

“Confidential Information” has the meaning set forth in Section 9.10(b) hereof.

 

2

--------------------------------------------------------------------------------

 

“EO13224” has the meaning set forth in Section 4.22 hereof.

 

“ERISA Event of Termination” means with respect to Pledgor (i) 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 thirty (30) days of the occurrence of such event,
or (ii) the withdrawal of Pledgor 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 (iii) the failure by Pledgor 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 (iv) the distribution under
Section 4041 of ERISA of a notice of intent to terminate any Plan or any action
taken by Pledgor or any ERISA Affiliate thereof to terminate any plan, or
(v) 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 (vi) 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
(vii) the receipt by Pledgor or any ERISA Affiliate thereof of a notice from a
Multiemployer Plan that action of the type described in the previous clause
(vi) has been taken by the PBGC with respect to such Multiemployer Plan, or
(viii) any event or circumstance exists which may reasonably be expected to
constitute grounds for Pledgor 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.

 

“Fidelity Insurance” means 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 Pledgor’s regulators.

 

“Financial Statement Date” has the meaning set forth in Section 4.05 hereof.

 

“GAAP” means U.S. generally accepted accounting principles that are
(i) consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its successors, as in effect from time to time,
and (ii) applied consistently with principles applied to past financial
statements of Seller and its subsidiaries; provided, that a certified public
accountant would, insofar as the use of such accounting principles is pertinent,
be in a position to deliver an unqualified opinion (other than a qualification
regarding changes in generally accepted accounting principles) that such
principles have been properly applied in preparing such financial statements.

 

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

 

“Ginnie Mae Acquisition Date” means any date on which the Pledgor acquires
portfolio excess spread on account of MSRs.

 

3

--------------------------------------------------------------------------------

 

“Ginnie Mae Guide” means the Ginnie Mae Mortgage-Backed Securities Guide,
Handbook 5500.3, Rev. 1, as amended from time to time, and any related
announcements, directives and correspondence issued by Ginnie Mae.

 

“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 Pledgor, Servicer or
Buyer, as applicable.

 

“Master Spread Acquisition Agreement” means the Second Amended and Restated
Acquisition and MSR Servicing Agreement, dated as of December 19, 2016, between
PLS and Pledgor, as amended, restated, supplemented or otherwise modified from
time to time and the Participation Certificates issued thereunder from time to
time

 

“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 Pledgor; (b) a material impairment of the ability
of Pledgor to perform under this Agreement and to avoid any Trigger Event; or
(c) a material adverse effect upon the legality, validity, binding effect or
enforceability of this Agreement against Pledgor.

 

“MBS” means collateralized mortgage obligations and other mortgage-backed
securities.

 

“Obligations” means all obligations and liabilities of PLS to Buyer, whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, or out of or in
connection with the PC Repurchase Agreement and any other related documents or
agreement made, delivered or given in connection therewith or herewith, whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise.

 

“OFAC” has the meaning set forth in Section 4.22 hereof.

 

“Participation Certificate” means the Purchased MSR Excess Spread PC and any
other participation certificate issued and delivered in connection with the
Master Spread Acquisition Agreement.

 

“PC Repurchase Agreement” has the meaning assigned to such term in the recitals
to this Agreement.

 

“PC Repurchase Documents” means the “Program Agreements” as such term is defined
in the PC Repurchase Agreement.

 

“Pledgor” means PennyMac Holdings, LLC or its permitted successors and assigns.

 

“Pledgor Guarantor” means PennyMac Mortgage Investment Trust or its permitted
successors and assigns.

 

4

--------------------------------------------------------------------------------

 

“Pledgor Guaranty Agreement” means that certain Guaranty, dated as of
December 19, 2016, made by Pledgor Guarantor for the benefit of the Buyer, as
amended, supplemented and restated from time to time.

 

“PMH Repurchase Agreement” has the meaning assigned to such term in the recitals
to this Agreement.

 

“PMIT” means PennyMac Mortgage Investment Trust.

 

“PNMAC” means Private National Mortgage Acceptance Company, LLC.

 

“Potential Trigger Event” means an event, condition or default that, with the
giving of notice, the passage of time, or both, would constitute a Trigger
Event.

 

“Power of Attorney” has the meaning set forth in Section 2.06(e) hereof.

 

“Prohibited Person” has the meaning set forth in Section 4.22 hereof.

 

“Property” has the meaning assigned to such term in the PC Repurchase Agreement.

 

“Records” means all instruments, agreements and other books, records, and
reports and data generated by other media for the storage of information
maintained by Pledgor, Servicer, or any other person or entity with respect to
the Assets or any other Collateral.

 

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

 

“Responsible Officer” means as to any Person, the chief executive officer or,
with respect to financial matters, the chief financial officer or treasurer of
such Person.  The Responsible Officers of Pledgor as of the date hereof are
listed on Schedule 1 hereto.

 

“Servicer” means PennyMac Loan Services, LLC.

 

“Subordinated Lender” means PennyMac Loan Services, LLC, in its capacity as
buyer under the PMH Repurchase Agreement.

 

“Trigger Event” has the meaning assigned to such term in Section 6.01 hereof.

 

Section 1.02                             Other Defined Terms.  (a) The words
“hereof,” “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.  Unless otherwise specified herein, the term “or”
has the inclusive meaning represented by the term “and/or” and the term
“including” is not limiting.  All references to Sections, subsections, Articles
and Exhibits shall be to Sections, subsections, and Articles of, and
Exhibits to, this Agreement unless otherwise specifically provided.

 

5

--------------------------------------------------------------------------------

 

(b)                                 In the computation of periods of time from a
specified date to a later specified date, unless otherwise specified herein the
words “commencing on” mean “commencing on and including,” the word “from” means
“from and including” and the words “to” and “until” each means “to but
excluding.”

 

ARTICLE II

 

COLLATERAL SECURITY

 

Section 2.01                             Collateral; Security Interest.  (a) 
All of Pledgor’s right, title and interest in, to and under each of the
following items of property, whether now owned or hereafter acquired, now
existing or hereafter created and wherever located, is hereinafter referred to
as the “Collateral”:

 

(i)                                     all Purchased MSR Excess Spread arising
under or related to the Purchased MSR Excess Spread PC;

 

(ii)                                  all rights to payment of amounts due under
the Master Spread Acquisition Agreement on account of, or related to, the
Purchased MSR Excess Spread PC;

 

(iii)                               all Assets, including the related
Participation Certificates, arising under or relating to the Master Spread
Acquisition Agreement and all rights thereunder;

 

(iv)                              all rights to reimbursement of Assets and/or
amounts due in respect thereof under the related Servicing Contract;

 

(v)                                 any rights in the Dedicated Account, and to
amounts on deposit therein;

 

(vi)                              any rights in the Portfolio Spread Custodial
Account, and to the amounts on deposit therein;

 

(vii)                           all records, instruments or other documentation
evidencing any of the foregoing;

 

(viii)                        all “general intangibles”, “accounts”, “chattel
paper”, “securities accounts”, “investment property”, “deposit accounts” and
“money” as defined in the Uniform Commercial Code relating to or constituting
any and all of the foregoing (including, without limitation, all of Pledgor’s
rights, title and interest in and under the Purchased MSR Excess Spread and
Servicing Contracts); and

 

(ix)                              any and all replacements, substitutions,
distributions on or proceeds of any and all of the foregoing.

 

(b)                                 In consideration of the agreements described
in the Recitals hereto, Pledgor hereby assigns, pledges and grants a security
interest in all of its right, title and interest in, to and under the Collateral
to Buyer to secure the Obligations.  Pledgor agrees to mark its computer records
and tapes to evidence the interests granted to Buyer hereunder.

 

6

--------------------------------------------------------------------------------

 

(c)                                  Pledgor acknowledges and agrees that it has
purchased the Collateral from the Servicer, subject to the first priority Lien
of the Buyer, and that its rights with respect to the Collateral are and shall
continue to be at all times junior and subordinate to the rights of Buyer under
the Repurchase Documents.

 

Section 2.02                             Further Documentation.  At any time and
from time to time, upon the written request of Buyer, and at the sole expense of
Pledgor, Pledgor will promptly and duly execute and deliver, or will promptly
cause to be executed and delivered, such further instruments and documents and
take such further action as Buyer may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any applicable jurisdiction with respect to the Liens created hereby. 
Pledgor also hereby authorizes Buyer to file any such financing or continuation
statement to the extent permitted by applicable law.

 

Section 2.03                             Participation Certificate.  With
respect to any Collateral that constitutes a Participation Certificate, Buyer
shall have received the original Participation Certificate registered into the
name of the Buyer or its designee or pledgee.

 

Section 2.04                             Limited Pledge of Ginnie Mae
Servicing.  To the extent that the pledge of the Pledgor’s right, title and
interest in the Purchased MSR Excess Spread shall at any time be included within
the MSRs, the Pledgor and Buyer each acknowledges and agrees that prior to the
occurrence of an Event of Default, (x) PLS is entitled to servicing income with
respect to a given mortgage pool only so long as PLS is a Ginnie Mae approved
issuer; (y) upon PLS’s loss of such approved issuer status, PLS’s rights to any
servicing income related to a given mortgage pool also terminate; and (z) the
pledge of the Pledgor’s rights to servicing income conveys no rights (such as a
right to become a substitute servicer or issuer) that are not otherwise
specifically provided for in the Ginnie Mae Contract, provided, that this
sentence shall automatically be deemed amended or modified if and to the extent
Ginnie Mae amends the Ginnie Mae Contract, the applicable Acknowledgment
Agreement, if any, or published announcements and, provided, further, that the
security interest created hereby is subject to the following provision to be
included in each financing statement filed in respect hereof (defined terms used
below shall have the meaning set forth in the applicable Acknowledgment
Agreement):

 

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

 

7

--------------------------------------------------------------------------------

 

(2) To the extent that the security interest reflected in this instrument
relates in any way to the Pooled Mortgages, such security interest is subject
and subordinate to all rights, powers and prerogatives of Ginnie Mae, whether
now existing or hereafter arising, under and in connection with: (i) 12 U.S.C.
§ 1721(g) and any implementing regulations; (ii) the terms and conditions of
that certain Acknowledgment Agreement, dated as of December 19, 2016, with
respect to the Security Interest, by and among Ginnie Mae, Debtor and Indenture
Trustee; (iii) applicable Guaranty Agreements and contractual agreements between
Ginnie Mae and Debtor; and (iv) the Ginnie Mae Contract and other applicable
guides;

 

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

 

(4) For purposes of clarification, “subject and subordinate” in clause (2) above
means, among other things, that any cash held by the Indenture Trustee as
collateral and any cash proceeds received by the Indenture Trustee in respect of
any sale or other disposition of, collection from, or other realization upon,
all or any part of the collateral may only be applied by the Indenture Trustee
to the extent that such proceeds have been received by, or for the account of,
the Debtor free and clear of all Ginnie Mae rights and other restrictions on
transfer under applicable Ginnie Mae guidelines; provided that this clause
(4) shall not be interpreted as establishing rights in favor of Ginnie Mae
except to the extent that such rights are reflected in, or arise under, the
Ginnie Mae Contract.

 

Section 2.05                             Changes in Locations, Name, etc.
 Pledgor shall not (a) change the location of its chief executive office/chief
place of business from that specified in Section 4.15 or (b) change its name or
identity, unless it shall have given Buyer at least thirty (30) days’ prior
written notice thereof and shall have delivered to Buyer all Uniform Commercial
Code financing statements and amendments thereto as Buyer shall request and
taken all other actions deemed necessary by Buyer to continue its perfected
status in the Collateral with the same or better priority.

 

Section 2.06                             Buyer’s Appointment as
Attorney-in-Fact.  (a)  Pledgor hereby irrevocably constitutes and appoints
Buyer and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of Pledgor and in the name of Pledgor or in its own name,
from time to time in Buyer’s discretion if an Event of Default or Trigger Event
shall have occurred and be continuing, for the purpose of carrying out the terms
of this Agreement, to take any and all

 

8

--------------------------------------------------------------------------------

 

appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, Pledgor hereby gives Buyer the
power and right, on behalf of Pledgor, without assent by, but with notice to,
Pledgor to do the following:

 

(i)                                     in the name of Pledgor or 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 Collateral 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 Collateral whenever payable;

 

(ii)                                  to pay or discharge taxes and Liens levied
or placed on or threatened against the Collateral;

 

(iii)                               to the extent permitted under the Master
Spread Acquisition Agreement, and under the Servicing Contracts and the
Acknowledgment Agreement, to request that MSRs be transferred to another
servicer approved by Ginnie Mae and perform (without assuming or being deemed to
have assumed any of the obligations of Servicer thereunder) all aspects of each
Servicing Contract to which the Purchased MSR Excess Spread relates;

 

(iv)                              to request distribution to Buyer of sale
proceeds or any applicable contract termination fees arising from the sale or
termination of such MSRs to the extent of the Purchased MSR Excess Spread and
remaining after satisfaction of Servicer’s relevant obligations to Ginnie Mae
(but only to the extent that such funds are payable to Seller free and clear of
Ginnie Mae’s rights or other restrictions on transfer set forth in such
Servicing Contract), including costs and expenses related to any such sale or
transfer of such MSRs and other amounts due for unmet obligations of Servicer to
Ginnie Mae under the Ginnie Mae Contract;

 

(v)                                 to deal with third parties, including,
without limitation, investors, guarantors and any and all subservicers and
master servicers in respect of any of the Collateral in the same manner and with
the same effect as if done by Pledgor;

 

(vi)                              to direct any party liable for any payment
under any Collateral to make payment of any and all moneys due or to become due
thereunder directly to Buyer or as Buyer shall direct; (B) to ask or demand for,
collect, receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising out of
any Collateral; (C) to sign and endorse any invoices, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (D) to commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect of
any Collateral; (E) to defend any suit, action or proceeding brought against
Pledgor with respect to any Collateral; (F) to settle, compromise or adjust any
suit, action or proceeding described in clause (E) above and, in connection
therewith, to give such discharges or releases as Buyer may deem appropriate;

 

9

--------------------------------------------------------------------------------

 

and (G) generally, to sell, transfer, pledge and make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though Buyer were the absolute owner thereof for all purposes, and to do, at
Buyer’s option and Pledgor’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 Collateral and Buyer’s Liens thereon and to effect the intent of this
Agreement, all as fully and effectively as Pledgor might do.

 

(b)                                 Pledgor 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 until such
time as all Obligations have been paid in full and this Agreement is terminated.

 

(c)                                  Pledgor also authorizes Buyer, at any time
and from time to time, to execute, in connection with any sale provided for in
Section 2.08 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.

 

(d)                                 The powers conferred on Buyer are solely to
protect Buyer’s interests in the Collateral and shall not impose any duty upon
Buyer 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 Buyer nor any of its officers, directors, or employees shall be
responsible to Pledgor for any act or failure to act hereunder, except for
Buyer’s own gross negligence or willful misconduct.

 

(e)                                  In addition to the foregoing, Pledgor
agrees to execute a power of attorney (the “Power of Attorney”) in favor of
Buyer in the form of Exhibit A hereto to be delivered on the date hereof.

 

(f)                                   Notwithstanding anything to the contrary
herein or in any of the other Program Agreements, any appointment set forth in
this Section 2.06, as well as Buyer’s exercise (or purported exercise) of any
right, power or authority given by Pledgor hereunder, shall be subject to the
Ginnie Mae Contract and the Acknowledgment Agreement.

 

Section 2.07                             Proceeds.

 

(a)                                 If an Event of Default under the PC
Repurchase Agreement shall occur and be continuing, (i) all proceeds of
Collateral received by Pledgor consisting of cash, checks and other liquid
assets readily convertible to cash items shall be held by Pledgor in trust for
Buyer, segregated from other funds of Pledgor, and shall forthwith upon receipt
by Pledgor be remitted to the Dedicated Account in the exact form received by
Pledgor (duly endorsed by Pledgor to Buyer, if required) and (ii) any and all
such proceeds received by Buyer (whether from Pledgor or otherwise) may, in the
sole discretion of Buyer, be held by Buyer as collateral security for, and/or
then or at any time thereafter may be applied by Buyer against, the Obligations
(whether matured or unmatured), such application to be in such order as Buyer
shall elect.  Any balance of such proceeds remaining after the Obligations shall
have been paid in full and this Agreement shall have been terminated shall be
remitted in accordance with Repurchase Documents.  For the avoidance of doubt,
the Servicer shall be solely responsible for remitting to the Pledgor any
amounts owed the Pledgor.  In no event shall the Buyer be accountable to the
Pledgor for any excess proceeds, which the Pledgor acknowledges, may be remitted
by the Buyer in accordance with the Repurchase Documents.

 

10

--------------------------------------------------------------------------------

 

(b)                                 Each of Pledgor and Servicer acknowledges
and agrees that all amounts with respect to Purchased MSR Excess Spread and
related MSRs shall be remitted by Servicer to the Dedicated Account to be
applied by Buyer in accordance with the terms of the PC Repurchase Agreement.

 

Section 2.08                             Remedies.  If an Event of Default shall
occur and be continuing, Buyer shall have the right to exercise any or all of
the following rights and remedies:

 

(a)                                 Buyer may exercise, in addition to all other
rights and remedies granted to it in this Agreement and in any other instrument
or agreement securing, evidencing or relating to the Obligations, any rights
otherwise available to it under applicable federal, state, foreign and local
laws, whether existing at law, in equity or by statute, including, without
limitation, all rights and remedies available to a purchaser/secured party under
the Uniform Commercial Code.

 

(b)                                 Without limiting the generality of the
foregoing, Buyer may seek the appointment of a receiver, liquidator,
conservator, trustee, or similar official in respect of any of the Collateral.

 

(c)                                  Without limiting the generality of the
foregoing, Buyer without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice required under
this Agreement or by law referred to below) to or upon Pledgor or any other
Person (each and all of which demands, presentments, protests, advertisements
and notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give option or options to purchase, or
otherwise dispose of and deliver the Collateral or any part thereof (or contract
to do any of the foregoing), in one or more parcels or as an entirety at public
or private sale or sales, at any exchange, broker’s board or office of Buyer or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk.  Buyer shall have the right upon any such public
sale or sales, and, to the extent permitted by law, upon any such private sale
or sales, to purchase the whole or any part of the Collateral so sold, free of
any right or equity of redemption in Pledgor, which right or equity is hereby
waived or released.

 

(d)                                 Buyer may demand that Pledgor assemble the
Collateral and make it available to Buyer at places which Buyer shall reasonably
select, whether at Pledgor’s premises or elsewhere.

 

(e)                                  Buyer shall apply the net proceeds of any
such collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable (under the circumstances) out-of-pocket costs and
expenses of every kind actually incurred therein or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of Buyer hereunder, including without limitation reasonable
attorneys’ fees and disbursements, to the payment in whole or in part of the
Obligations, in such order as Buyer may elect, and only after such application
and after the payment by Buyer of any other amount required or permitted by any
provision of law, including without limitation Section 9-615 of the Uniform
Commercial Code, need Buyer account for the surplus, if any, to the Servicer as
agent for the Pledgor.

 

11

--------------------------------------------------------------------------------

 

(f)                                   To the extent that there are any excess
proceeds resulting from any collection, recovery, receipt, appropriation,
realization or sale of the Collateral by Buyer after satisfaction of all
Obligations, Buyer shall remit such excess to the Servicer.

 

(g)                                  To the extent permitted by applicable law,
Pledgor waives all claims, damages and demands it may acquire against Buyer
arising out of the exercise by Buyer of any of its rights hereunder, other than
those claims, damages and demands arising from the gross negligence or willful
misconduct of Buyer.  If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least ten (10) days before such sale or other disposition.

 

(h)                                 Buyer may enforce its rights and remedies
hereunder without prior judicial process or hearing, and Pledgor hereby
expressly waives, to the extent permitted by law, any right Pledgor might
otherwise have to require Buyer to enforce its rights by judicial process. 
Buyer also waives, to the extent permitted by law, any defense Pledgor might
otherwise have to the Obligations, or any guaranty thereof, arising from use of
nonjudicial process, enforcement and sale of all or any portion of the
Collateral or from any other election of remedies.  Pledgor 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.

 

(i)                                     Pledgor shall not be liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay the Obligations, it being understood that the sole
recourse of the Buyer to the Pledgor hereunder for the Obligations (other than
for Pledgor’s gross negligence or willful misconduct) shall be to the Collateral
pledged by the Pledgor hereunder.

 

(j)                                    Notwithstanding anything to the contrary
herein or in any of the other Repurchase Documents, the remedies set forth in
this Section 2.08 shall be subject to the Ginnie Mae Contract and the
Acknowledgment Agreement.

 

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

 

12

--------------------------------------------------------------------------------

 

Section 2.09                             Limitation on Duties Regarding
Preservation of Collateral.  Buyer’s duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the Uniform Commercial Code or otherwise, shall be to require
the Indenture Trustee to deal with it in the same manner as the Indenture
Trustee deals with similar property for its own account.  Neither Buyer nor any
of its directors, officers or employees shall be liable for failure to demand,
collect or realize upon all or any part of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of Pledgor or otherwise.

 

Section 2.10                             Powers Coupled with an Interest.  All
authorizations and agencies herein contained with respect to the Collateral are
irrevocable and powers coupled with an interest.

 

Section 2.11                             Release of Security Interest.  Upon the
latest to occur of (a) the repayment to Buyer of all Obligations and the
performance of all obligations under the PC Repurchase Documents, and (b) the
occurrence of the Termination Date, Buyer shall release its security interest in
any remaining Collateral hereunder and shall promptly execute and deliver to the
Subordinated Lender such documents or instruments as the Subordinated Lender
shall reasonably request to evidence such release; provided that, such release
shall not be required until such time as the Acknowledgment Agreement is
terminated.

 

Section 2.12                             Reinstatement.  All security interests
created by this Article II shall continue to be effective, or be reinstated, as
the case may be, if at any time any payment, or any part thereof, of any
Obligation is rescinded or must otherwise be restored or returned by the Buyer
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
Pledgor or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, Pledgor or any substantial
part of its property, or otherwise, all as if such release had not been made.

 

Section 2.13                             Use of Collateral.  Buyer and Pledgor
hereby acknowledge and agree that should any Collateral be liquidated or
foreclosed upon by Buyer, Buyer shall apply the Proceeds of such Collateral to
the Obligations.

 

Section 2.14                             Intent.

 

(a)                                 The parties hereto recognize that this
Agreement constitutes “a security agreement or other arrangement or other credit
enhancement” that is “related to” the Repurchase Agreement and transactions
thereunder within the meaning of Sections 101(38A)(A), 101(47)(A)(v) and/or
741(7)(A)(xi) of the Bankruptcy Code.

 

(b)                                 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.

 

13

--------------------------------------------------------------------------------

 

ARTICLE III

 

RECOURSE; SUBORDINATION

 

Section 3.01                             Recourse.  Notwithstanding anything
else to the contrary contained or implied herein or in any other Repurchase
Document, Buyer’s recourse against Pledgor in order to satisfy the Obligations
shall be limited to the Collateral that is the subject of this Agreement and its
recourse as against the Pledgor Guarantor shall be as more particularly
described in the Pledgor Guaranty Agreement; provided, that such limitation
shall not extend to the gross negligence or willful misconduct of the Pledgor.

 

Section 3.02                             Subordination in Connection with
Financing.

 

(a)                                 It is anticipated that in connection with
the transactions contemplated by the PC Repurchase Documents, that (x) the
Pledgor has purchased the Collateral from the Servicer subject to the first
priority Lien of the Buyer and (y) Pledgor hereby reaffirms such lien and
pledges its interest in such Collateral hereunder to the Buyer.  In connection
with the foregoing Pledgor acknowledges and agrees that its rights with respect
to the Collateral (including without limitation its security interest in the
Purchased MSR Excess Spread and pursuant to the Master Spread Acquisition
Agreement and any other collateral purchased by Pledgor thereunder and in which
a security interest is granted to Buyer pursuant to Section 2.01) are and shall
continue to be at all times junior and subordinate to the rights of Buyer under
the PC Repurchase Documents.  In furtherance of the foregoing, notwithstanding
any rights or remedies available to Pledgor thereunder or under the Master
Spread Acquisition Agreement, applicable law or otherwise, Pledgor shall not,
directly or indirectly, exercise any remedies available to it under the Master
Spread Acquisition Agreement or at law or equity for ninety-one (91) days
following the date that all Obligations are paid in full under the Repurchase
Documents; provided, that nothing in the foregoing shall prohibit Pledgor from
receiving, payments with respect to the obligations under the Master Spread
Acquisition Agreement as, and in the manner, contemplated therein, but subject
to the prior rights of the Buyer hereunder and under the Repurchase Documents. 
For the avoidance of doubt, in no instance shall the Buyer succeed to any
liabilities or obligations of Pledgor under the Master Spread Acquisition
Agreement.

 

(b)                                 In furtherance of the foregoing, Pledgor
agrees to not assert any objection to, and shall be deemed to have otherwise
consented to, a disposition of any assets subject to the Master Spread
Acquisition Agreement and subject to the Repurchase Documents during an Act of
Insolvency of Pledgor or the Servicer, free and clear of any lien, encumbrance,
pledge or other claims under Section 363 of the Bankruptcy Code (or any similar
bankruptcy law) if Buyer has consented to such disposition.

 

(c)                                  If an Act of Insolvency of Pledgor or the
Servicer occurs, the Pledgor agrees not to contest (or support any other Person
contesting) any request by Buyer for adequate protection, or any objection by
Buyer to any motion, relief, action or proceeding based on Buyer claiming a lack
of adequate protection.

 

14

--------------------------------------------------------------------------------

 

(d)                                 Until the obligations under the Repurchase
Documents are paid in full, the Pledgor shall not oppose any request by Buyer
for relief from the automatic stay or any other stay in any Act of Insolvency of
Pledgor or the Servicer.

 

(e)                                  Pledgor shall not oppose or seek to
challenge any claim by Buyer for allowance and payment in any Act of Insolvency
of Pledgor or the Servicer, of obligations under the Repurchase Documents
consisting of post-petition interest, fees, costs or other charges to the extent
of the value of Buyer’s lien, encumbrance, pledge or other claims on the assets
that are the subject of this Agreement or the PC Repurchase Agreement, without
regard to the existence of a lien, encumbrance, pledge or other claims of
Pledgor applicable to the obligations of the other parties to the Repurchase
Documents.

 

(f)                                   Pledgor shall not seek in any Act of
Insolvency of Pledgor or the Servicer, to be treated as part of the same class
of creditors as Buyer and shall not oppose any pleading or motion by Buyer
advocating that Buyer and Pledgor and the Servicer should be treated as separate
classes of creditors.  Pledgor acknowledges and agrees that its rights with
respect to the Collateral are and shall continue to be at all times junior and
subordinate to the rights of Buyer under the PC Repurchase Agreement and under
this Agreement.

 

Section 3.03                             Rights under PMH Repurchase Agreement.

 

(a)                                 Pledgor acknowledges and agrees
notwithstanding any right to repurchase the Purchased MSR Excess Spread PC from
PLS granted pursuant to the PMH Repurchase Agreement, Pledgor may not exercise
such repurchase right as long as the Purchased MSR Excess Spread PC is
registered in the name of the Buyer or otherwise subject to the PC Repurchase
Agreement.

 

(b)                                 In the event that PLS repurchases the
Purchased MSR Excess Spread PC from Buyer, Pledgor may repurchase the Purchased
MSR Excess Spread PC from PLS pursuant to the PMH Repurchase Agreement; however,
until the Obligations have been paid in full and the PC Repurchase Agreement
terminated, the rights of Pledgor in the related Purchased MSR Excess Spread
shall be subordinate to the rights of the Buyer in the related MSRs and
accordingly, Pledgor acknowledges and agrees that its rights to the Purchased
MSR Excess Spread may be completely eliminated upon the exercise of remedies by
Buyer under the PC Repurchase Agreement or the exercise of remedies by the
Indenture Trustee under the Acknowledgment Agreement or the Indenture, and
Pledgor shall have no rights, remedies or recourse against the Buyer for such
actions.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

Pledgor represents and warrants to Buyer as of the date hereof and as of each
Ginnie Mae Acquisition Date that:

 

Section 4.01                             Pledgor Existence.  Pledgor has been
duly organized and is validly existing as a limited liability company in good
standing under the laws of the State of Delaware.

 

15

--------------------------------------------------------------------------------

 

Section 4.02                             Licenses.  Pledgor 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 and is not in default of such
state’s applicable laws, rules and regulations.  Pledgor has the requisite power
and authority and legal right to own, sell and grant a lien on all of its right,
title and interest in and to the Collateral.  Pledgor has the requisite power
and authority and legal right to execute and deliver, engage in the transactions
contemplated by, and perform and observe the terms and conditions of, this
Agreement and each Repurchase Document to which it is a party.

 

Section 4.03                             Power.  Pledgor 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.

 

Section 4.04                             Due Authorization.  Pledgor has all
necessary corporate or other power, authority and legal right to execute,
deliver and perform its obligations under each of the Repurchase Documents, as
applicable.  This Agreement, and the Repurchase Documents to which it is a party
have been duly authorized, executed and delivered by Pledgor, all requisite or
other corporate action having been taken, and each is valid, binding and
enforceable against Pledgor in accordance with its terms except as such
enforcement may be affected by bankruptcy, by other insolvency laws, or by
general principles of equity.

 

Section 4.05                             Financial Statements.  Pledgor has
heretofore furnished to Buyer a copy of (a) its balance sheet for the fiscal
year of Pledgor ended December 31, 2015, and the related statements of income
for Pledgor for such fiscal year, with the opinion thereon of Deloitte & Touche
LLP and (b) its balance sheet for the quarterly fiscal period of Pledgor ended
September 30, 2016, and the related statements of income for Pledgor for such
quarterly fiscal period.  All such financial statements are complete and correct
and fairly present, in all material respects, the financial condition of Pledgor
and the results of its operations as at such dates and for such fiscal periods,
all in accordance with GAAP applied on a consistent basis.  Since December 31,
2015, there has been no material adverse change in the consolidated business,
operations or financial condition of Pledgor from that set forth in said
financial statements nor is Pledgor aware of any state of facts which (with
notice or the lapse of time) would or could result in any such material adverse
change.  Pledgor has, on the Financial 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 Pledgor
except as heretofore disclosed to Buyer in writing.

 

Section 4.06                             Solvency.  Pledgor is solvent and will
not be rendered insolvent by the acquisition of the Purchased MSR Excess Spread
PC or by this Agreement and, after giving effect to such acquisition and this
Agreement, will not be left with an unreasonably small amount of capital with
which to engage in its business.  Pledgor does not intend to incur, nor does it

 

16

--------------------------------------------------------------------------------

 

believe that it has incurred, debts beyond its ability to pay such debts as they
mature and is not contemplating the commencement of insolvency, bankruptcy,
liquidation or consolidation proceedings or the appointment of a receiver,
liquidator, conservator, trustee or similar official in respect of such entity
or any of its assets.  Pledgor is not pledging any Collateral with any intent to
hinder, delay or defraud any of its creditors.

 

Section 4.07                             No Conflicts.  The execution, delivery
and performance by Pledgor of this Agreement, and the Repurchase Documents to
which it is a party do not conflict with any term or provision of the
organizational documents of Pledgor or any law, rule, regulation, order,
judgment, writ, injunction or decree applicable to Pledgor of any court,
regulatory body, administrative agency or governmental body having jurisdiction
over Pledgor, which conflict would have a Material Adverse Effect, and will not
result in any violation of any such mortgage, instrument, agreement, obligation
to which Pledgor is a party.

 

Section 4.08                             True and Complete Disclosure.  All
information, reports, exhibits, schedules, financial statements or certificates
of Pledgor 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 Pledgor or any Affiliate or officer thereof, negotiation, preparation, or
delivery of the Repurchase Documents to which it is a party are true and
complete in all material respects 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).

 

Section 4.09                             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 Pledgor of this Agreement, and
the Repurchase Documents to which it is a party.

 

Section 4.10                             No Trigger Event.  There exists no
Trigger Event under Section 6.01 hereof.

 

Section 4.11                             [Reserved].

 

Section 4.12                             Ownership.  (a) Pledgor has good title
to all of the Collateral, free and clear of all mortgages, security interests,
restrictions, Liens and encumbrances of any kind other than the Liens created
hereby and the Liens created pursuant to the PC Repurchase Agreement and the
Liens created pursuant to the PMH Repurchase Agreement; provided, that, for the
avoidance of doubt, the Pledgor has purchased the Collateral subject hereto from
the Servicer, subject and subordinate to, the Lien of the Buyer originally
created under the PC Repurchase Agreement, and further perfected hereby.

 

(b)                                 Each item of Collateral was acquired by
Pledgor in the ordinary course of its business, in good faith, for value and
without notice of any defense against or claim to it on the part of any Person
other than the Buyer.

 

17

--------------------------------------------------------------------------------

 

(c)                                  Except as set forth herein, there are no
agreements or understandings between Pledgor and any other party which would
modify, release, terminate or delay the attachment of the security interests
granted to Buyer under this Agreement.

 

(d)                                 The provisions of this Agreement are
effective to create in favor of Buyer a valid security interest in all right,
title and interest of Pledgor in, to and under the Collateral.

 

(e)                                  Upon the filing of financing statements on
Form UCC-1 naming Buyer as “Secured Party” and Pledgor as “Debtor”, and
describing the Collateral, in the recording offices of the Secretary of State of
Delaware the security interests granted hereunder in the Collateral will
constitute fully perfected first priority security interests under the Uniform
Commercial Code in all right, title and interest of Pledgor in, to and under
such Collateral which can be perfected by filing under the Uniform Commercial
Code.

 

Section 4.13                             [Reserved].

 

Section 4.14                             Investment Company.  Neither Pledgor
nor any of its Subsidiaries is an “investment company”, or a company
“controlled” by an “investment company,” within the meaning of the Investment
Company Act of 1940, as amended; 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 Pledgor shall
not be deemed a “Subsidiary” for the purposes of this Section 4.14.

 

Section 4.15                             Chief Executive Office; Jurisdiction of
Organization.  On the date hereof, Pledgor’s chief executive office, is, and has
been, located at 3043 Townsgate Road, Westlake Village, CA 91361.  On the date
hereof, Pledgor’s jurisdiction of organization is the State of Delaware. 
Pledgor shall provide Buyer with thirty days advance notice of any change in
Pledgor’s principal office or place of business or jurisdiction.  Pledgor has no
trade name.  During the preceding five years, Pledgor has not 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.

 

Section 4.16                             Location of Books and Records.  The
location where Pledgor keeps its books and records, including all computer tapes
and records relating to the Collateral is its chief executive office.

 

Section 4.17                             Adjusted Tangible Net Worth.  On the
date hereof, Pledgor’s Adjusted Tangible Net Worth is not less than
$250,000,000.

 

Section 4.18                             ERISA.  Each Plan to which Pledgor or
its Subsidiaries make direct contributions, and, to the knowledge of Pledgor,
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.

 

Section 4.19                             [Reserved].

 

18

--------------------------------------------------------------------------------

 

Section 4.20                             No Reliance.  Pledgor has made its own
independent decisions to enter into the Repurchase Documents to which it is a
party. Pledgor is not relying upon any advice from Buyer as to any aspect of the
Repurchase Documents, including without limitation, the legal, accounting or tax
treatment of such Repurchase Documents.

 

Section 4.21                             Plan Assets.  Pledgor is not 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 Collateral are not “plan
assets” within the meaning of 29 CFR §2510.3 101 as amended by Section 3(42) of
ERISA, in Pledgor’s hands, and transactions by or with Pledgor 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.

 

Section 4.22                             No Prohibited Persons.  Neither Pledgor
nor any of its Affiliates, officers, directors, partners or members, is an
entity or person (or to the Pledgor’s 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”).

 

ARTICLE V

 

COVENANTS

 

Pledgor covenants and agrees that until the payment and satisfaction in full of
all Obligations, whether now existing or arising hereafter, shall have occurred
and termination of the PC Repurchase Agreement:

 

Section 5.01                             Insurance.  Pledgor shall continue to
maintain, for Pledgor and its Subsidiaries, Fidelity Insurance in an aggregate
amount at least equal to $300,000.  Pledgor shall maintain, for Pledgor and its
Subsidiaries, 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 Assets.  Pledgor shall notify Buyer of any material change in the terms of
any such Fidelity Insurance.

 

Section 5.02                             No Adverse Claims.  Pledgor warrants
and will defend, and shall cause Servicer to defend, the right, title and
interest of Buyer in and to all Collateral against all adverse claims and
demands.

 

Section 5.03                             Assignment.  Except as permitted
herein, neither Pledgor nor 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 as permitted by
the Repurchase Documents), any of the Collateral or any interest therein,
provided

 

19

--------------------------------------------------------------------------------

 

that this Section 5.03 shall not prevent any transfer of Collateral in
accordance with the Repurchase Documents.

 

Section 5.04                             Security Interest.  Pledgor shall do
all things necessary to preserve the Collateral so that they remain subject to a
first priority perfected security interest hereunder.  Without limiting the
foregoing, Pledgor will comply with all rules, regulations and other laws of any
Governmental Authority and cause the Collateral to comply with all applicable
rules, regulations and other laws.

 

Section 5.05                             Records.  (a) Pledgor shall collect and
maintain or cause to be collected and maintained all Records relating to the
Collateral in accordance with industry custom and practice for assets similar to
the Collateral and all such Records shall be in Pledgor’s possession unless
Buyer otherwise approves.  Pledgor will not allow any such papers, records or
files that are an original or an only copy to leave Pledgor’s possession. 
Pledgor or Servicer will maintain all such Records in good and complete
condition in accordance with industry practices for assets similar to the
Collateral and preserve them against loss.

 

(b)                                 For so long as Buyer has an interest in or
lien on any Collateral, Pledgor will hold or cause to be held all related
Records in trust for Buyer.  Pledgor 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.

 

(c)                                  Upon reasonable advance notice from Buyer,
Pledgor shall (x) make any and all such Records available to 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 Pledgor with its chief operating officer and chief financial officer
and to discuss the affairs, finances and accounts of Pledgor with its
independent certified public accountants.

 

Section 5.06                             Books.  Pledgor 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 pledge of Collateral to Buyer.

 

Section 5.07                             Approvals.  Pledgor shall maintain all
licenses, permits or other approvals necessary for Pledgor to conduct its
business and to perform its obligations under the Repurchase Documents, and
Pledgor shall conduct its business strictly in accordance with applicable law.

 

Section 5.08                             Applicable Law.  Pledgor shall comply
with the requirements of all applicable laws, rules, regulations and orders of
any Governmental Authority.

 

Section 5.09                             Existence.  Pledgor shall preserve and
maintain its legal existence and all of its material rights, privileges,
material licenses and franchises.

 

Section 5.10                             Chief Executive Office; Jurisdiction of
Organization.  Pledgor shall not move its chief executive office from the
address referred to in Section 4.15 or change its jurisdiction of organization
from the jurisdiction referred to in Section 4.15 unless it shall have provided
Buyer thirty (30) days’ prior written notice of such change.

 

20

--------------------------------------------------------------------------------

 

Section 5.11                             Taxes.  Pledgor shall timely file all
tax returns that are required to be filed by it 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.

 

Section 5.12                             True and Correct Information.  All
information, reports, exhibits, schedules, financial statements or certificates
of Pledgor, any Affiliate thereof or any of their officers furnished to Buyer
hereunder and during Buyer’s diligence of Pledgor are and will be true and
complete in all material respects 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 Pledgor 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.

 

Section 5.13                             Purchased MSR Excess Spread Not To Be
Evidenced by Promissory Notes.  Pledgor shall not take any action, or permit any
other Person to take any action, to cause any of the Purchased MSR Excess Spread
to be evidenced by any “instrument” (as such term is defined in the Uniform
Commercial Code), except in connection with the enforcement or collection of the
Purchased MSR Excess Spread; provided, that each Participation Certificate
pledged hereunder shall be a security (as such term is defined in the Uniform
Commercial Code).

 

Section 5.14                             No Pledge; Other Liens; Creditors. 
Pledgor shall not (other than with respect to the Liens created pursuant to the
PMH Repurchase Agreement) (a) pledge, grant a security interest or assign any
existing or future rights to the Collateral, or pledge or grant to any other
Person any security interest in any Assets or Servicing Contracts; or
(b) pledge, transfer or convey any security interest or suffer to exist, any
Lien on any interest of any kind (whether in whole or in part) in any Purchased
MSR Excess Spread or Servicing Contract, unless such parties enter into an
intercreditor agreement with the recipient of such security interest or Lien, in
form and substance acceptable to the Buyer.

 

Section 5.15                             Plan Assets.  Pledgor shall not 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 Pledgor 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.

 

Section 5.16                             Sharing of Information.  Pledgor shall
allow Buyer to exchange information related to Pledgor and the Collateral
hereunder with third party lenders and Pledgor shall permit each third party
lender to share such information with Buyer.

 

Section 5.17                             No Modification of the Master Spread
Acquisition Agreement; Intended Third Party Beneficiary.  Pledgor shall not
consent, with respect to the Master Spread Acquisition Agreement related to any
Collateral, to (i) the material modification or amendment or the termination of
such Master Spread Acquisition Agreement, (ii) the waiver of any provision of
such Master Spread Acquisition Agreement to the extent such waiver adversely
affects the

 

21

--------------------------------------------------------------------------------

 

Buyer or the Pledgor or (iii) the resignation of Servicer as servicer, or the
assignment, transfer, or material delegation of any of its rights or
obligations, under Master Spread Acquisition Agreement, without the prior
written consent of Buyer exercised in Buyer’s sole discretion.  Notwithstanding
anything to the contrary set forth in the Master Spread Acquisition Agreement,
the Buyer is hereby appointed and is an intended third party beneficiary
thereof, with full enforcement rights as if a party thereto.

 

ARTICLE VI

 

TRIGGER EVENTS / RIGHTS AND REMEDIES OF BUYER UPON TRIGGER EVENT OR EVENT OF
DEFAULT

 

Section 6.01                             Trigger Events.  Each of the following
events or circumstances shall constitute a “Trigger Event”:

 

(a)                                 Assignment.  Assignment or attempted
assignment by Pledgor of this Agreement or any rights hereunder without first
obtaining the specific written consent of Buyer, or the granting by Pledgor of
any security interest, lien or other encumbrances on any Collateral to any
person other than Buyer, except for the second priority Lien of the Subordinated
Lender.

 

(b)                                 Insolvency.  An Act of Insolvency shall have
occurred with respect to Pledgor or any Affiliate thereof or the Pledgor
Guarantor.

 

(c)                                  Breach of Material Representation or
Covenant or Obligation.  A breach by Pledgor of any of the representations,
warranties or covenants or obligations set forth in Sections 4.01, 4.06, 4.17,
5.09, 5.14 or 5.15 of this Agreement.

 

(d)                                 Breach of Other Representation or Covenant. 
A material breach by Pledgor of any other material representation, warranty or
covenant set forth in this Agreement (and not otherwise specified in
Section 6.01(c) above), if such breach is not cured within five (5) Business
Days.

 

(e)                                  Inability to Perform.  A Responsible
Officer of (i) Pledgor shall admit its inability to, or its intention not to,
perform any of their respective obligations under the applicable Repurchase
Documents or (ii) the Pledgor Guarantor shall admit its inability to, or its
intention not to, perform any of their respective obligations under the Pledgor
Guaranty Agreement.

 

(f)                                   Security Interest.  This Agreement shall
for any reason cease to create a valid security interest in any material portion
of the Collateral purported to be covered hereby.

 

(g)                                  Financial Statements.  Pledgor’s or Pledgor
Guarantor’s 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 Pledgor or Pledgor Guarantor as a “going concern” or
a reference of similar import.

 

(h)                                 Default.  The occurrence of (i) a default or
termination event under the PC Repurchase Agreement, (ii) as of any MRA Payment
Date, the amounts on deposit in the Dedicated Account are insufficient to
satisfy the Obligations for such date, or (iii) a default or termination event
under the Series 2016-MSRVF1 Repurchase Agreement.

 

22

--------------------------------------------------------------------------------

 

(i)                                     Early Amortization Event.  The
occurrence of an Early Amortization Event under the Base Indenture.

 

Section 6.02                             No Waiver.  A Trigger Event shall be
deemed to be continuing unless expressly waived by Buyer in writing.

 

Section 6.03                             Liquidation of Collateral.  Pledgor
hereby acknowledges and agrees that on the occurrence of an Event of Default
under the PC Repurchase Agreement, Buyer shall have the right to liquidate the
Purchased MSR Excess Spread, the MSRs and any other Assets constituting
Collateral and apply any proceeds as provided under the PC Repurchase Agreement.
Pledgor hereby authorizes Buyer to liquidate the Collateral should an Event of
Default occur and apply the Proceeds of such liquidation to the Obligations
existing under the PC Repurchase Agreement.

 

ARTICLE VII

 

ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS; SEPARATE ACTIONS BY BUYER

 

Section 7.01                             Entire Agreement.  This Agreement
(including the Schedules and Exhibits hereto) and the related Repurchase
Documents constitute the entire agreement of the parties hereto and supersedes
any and all prior or contemporaneous agreements, written or oral, as to the
matters contained herein, and no modification or waiver of any provision hereof
or of the Repurchase Documents, nor consent to the departure by Pledgor
therefrom, shall be effective unless the same is in writing, and then such
waiver or consent shall be effective only in the specific instance, and for the
purpose, for which it is given.

 

Section 7.02                             Waivers, Separate Actions by Buyer. 
Any amendment or waiver effected in accordance with this Article VII shall be
binding upon Buyer and Pledgor; and Buyer’s failure to insist upon the strict
performance of any term, condition or other provision of this Agreement, or any
of the Repurchase Documents, or to exercise any right or remedy hereunder or
thereunder, shall not constitute a waiver by Buyer of any such term, condition
or other provision or Trigger Event, Potential Trigger Event or Event of Default
in connection therewith, nor shall a single or partial exercise of any such
right or remedy preclude any other or future exercise, or the exercise of any
other right or remedy; and any waiver of any such term, condition or other
provision or of any such Trigger Event, Potential Trigger Event or Event of
Default shall not affect or alter this Agreement, or any of the Repurchase
Documents, and each and every term, condition and other provision of this
Agreement, and the Repurchase Documents shall, in such event, continue in full
force and effect and shall be operative with respect to any other then existing
or subsequent Trigger Event, Potential Trigger Event or Event of Default in
connection therewith.  A Trigger Event or an Event of Default hereunder and
under any of the Repurchase Documents shall be deemed to be continuing unless
and until waived pursuant to the terms of the Repurchase Documents.

 

23

--------------------------------------------------------------------------------

 

Section 7.03                             Amendment.  Any amendment of this
Agreement which affects the rights, duties, immunities, obligations or
liabilities of the Owner Trustee in its capacity as owner trustee under the
Trust Agreement shall require the written consent of the Owner Trustee.

 

ARTICLE VIII

 

SUCCESSORS AND ASSIGNS

 

Section 8.01                             Successors and Assigns.  This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.  Pledgor shall not have the right
to assign all or any part of this Agreement or any interest herein without the
prior written consent of Buyer.

 

ARTICLE IX

 

MISCELLANEOUS

 

Section 9.01                             Survival.  This Agreement and the other
Repurchase Documents and all covenants, agreements, representations and
warranties herein and therein and in the certificates delivered pursuant hereto
and thereto, shall survive the entering by Buyer into any Transaction and the
execution and delivery to Buyer of this Agreement and the Repurchase Documents
and shall continue in full force and effect so long as the Obligations are
outstanding and unpaid and the Repurchase Documents have not been terminated.

 

Section 9.02                             Indemnification.  Pledgor shall, and
hereby agrees to, indemnify, defend and hold harmless Buyer, any Affiliate of
Buyer and their respective directors, officers, agents, employees and counsel
from and against any and all losses, claims, damages, liabilities, deficiencies,
judgments or expenses incurred by any of them as a consequence of, or arising
out of or by reason of any litigation, investigations, claims or proceedings
which arise out of or are in any way related to the enforcement of this
Agreement or Pledgor’s gross negligence or willful misconduct in connection
with, (i) this Agreement or any other Repurchase Document or any Servicing
Contract, or the transactions contemplated hereby or thereby, (ii) Pledgor’s
practices or procedures; and (iii) any Trigger Event, Potential Trigger Event,
or any other breach by Pledgor of any of the provisions of this Agreement or any
other Repurchase Document, including, without limitation, amounts paid in
settlement, court costs and reasonable fees and disbursements of counsel
incurred in connection with any such litigation, investigation, claim or
proceeding or any advice rendered in connection with any of the foregoing.  In
addition to the foregoing, the Pledgor shall also indemnify and hold harmless
Buyer, any Affiliate of Buyer and their respective directors, officers, agents,
employees and counsel from and against any and all losses, claims, damages,
liabilities, deficiencies, judgments or expenses incurred by any of them as a
consequence of, or any claims arising from or relating to the Purchased MSR
Excess Spread or the Master Spread Acquisition Agreement.

 

Section 9.03                             Nonliability of Buyer.  The parties
hereto agree that, notwithstanding any affiliation that may exist between
Pledgor and Buyer, the relationship between Pledgor and Buyer shall be solely
that of a Pledgor and a lender.  Buyer shall not have any fiduciary
responsibilities to Pledgor.  Pledgor (i) agrees that Buyer shall not have any

 

24

--------------------------------------------------------------------------------

 

liability to Pledgor (whether sounding in tort, contract or otherwise) for
losses suffered by Pledgor in connection with, arising out of, or in any way
related to, the transactions contemplated and the relationship established by
this agreement, the other loan documents or any other agreement entered into in
connection herewith or any act, omission or event occurring in connection
therewith, unless it is determined by a judgment of a court that is binding on
Buyer (which judgment shall be final and not subject to review on appeal), that
such losses were the result of acts or omissions on the part of Buyer
constituting gross negligence or willful misconduct and (ii) waives, releases
and agrees not to sue upon any claim against Buyer (whether sounding in tort,
contract or otherwise), except a claim based upon gross negligence or willful
misconduct.  Whether or not such damages are related to a claim that is subject
to such waiver and whether or not such waiver is effective, Buyer shall not have
any liability with respect to, and Pledgor hereby waives, releases and agrees
not to sue upon any claim for, any special, indirect, consequential or punitive
damages suffered by Pledgor in connection with, arising out of, or in any way
related to the transactions contemplated or the relationship established by this
Agreement, the other loan documents or any other agreement entered into in
connection herewith or therewith or any act, omission or event occurring in
connection herewith or therewith, unless it is determined by a judgment of a
court that is binding on Buyer (which judgment shall be final and not subject to
review on appeal), that such damages were the result of acts or omissions on the
part of Buyer, as applicable, constituting willful misconduct or gross
negligence.

 

Section 9.04                             Governing Law; Jurisdiction, Waiver of
Jury Trial:  Waiver of Damages.  (a) This Agreement shall be binding and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.  Pledgor 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.

 

(b)                                 PLEDGOR HEREBY WAIVES TRIAL BY JURY. 
PLEDGOR 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 REPURCHASE
DOCUMENTS IN ANY ACTION OR PROCEEDING.  PLEDGOR HEREBY SUBMITS TO, AND WAIVES
ANY OBJECTION IT 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 REPURCHASE DOCUMENTS.

 

(c)                                  Pledgor further irrevocably consents to the
service of process of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to Pledgor at the address set forth in Section 9.05 hereof.

 

25

--------------------------------------------------------------------------------

 

(d)                                 Nothing herein shall affect the right of
Buyer to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against Pledgor in any other jurisdiction.

 

(e)                                  Pledgor waives the posting of any bond
otherwise required of Buyer in connection with any judicial process or
proceeding to enforce any judgment or other court order entered in favor of
Buyer, or to enforce by specific performance, temporary restraining order or
preliminary or permanent injunction this Agreement or any of the other
Repurchase Documents.

 

Section 9.05                             Notices.  Any and all notices
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.

 

(a) If to Pledgor:

 

Penny Mac Holdings, LLC

3043 Townsgate Road

Westlake Village, CA 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 Holdings, LLC

3043 Townsgate Road

Westlake Village, CA 91361

Attention:  Jeff Grogin

Phone Number:  (818) 224-7050

E-mail:  jeff.grogin@pnmac.com

 

(b) If to Buyer:

 

PennyMac Loan Services, LLC

3043 Townsgate Road

Westlake Village, CA 91361

Attention:  Pamela Marsh/Kevin Chamberlain

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

E-mail:  pamela.marsh@pnmac.com;

kevin.chamberlain@pnmac.com;

contract.finance@pnmac.com

 

with a copy to:

 

26

--------------------------------------------------------------------------------

 

Wilmington Savings Fund Society, FSB,

d/b/a Christiana Trust, as Owner Trustee

c/o Corporate Trust Office

500 Delaware Avenue, 11th Floor,

Wilmington, Delaware 19801,

Attention: Corporate Trust Administration

Phone Number: (302) 888-7437

Facsimile Number: (302) 421-9137

Email:  jeverhart@christiana.com

 

with a copy to the Administrative Agent:

 

Credit Suisse First Boston Mortgage Capital LLC

Eleven Madison Avenue

New York, New York 10010

Attention: Dominic Obaditch

Phone Number:  (212) 325-3003

Fax Number:  (646) 935-7470

E-mail: dominic.obaditch@credit-suisse.com

 

Section 9.06                             Severability.  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. In case any provision
in or obligation under this Agreement, or any other Repurchase Document shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

 

Section 9.07                             Section Headings.  The Article and
Section headings in this Agreement are inserted for convenience of reference
only and shall not in any way affect the meaning or construction of any
provision of this Agreement.

 

Section 9.08                             Counterparts.  This Agreement may be
executed in any number of counterparts and by the different parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.  This Agreement may be executed by signature(s) transmitted by
facsimile.

 

Section 9.09                             Hypothecation or Pledge of Collateral. 
Buyer shall have free and unrestricted use of all Collateral and nothing in this
Agreement shall preclude Buyer from engaging in repurchase transactions with all
or a portion of the Collateral or otherwise pledging, repledging, transferring,
hypothecating, or rehypothecating all or a portion of the Collateral, so long as
such pledge, re-pledge, transfer, hypothecation or re-hypothecation is not in
violation of the Acknowledgment Agreement.

 

Section 9.10                             Non-Confidentiality of Tax Treatment. 
(a) This Agreement and its terms, provisions, supplements and amendments, and
notices hereunder, are proprietary to Buyer and Pledgor and shall be held by
each party hereto, as applicable in strict confidence and shall

 

27

--------------------------------------------------------------------------------

 

not be disclosed to any third party without the written consent of Buyer or
Pledgor, except for (i) disclosure to Buyer’s, Pledgor’s 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, other regulatory body or in connection with enforcement of rights
and remedies hereunder.  Notwithstanding the foregoing or anything to the
contrary contained herein or in any other Repurchase Documents, the parties
hereto may disclose to any and all Persons, without limitation of any kind, the
federal, state and local tax treatment of the Transaction, any fact relevant to
understanding the federal, state and local tax treatment of the Transaction, 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 Pledgor may not disclose the
name of or identifying information with respect to Buyer or any pricing terms 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 Transaction and is not relevant to understanding the federal,
state and local tax treatment of the Transaction, without the prior written
consent of Buyer.

 

(b)                                 Notwithstanding anything in this Agreement
to the contrary, Pledgor 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 Collateral and/or any
applicable terms of this Agreement (the “Confidential Information”).  Pledgor
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 Pledgor agrees to maintain such
nonpublic personal information that it receives hereunder in accordance with the
Act and other applicable federal and state privacy laws.  Pledgor 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 Pledgor 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. Pledgor 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, Pledgor 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 Pledgor.  Pledgor 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 Pledgor by
Buyer or such Affiliate.  Pledgor 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.

 

Section 9.11                             Set-off.  In addition to any rights and
remedies of Buyer hereunder and by law, Buyer shall have the right, without
prior notice to Pledgor, any such notice being expressly waived by Pledgor to
the extent permitted by applicable law to set-off and appropriate and apply
against any Obligation from Pledgor or any Affiliate thereof to Buyer or any of
its

 

28

--------------------------------------------------------------------------------

 

Affiliates any and all deposits (general or special, time or demand, provisional
or final), in any currency, and any other obligation (including to return funds
to Pledgor), 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 Buyer or any Affiliate thereof to or for the
credit or the account of Pledgor or any Affiliate thereof.  Buyer agrees
promptly to notify Pledgor after any such set off and application made by Buyer;
provided that the failure to give such notice shall not affect the validity of
such set off and application.

 

Section 9.12                             Actions and Discretion of Buyer.  Any
provision providing for the exercise of any action or discretion by Buyer shall
be exercised by the Indenture Trustee at the written direction of either 100% of
the VFN Noteholders or the Majority Noteholders of all Outstanding Notes (as
such terms are defined in the Indenture).  In addition, and notwithstanding any
other provision in this Agreement to the contrary, any approvals, consents,
votes or other rights exercisable by Buyer under this Agreement shall be
exercised by the Indenture Trustee on behalf of Noteholders (as defined in the
Indenture).

 

Section 9.13                             No Recourse.  No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or Owner Trustee in their individual capacities, (ii) any owner of a
beneficial ownership interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or “control person” within the
meaning of the 1933 Act and the 1934 Act of the Indenture Trustee or Owner
Trustee in its individual capacity, any holder of a beneficial ownership
interest in the Issuer or the Indenture Trustee or Owner Trustee or of any
successor or assign of the Indenture Trustee or Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.

 

Section 9.14                             Limitation of Liability of Owner
Trustee.  The Issuer is a Delaware common law trust and not a separate legal
entity under Delaware law. In furtherance thereof, all parties hereto are put on
notice and hereby acknowledge and agree that (a) this Agreement is executed and
delivered by Wilmington Savings Fund Society, FSB, d/b/a Christiana Trust
(“Bank”), not individually or personally but solely as Owner Trustee of the
Issuer, in the exercise of the powers and authority conferred and vested in it
under the governing instrument of the Issuer, (b) each of the representations,
covenants, undertakings and agreements herein made on the part of the Issuer is
made and intended not as personal representations, covenants, undertakings and
agreements by Bank but is made and intended for the purpose of binding only the
Issuer and its assets (which are separate and distinct from the individual
assets of Bank), (c) nothing herein contained shall be construed as creating any
liability on Bank, individually or personally, to perform any agreement,
undertaking or covenant, either expressed or implied, contained herein of the
Issuer Subsidiary, all such liability, if any, being expressly waived by the
parties hereto and by any Person claiming by, through or under the parties
hereto, (d) Bank has not verified or made any investigation as to the accuracy
or completeness of any representations and warranties made by the Issuer in this
Agreement and such representations and warranties are thus solely a means of
allocating risk among the parties and (e) under no circumstances shall Bank be
personally liable for the payment of any indebtedness or expenses of the Issuer
or be

 

29

--------------------------------------------------------------------------------

 

liable for the breach or failure of any obligation, representation, undertaking,
warranty or covenant made or undertaken by Issuer under this Agreement or any
other related documents.  All recourse of the parties shall be limited to the
Trust Estate, if any, of the Issuer.

 

Section 9.15                             Third-Party Beneficiaries.  The
Indenture Trustee shall be an express third party beneficiary of this Agreement.

 

30

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, Pledgor and Buyer have caused this Subordination,
Acknowledgment and Pledge Agreement to be executed and delivered by their duly
authorized officers or trustees as of the date first above written.

 

 

 

PNMAC GMSR ISSUER TRUST, as Buyer

 

 

 

By: Wilmington Savings Fund Society, FSB, d/b/a Christiana Trust, not in its
individual capacity but solely as Owner Trustee

 

 

 

 

 

By:

/s/ Jeffrey R. Everhart

 

 

Name:

Jeffrey R. Everhart, AVP

 

 

Title:

 

 

[Signature Page to Subordination, Acknowledgment and Pledge Agreement]

 

--------------------------------------------------------------------------------

 

 

PENNYMAC HOLDINGS, LLC, as Pledgor

 

 

 

By:

/s/ Pamela Marsh

 

 

Name:

Pamela Marsh

 

 

Title:

Managing Director, Treasurer

 

[Signature Page to Subordination, Acknowledgment and Pledge Agreement]

 

--------------------------------------------------------------------------------

 

SCHEDULE 1

 

RESPONSIBLE OFFICERS — PLEDGOR

 

PLEDGOR AUTHORIZATIONS

 

Any of the persons whose signatures and titles appear below are authorized,
acting singly, to act for Pledgor under this Agreement:

 

Responsible Officers for execution of Repurchase Documents and amendments

 

Name

 

Title

 

Signature

 

 

 

 

 

 

 

 

 

 

 

Responsible Officers for execution of day-to-day operational functions

 

Name

 

Title

 

Signature

 

 

 

 

 

 

 

 

 

 

 

Schedule 1-1

--------------------------------------------------------------------------------

 

EXHIBIT A

 

FORM OF POWER OF ATTORNEY

 

Reference is made to the Subordination, Acknowledgment and Pledge Agreement,
dated as of December 19, 2016 (as amended from time to time, the “Agreement”),
between PENNYMAC HOLDINGS, LLC (“Pledgor”) and PNMAC GMSR ISSUER TRUST
(“Buyer”).

 

KNOW ALL MEN BY THESE PRESENTS, Pledgor hereby irrevocably constitutes and
appoints Buyer and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of Pledgor and in the name of Pledgor
or in its own name, from time to time in Buyer’s discretion, in accordance with
the terms of the Agreement, for the purpose of carrying out the terms of the
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of the Agreement, and, without limiting the generality of the
foregoing, Pledgor hereby gives Buyer the power and right, on behalf of Pledgor,
without assent by, but with notice to, Pledgor, if permitted under the terms of
the Agreement, to do the following:

 

(i)                                     in the name of Pledgor or 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 (i) all Purchased MSR Excess Spread arising under or related to any
Servicing Contract; (ii) all rights to payment of amounts due under the Master
Spread Acquisition Agreement on account of, or related to, the Purchased MSR
Excess Spread; (iii) all Assets arising under or relating to the Master Spread
Acquisition Agreement and all rights thereunder; (iv) all rights to
reimbursement of Assets and/or amounts due in respect thereof under the related
Servicing Contract; (v) the Dedicated Account; (vi) all records, instruments or
other documentation evidencing any of the foregoing; (vii) all “general
intangibles”, “accounts”, “chattel paper”, “securities accounts”, “investment
property”, “deposit accounts” and “money” as defined in the Uniform Commercial
Code relating to or constituting any and all of the foregoing (including,
without limitation, all of Pledgor’s rights, title and interest in and under the
Purchased MSR Excess Spread and Servicing Contracts); and (viii) any and all
replacements, substitutions, distributions on or proceeds of any and all of the
foregoing (any and all property listed in clauses (i) through (viii),
collectively, the “Collateral”) 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 Collateral whenever payable;

 

(ii)                                  to pay or discharge taxes and Liens levied
or placed on or threatened against the Collateral;

 

(iii)                               to the extent permitted under the Master
Spread Acquisition Agreement, to request that MSRs in respect of Mortgage Loans
owned by any other investor or guarantor be transferred to Buyer or to another
servicer approved by Ginnie Mae or such other investor or guarantor (as the case
may be) and perform (without assuming or being

 

Exhibit A-1

--------------------------------------------------------------------------------

 

deemed to have assumed any of the obligations of Servicer thereunder) all
aspects of each servicing contract for which the Purchased MSR Excess Spread is
Collateral;

 

(iv)                              to request distribution to Buyer of sale
proceeds or any applicable contract termination fees arising from the sale or
termination of such MSRs to the extent of the Purchased MSR Excess Spread and
remaining after satisfaction of Servicer’s relevant obligations to Ginnie Mae or
such other investor (as the case may be), including costs and expenses related
to any such sale or transfer of such MSRs and other amounts due for unmet
obligations of Servicer to Ginnie Mae or such other investor (as the case may
be) under applicable Ginnie Mae Contracts or such other investor’s or
guarantor’s contract;

 

(v)                                 to deal with third parties, including,
without limitation, investors, guarantors and any and all subservicers and
master servicers in respect of any of the Collateral in the same manner and with
the same effect as if done by Pledgor;

 

(vi)                              (A) to direct any party liable for any payment
under any Collateral to make payment of any and all moneys due or to become due
thereunder directly to Buyer or as Buyer shall direct; (B) to ask or demand for,
collect, receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising out of
any Collateral; (C) to sign and endorse any invoices, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (D) to commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect of
any Collateral; (E) to defend any suit, action or proceeding brought against
Pledgor with respect to any Collateral; (F) to settle, compromise or adjust any
suit, action or proceeding described in clause (E) above and, in connection
therewith, to give such discharges or releases as Buyer may deem appropriate;
and (G) generally, to sell, transfer, pledge and make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though Buyer were the absolute owner thereof for all purposes, and to do, at
Buyer’s option and Pledgor’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 Collateral and Buyer’s Liens thereon and to effect the intent of the
Agreement, all as fully and effectively as Pledgor might do.

 

This power of attorney is a power coupled with an interest and shall be
irrevocable until such time as all Obligations have been paid in full and the
Agreement is terminated.

 

Pledgor also authorizes Buyer, at any time and from time to time, to execute, in
connection with any sale provided for in the Agreement, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the
Collateral.

 

The powers conferred on Buyer are solely to protect Buyer’s interests in the
Collateral and shall not impose any duty upon Buyer 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 Buyer nor any of its
officers, directors, or employees shall be responsible to

 

Exhibit A-2

--------------------------------------------------------------------------------

 

Pledgor for any act or failure to act hereunder, except for Buyer’s own gross
negligence or willful misconduct.

 

Notwithstanding anything to the contrary herein or in any of the other Program
Agreements, any appointment set forth in this power of attorney, as well as
Buyer’s exercise (or purported exercise) of any right, power or authority given
by Pledgor hereunder, shall be subject to the Ginnie Mae Contract and the
Acknowledgment Agreement.

 

Any capitalized term used but not defined herein shall have the meaning assigned
to such term in the Agreement.

 

TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, PLEDGOR 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.

 

Exhibit A-3

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, Pledgor has caused this Power of Attorney to be executed and
Pledgor’s seal to be affixed this      day of           , 2016.

 

 

PENNYMAC HOLDINGS, LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Exhibit A-4

--------------------------------------------------------------------------------

 

STATE OF

)

 

 

)

ss.:

COUNTY OF

)

 

 

On the              day of       , 2016 before me, a Notary Public in and for
said State, personally appeared                                      , known to
me to be                                                of Pledgor, the
institution that executed the within instrument and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.

 

IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the day
and year in this certificate first above written.

 

 

 

 

Notary Public

 

 

My Commission expires

 

 

 

Exhibit A-5

--------------------------------------------------------------------------------